Session 2010-12
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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1014-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Communities and Local Government Committee

REGENERATION

Monday 9 May 2011

NEIL McINROY, KATIE SCHMUECKER and JOSH STOTT

MICHAEL GAHAGAN, JIM COULTER, DAVID ORR and JULIAN DOBSON

Evidence heard in Public Questions 1 - 76

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 9 May 2011

Members present:

Clive Betts (Chair)

Heidi Alexander

Bob Blackman

Simon Danczuk

George Hollingbery

James Morris

Mark Pawsey

________________

Examination of Witnesses

Witnesses: Neil McInroy, Centre for Local Economic Strategies, Katie Schmuecker, Institute for Public Policy Research North, and Josh Stott, Joseph Rowntree Foundation, gave evidence.

Q1 Chair: Good afternoon and welcome to our first evidence session in our inquiry into regeneration. Just for the sake of our records, could you identify yourselves and say which organisation you represent?

Neil McInroy: I am Neil McInroy from the Centre for Local Economic Strategies.

Katie Schm uecker: I am Katie Schmuecker from the Institute for Public Policy Research North.

Josh Stott: I am Josh Stott from the Joseph Rowntree Foundation.

Q2 Chair: You are all welcome. The Government has issued a document about regeneration to enable growth. Do you think there is anything missing from that document that you would have liked to have seen in it if you had been responsible for writing it?

Neil McInroy: To talk about the document first, I think that the proposals in the document are, from our point of view, weak and disappointing on five main counts. First, there is no strategic direction in the document as such; it is very piecemeal; it has nothing about how growth, social inclusion, work within environmental limits connect up. So, on the first count there is no strong narrative or strategic direction within it. Second, it has poor connections between strategy and delivery and I am unsure exactly what the document sets out to do. It is quite fragmented; there is no vision there, and it does not address the big questions, for instance how economic development links to planning.

The Centre believes that the third thing missing is that there is not enough talk about local enterprise partnerships; there is not enough consideration of business rates; there is not enough around enterprise zones, tax increment financing, local government finance review or even how all this connects up to the Work programme. So, there are bits missing and in that sense it is weak. Fourth, there is nothing on the pure assets of place in terms of social assets, financial assets, public assets, private assets; there is nothing on how we connect up those various positive aspects within any given locality. Fifth, there is an overriding physical focus in the document, and it does not say how those physical assets would connect up to public or social assets within any given locality. So, we at the centre believe that it is quite weak and disappointing. What needs to happen is something that is much more strategic and embedded in each locality, and which tries to build on the assets within any given locality.

Katie Schmuecker: We would endorse much of what we have just heard. Looking at the document, there seems to be a very strong focus on a market-led approach and on places where there is the greatest potential for growth. I think that leaves us with the question of what that means for places that fall outside that, such as peripheral towns outside of our great centres of growth, which are often located in the cities. Perhaps they are places like Barnsley or Blackpool, to give just a couple of examples. What is the strategy for those places, and also for the deprived communities as well? We would like to see a lot more specific details there. I think we would agree that, if the document is meant as a strategy, it is weak; it reads rather more like a collection of Government policies and the way in which they may apply to some deprived places.

We would also like to see something a little more ambitious in terms of a cross-governmental approach. Neil mentioned the links with the Work programme. That is something we absolutely endorse, in the sense that there is discussion about the central role of local authorities in terms of a more localist approach to regeneration-the role of local authorities in co-ordinating that. We are very supportive of that, but local authorities need to be adequately resourced to do that and to be able to influence other areas of local public service delivery. Absolutely essential to that is employment services in the Work programme.

Josh Stott: I would endorse most of what has been said so far, particularly in terms of what Katie said about lack of strategy for places that will not be able to benefit from the proposed growth incentives. To our mind, regeneration is about reversing decline in tackling disadvantage, not simply about promoting growth. That seems to be a major gap in the regeneration document that has been produced. There seems to be an assumption that the trickle-down effect will work and growth will benefit all. Our evidence certainly suggests contrary to that, and that a rising tide will not lift all boats. There have been plenty of areas, even in areas of strong economic growth, where persistent deprivation is still occurring in deprived neighbourhoods, and there does not seem to be an acknowledgement or a forward strategy for dealing with these places. It seems to be about promoting personal mobility and incentivising growth, and a big part of the equation has been missed in terms of disadvantaged places.

Q3 Chair: You also drew attention in your evidence to the Scottish Government’s approach. It might be a bit uncomfortable for some of us to mention that, but you felt that they had had a much better shot at trying to look at these issues in the document they produced. Can you explain why you say that?

Josh Stott: I do not know whether people are aware of it, but it is a much fuller document; it is the beginnings of a strategy. I think that critically what it does is that it attempts to define regeneration first and foremost, which the coalition Government’s document does not attempt to do, in particular community-led regeneration. We are left questioning quite what that is, let alone how it is to be delivered. The document fails to outline the current challenges facing the regeneration sector, and it also fails to reference the past 15 years previously in terms of what has gone on in regeneration, and what success stories and lessons we should be learning and drawing from. It is silent on all those issues.

Q4 Chair: On the point of definition, do you think it is important that we have a definition? Should we be trying to distinguish between something called regeneration and something that might be called economic development?

Neil McInroy: I think that is very important, because there is a slipperiness. I think one needs to be quite clear what one is talking about. It seems to us at the centre, having had 25 years’ experience of working in regeneration and economic development, that there is no silver bullet here. We have tried lots of different initiatives over the years. We have thrown money at the issue; we have established partnerships on the issue, but the lessons from all those past activities and from abroad tell us that there are perhaps a couple of abiding things that mean you can regenerate places and make them successful and resilient in perpetuity. Those two things are: the connectivity between commercial, public and social activity within any given place. We at the centre believe that it is the connectivity and relationships between those three elements that is fundamentally important. If you have a weakness in one of those particular elements, or there is not a good connection between those elements, then a place is more likely to go into decline. So, the thing that we focus on is the relationships between those three elements in any given locality.

The second thing is that we need to have greater emphasis on the assets and capital within those places: financial, human, social, environmental and production capital, particularly around manufacturing. Those two elements of a place-based blend of social, commercial and the public and the focus on assets are how you can regenerate places. It has been proven in this country and elsewhere. One needs to have a focus on those things as a starting point for regeneration.

Katie Schmuecker: Regeneration is about the intersection between the social, economic and physical. One of the promising things about this approach is the localist approach that is endorsed, as much as we can tell what it is so far. But what is important about that is, as Neil says, context really does matter. Quite what blend of those three elements is required will vary from place to place; how ready a community is to be engaged in regeneration will vary from place to place. Our research certainly shows that it is not as simple as deprived neighbourhoods not having the capacity to engage with regeneration, whereas slightly better off neighbourhoods do. It is not that straightforward. There are some very deprived neighbourhoods that have excellent examples of community-led regeneration, and the reverse is also true. The definition of regeneration is important because it helps people come together around an understood idea of what it is they are trying to achieve.

The other thing I would say about regeneration is that we should regard it as a process and not an event. That is something we tend to say about devolution quite often; you mentioned Scotland before. But in terms of regeneration, too often we have looked at it as an event: it has been a project, a pot of money that is there to be spent, rather than an ongoing build up of relationships within an area to deliver on a vision for a place in partnership between the different players that Neil mentioned. It is that ongoing and sustained element of regeneration that is vital for it to be successful.

Josh Stott: Picking up on some of those points, I think the key reason the definition of regeneration is important is that it means different things to different people. A community worker in Bradford will have a very different view from a property developer in Newham, so trying to define and have a common understanding of regeneration and different elements is really important. Added to that importance is that historically there has been a great disconnect across the different elements and strands of regeneration at governance levels and at spatial levels between economic, social and physical investment and interventions. We are all saying the need is for those three elements to come together and join up. Without a common understanding and strategy, that will never happen.

To pick up the point as to whether regeneration is distinct or should be seen as distinct from economic development, our strong view is that it should. Economic development is obviously crucial and is the name of the game at the moment, but for us regeneration starts in areas of decline and priority disadvantaged areas; it is about reversing that decline and stabilising economies. At that point you can build the foundations of future growth, but for me that is what distinguishes regeneration from development. It is about targeting deprived and disadvantaged areas.

Q5 James Morris: Perhaps I may probe a little more the lessons that we can learn from the past. All of you have talked about regeneration playing a role within deprived communities, but if you looked at the evidence over the last 15 to 20 years, a lot of the indicators of deprivation in many of our most deprived communities in, say, Greater Manchester or areas of the Black Country that I represent have stayed broadly the same; in fact they may have got slightly worse. Why do you think that is? Why have previous schemes failed to get underneath some of those underlying issues of deprivation?

Katie Schmuecker: Unfortunately, there is no straightforward answer to that. If there was, we would have sorted this out years ago. Deprivation is by its very nature complex. As I was talking about previously, the context of the area will be very important. This is why we think a more localist approach to regeneration is a helpful one. But what we need to understand is that deprived neighbourhoods are not islands. They are where they are partly as a result of their relationships with the wider labour and housing markets. One thing I would stress very strongly is that, while we strongly support and endorse a community-led notion of regeneration, on its own that will not suffice, because we have to make the links between what is going on in a deprived neighbourhood and what is happening in the wider economy of the area and wider housing market of the area, and the way in which those two things operate will have implications for the prospects of people in those areas.

Q6 James Morris: What I am trying to get at is: what was in the nature of regeneration schemes-it would be good to get some examples from the last 15 years-that did not understand that, where money was applied, a scheme with all the best intentions was applied to a particular area and it did not have the impact that was hoped for. Are there some examples we can focus on where previous regeneration schemes have failed?

Neil McInroy: I think I will cover your answer, James. To start off very briefly, it is quite clear why regeneration has failed in the past. I think it is fairly obvious that what we have here is money being thrown at a problem without due understanding of the connectivity and relationships that take place in any given locality. It seems to us that what needs to take place is that, when money is thrown at an issue, there is a clear heady network and connectivity and galvanised vision of how that place should turn around. Money has been thrown at physical initiatives or community regeneration initiatives without a proper connectivity between all the elements within a place. If you look at the regeneration that has been successful, you will find there is a good community buy-in; there is a public sector intervening and creating a co-ordinating role; and there is a private sector that understands the issues in that locality and offers supports in different ways for the success of that location.

To move on to where there have been good things happening in previous schemes, there needs to be co-ordination of spatial scales. The worry is that we have got rid of the RDAs-we now have LEPs-and there could be a lack of co-ordination in any given locality because of the absence of the RDAs and at the same time a weakening of the approach. Some people say local strategic partnerships were a bureaucratic process-driven thing, but they did provide that key co-ordinating role within any given locality.

Q7 James Morris: I just want to get underneath this. Are you both saying that one of the failures of previous regeneration schemes was a lack of understanding of the dynamics of particular locations and communities, and an assumption that if you applied money at a certain scale it would necessarily lead to regeneration? If you take Hulme in Manchester as an example, which we discussed, it was a success but only because it was very much community-based, but it was very local in terms of the way it understood the dynamics of that particular part of Manchester. Is that what historical failure was about-lack of understanding of local community dynamics and an assumption that, if you just flow money from the centre, that would solve the problem?

Neil McInroy: I think that is one of the reasons why it would go wrong. When it goes right there is an understanding of community-demand dynamics. I also think that, if you are talking of environmental or economic regeneration or cultural regeneration, one needs equally to understand the dynamics relating to those particular aspects for it to be a success. That requires a much deeper, voracious awareness of the dynamics in any given locality.

Katie Schmuecker: To add to that, on the point of community dynamics, certainly failing to understand those linkages between neighbourhood and the wider labour market in particular explains some of the regeneration failures in the past. Some of our research looked at the area of Speke in Liverpool, which is one of the most deprived neighbourhoods in the country. The amount of economic development that has gone on around Speke is enormous, yet the area itself has not improved economically to the extent you might expect it to have done. Clearly, there are some social elements to regeneration that need to be addressed in that example.

However, there is a danger of the pendulum swinging too far the other way if we are not careful. If you look at New Deal for Communities, for example, the evaluation of that, which was extremely community-led in its approach, suggests that too often neighbourhood representatives did not have an excellent grasp of the issues facing their area, and sometimes professionals were not robust enough in challenging the anecdotal evidence and assumptions of those communities. I think that helps to explain one of the reasons why perhaps the New Deal for Communities did not deliver quite as much as we might have hoped it would have done.

Josh Stott: Where Katie started is that there are not any magic bullets here, and the outcomes of our research into area-and place-based regeneration initiatives are very mixed. So, I am not sitting here saying that we have the answers, but the critical thing is that we do not give up on these places. Just because a previous policy has not worked does not mean we should not develop alternative policies in order to try to deal with them. There is a big question about the long-term costs of doing this.

Q8 James Morris: I certainly was not suggesting that we should give up on deprived communities.

Josh Stott: Sorry. I was not suggesting you were.

Q9 Heidi Alexander: To follow up the question of learning from past programmes and initiatives, in the Government’s three-and-a-half pages of text that introduce their Regeneration to Enable Growth document, one of the things they put past failure down to is barriers that thwart local ambition and limit agencies’ room to manoeuvre. There is a suggestion there that perhaps different elements of bureaucracy and the planning system may have got in the way of regeneration in the past. Do you agree with the Government in that?

Neil McInroy: To an extent, yes, in that they did become a bureaucracy and became process driven. There was a managerialism about all the processes that were a burden. To move forward, however, one cannot get rid of planning, local Government and interventionist policy. One needs to have those but of a different type. I think the new direction for regeneration needs to learn from that bureaucratic machine that became regeneration and be lighter on its feet, be smarter and more bespoke and deeper at certain points where it needs to be. I think that does require a more localist perspective.

It seems to us at CLES that regeneration is one of those things with which you need to be very careful about when you want to intervene. Then you need to be careful about how deep you intervene; you need to know how long you hang around for and then you need to know how to get out. I think in the past all those four elements were not understood very well. We need to do all those four elements but in much smarter ways, and effective local Government, effective localism, should give an advantage for that to occur.

Josh Stott: Just to pick up the point in terms of there being barriers, I think that sometimes people perceive barriers, and it comes back to the idea that regeneration needs to be integrated, because we are talking about different sectors with different languages, skill sets and objectives operating at different spatial levels. It is incredibly complex. Inevitably, there will be barriers. It is the ability to be able to bridge those different levels and areas of interest that regeneration is all about. Without the right resource and capacity, it cannot happen.

Katie Schmuecker: From our research, one of the barriers that has been an issue in the past is the attitude of other Government agencies and Departments, which play a critical but sometimes not a central role in regeneration. I am thinking particularly of issues to do with skills, welfare to work and transport. Pushing forward the Government’s localist agenda across Whitehall would be one issue I would like to see raised as one of the potential barriers.

Q10 Simon Danczuk: One of the key words that I think all of our witnesses have used so far is the need to co-ordinate activity within regeneration. There is a change of attitude from the Government, which is that the public sector is not going to do everything. The impression you have given me is that previously the public sector did everything, and the co-ordination was between the series of public-sector agencies. Now the private sector is coming in and the vehicle for that is local enterprise partnerships, where we have much smaller and more manageable units that are working with public sector and private sector people at a more local level than previously. To what extent do you think the LEPs will be able to pull things together to provide that more joinedup approach?

Josh Stott: It is very early days and time will tell. They have no statutory powers or funding. I think they are a very important voice for business, and a voice they perhaps have been missing previously. Obviously, operating at the functional economic area is the correct area in which to operate. Our concern is in terms of their remit. It is about growth and economics; it does not cover the social and environmental parts of regeneration we have been talking about, and there is no explicit remit to target deprived areas and concentrations of deprivation.

Q11 Simon Danczuk: You do not subscribe in any way to the trickle-down theory, that if we can build economic growth, the more deprived areas will benefit. You are saying that will not happen?

Josh Stott: I certainly do not subscribe to it in full. There are persistent areas of deprivation and concentrated worklessness, but growth in neighbouring towns, cities and areas. Unless you connect individuals to the labour market effectively, that is not going to happen. With the LEPs not having a remit to tackle deprivation and focus on areas of concentration of deprivation, if it is not high on their agenda, then it is unlikely that it will happen.

Katie Schmuecker: I would entirely endorse that. I would also slightly challenge what is behind your question. I certainly would not want to give you the impression that we thought regeneration in the past had been all about the public sector. It has not; it has been about a partnership between the public sector and the private sector and the voluntary and community sector, or at least it certainly works well if that has been the case. I think that potentially LEPs have a vital co-ordination role. Having said that, it is actually the role of local authorities within LEPs that is very important here, because local authorities have roots in the neighbourhoods we might be talking about in terms of places that require regeneration, but they also have a presence on the LEP boards. Local authorities are potentially the fulcrum of this task of co-ordinating and linking between the neighbourhood and the wider functional economic area.

Q12 Simon Danczuk: But the LEP itself cannot do that; you still need the local authority in your view to be the driver of change here?

Katie Schmuecker: The local authority plays a fundamental part on the LEP of course, and I think part of that role should be to drive that change, yes.

Neil McInroy: The key thing here is stewardship of place. At CLES we are easy about who does that stewarding role, but it needs to be strategic, voracious and powerful to do that. My feeling of the LEPs when they first came out was, "Fantastic; here we go. We have got a turbo-charged chamber of commerce sitting in any given locality that will drive economic success as you see in a Japanese, German or US model." They have since become a bit more of a partnership, a kind of local strategic partnership, with a focus on the economic. They are on a moving journey clearly, but the danger is that they are even more remote because they have a narrow focus around business and are business-led. They could be even more remote from what the locality requires in terms of all that other stuff and all the connection between the economic success and community activity and so on.

I think that LEPs need to move forward quickly, and they already are, and start to receive powers through the decentralisation process from Whitehall. I think they need to draw down powers from Whitehall and not necessarily suck power away from local Government. I think that working with local Government you should be able to draw down powers from the centre, and we need to do that speedily, particularly in those areas that need regeneration. Areas like Oldham, for instance, did not do very well even in the good times, so the trickle down did not work even in the really good times. One needs to move very fast in these difficult times. LEPs need to get those powers and co-ordinate and be strategic; they need to steward a place in a broader palette of activities than was initially proposed for them.

Q13 Simon Danczuk: Let’s assume they get those powers. Are they going to be able to drive regeneration forward without substantial amounts of public money? I was interested in one of your earlier remarks. You said that in the past we had thrown money at this problem without necessarily solving it. There will certainly be less money available this time round. Does that mean regeneration cannot be successful in your view?

Neil McInroy: I think regeneration can be successful with less money. I believe it is about the connections between different facets within places I outlined earlier. If you did get better co-ordination between the commercial activity, including greater levels of giving and philanthropy within that sector, and had an enabling, entrepreneurial, innovative council and you had a respect for and tried to harness the social and human capital in those places, and made great heady connection between all those three, that does not necessarily mean lots and lots of money. If you look at regeneration success round the world, you will find there is great regeneration done without lots of public money being thrown at it, but what it does need is a strong stewardship of place, be it from the local authority or from a LEP that has the power and some resources to act as a steward effectively.

Katie Schmuecker: As to less public money being available, I think that is simply a reality that has to be accepted. The question becomes: what do you do with the smaller pot of money that is available? I think the question we would ask is: on what should that be targeted? The Government’s approach it appears is to target that money on those places with the greatest potential for growth. To our mind that leads to the question: what of those places that do not demonstrate such great potential for growth? What is the policy and strategy for those places?

Q14 Heidi Alexander: I am interested in you, Neil, talking about the stewardship of place and saying that is absolutely essential. I think that all three of you in your written evidence referred to concerns about capacity within the regeneration sector-skills, expertise, knowledge and experience-and what is happening currently given the Government’s approach. Can you say something about what evidence you see out there of those skills and that expertise being lost at the moment?

Neil McInroy: We are in quite a worrying place in many localities because LEPs and other activities have not managed to pick up the slack swiftly enough, so what you have is a hollowing out of street wardens, of neighbourhood wardens, regeneration officers or economic development people. All that industry has been hollowed out. What you have is a deficit there, and also in terms of connecting up services at a local level. That is why there is an urgency both to move quickly with LEPs and also to move quickly in terms of supporting the social and human capital in communities themselves. At present we have, of course, the big society and this re-energisation of civil society. That is not making a connection with regeneration at this point in time, and clearly it needs to. I would argue that LEPs particularly need to engage with the re-energisation of the civil society to ensure that some of the activity that took place in the public sector has a chance of growing more within the social sector.

Josh Stott: I will not point to specific examples, but as the cuts kick in there are increasing skills gaps in planning, housing and economic development and regeneration across local authorities. It will be the areas that face the most severe challenges or most complex problems that will be most stretched. It is not simply about throwing money at it, but if you do not have the resource and the capacity, as we have said previously, those areas that face the most severe challenges will spiral into decline essentially.

Q15 Heidi Alexander: What do you think the Government should be doing now to ensure that those skills and expertise are not lost and are maintained? Do you think it could be doing anything now? Neil has talked about making sure the LEPs come forward a bit more quickly.

Josh Stott: The LEPs seem to be the only show in town at the moment, and it is what everybody in the regeneration sector talked about and what everybody in the economic development sector talked about. It is all about the LEPs now. It is such early days. Inevitably, there again places that have got well-established partnerships-Leeds city region, Manchester city region-and places that have got strong and established business voices that are connected into the public sphere will be able to form LEPs, but the coverage is not widespread at the moment, so there are areas that have not even got LEPs in their infancy at the moment, let alone a strong LEP. In terms of what the Government could do, I guess a starting point would be the regeneration document that we are discussing today, which, as you refer to, is three or four pages of text supported by some appendix tables. So, in terms of the message that sends out and providing answers to some of the questions that we are raising, it seems to fall a long way short.

Neil McInroy: It strikes me that the Government need to get more spatially and socially aware; they need to recognise that not every locality will be able to build the new civil society in similar ways. If you are strapped for time and money, with lots of pressures of life-as some localities face more than others-you are unlikely to be able to build the big civil society more than other localities. It needs to be spatially and socially aware. In that, you would hope it could focus or at least relax some of the pressures, particularly in local Government, in those particular localities. That would need an awareness of the social and spatial ramifications of the cuts to a much greater degree. In particular the RDA assets are something that could be utilised, in how they are divested or disposed, in a more creative way locally to assist regeneration, and also making it a statutory duty for regeneration or local economic development would help in putting emphasis on regeneration and economic development in certain localities.

Katie Schmuecker: To pick up on that, those local authorities that have seen the deepest cuts to their budgets are struggling to implement those, and some of those places are arguably often those that most need economic development and regeneration. Functions outside the statutory core of what local government has to do inevitably come under greater pressure. Certainly, the Institute for Economic Development has found from a survey of its members that jobs are going, and in some cases entire economic development regeneration departments within councils are going, so clearly there is an issue of capacity here. It is not just the public sector but the private sector to some degree. A lot of the private sector companies that are engaged in regeneration were extremely hard hit as a result of the credit crunch and recession.

Q16 George Hollingbery: I am a self-confessed ingénue; I know nothing about regeneration at all. To be quite straight with you, I come from a privileged part of the country and it is not something I have experienced. I find myself continually confused by what I am hearing. I do not really find myself illuminated today about what regeneration really is and what is standing in its way. I am surprised not to hear you talking so much about individuals and inspirational individuals and people driving the process forward themselves. To come back to Heidi’s question, which is about capacity and so on, has the capacity been in place to negotiate the structures and get round the complexities of the work programme as it will be, or the planning process as was? Is that what the structures are there to do-to allow people to negotiate the extraordinary road blocks that stand in their way to helping themselves-or is there a real need to create the social capital that does not exist in a lot of these places, and help people over the hump so they can help themselves?

Neil McInroy: Earlier I alluded to the fact that the structures have been too cumbersome, and, if you like, cowed or suppressed some of that individual talent and energy to get on and do things in a community within any given place. Clearly, the Government is going in the right direction when it seeks to get rid of some of that bureaucracy and heavy-handedness. However, an individual’s role needs to be supported in some localities by particular ways of working and policy interventions. I think that a greater awareness of that in certain localities needs to be recognised, and there needs to be heavier and perhaps more deeper intervention in some localities compared with others. I think that is what I am broadly saying.

Katie Schmuecker: You have touched on the role of people there. One of the big debates within regeneration is whether it is about people and supporting deprived individuals or about places and geographic areas. Our research tells us that it is fundamentally about both. You cannot look at one without looking at the other. Certainly, if you focus only on individual mobility, clearly that can have some very positive effects for the individuals concerned. We certainly would not want to suppress that.

Do not misunderstand me. This is not a counsel against supporting individual mobility, but what you have to do alongside that is develop places as well because, if people do not have a positive reason to stay within a deprived neighbourhood, if their circumstances change, they will move out. The result of that can be a spiralling decline of a place as the physical fabric of the area declines; it is a less appealing place to live; crime goes up; the reputation is tarnished, and the result is that it becomes an area of last resort. We have seen that sort of vicious spiral of decline in the past. It was seen in the 1980s and early 1990s; it was a big problem in a lot of our communities. A lot of work has been done. A lot of the regeneration that has taken place has stalled and in some places reversed that spiral of decline. We need to be extremely careful that we do not re-enter something like that. That is why, in our view, while individual mobility and supporting people to improve their personal circumstances is extremely important, improving places has to go hand in hand with that.

Josh Stott: To pick up the point about personal mobility, again we would fully endorse some of the proposals put forward. We certainly would not argue with providing people with access to great opportunity, but there also needs to be a recognition that people have attachments to places and it does not always pay to relocate or travel for work. In many instances, if you have strong social and family connections, covering childcare costs for example, people are attached to a place. As Kate outlined, it will be the more mobile who leave and you will have the residualisation effect of the most deprived and least skilled people concentrated in severely failing areas.

Katie Schmuecker: There is an issue of sustainability for those places that are the most economically prosperous and growing. If our approach is simply to support individual mobility out of lagging places and encourage them to move to places that are growing, the consequence of that would be severe strain on the sustainability of some places. It seems to me a better approach for the UK as a whole is for us to support places to achieve their potential.

Q17 Mark Pawsey: Both Katie and Josh used the expression "spiral into decline". You explained it a little, but, Josh, how would we recognise a place that is spiralling into decline? Would that be happening simply because of the lack of a regeneration policy?

Josh Stott: It is struggling a bit to say this is simply a lack of regeneration policy. There will be lots of complex factors that will influence a spiral of decline. A simple way of understanding when you have a spiral of decline would be to look at population change and the proportion of out-of-work benefit claimants in an area. If that is increasing over time, you will see, as I have talked about, there is this residualisation and concentration of deprivation in an area.

Q18 Bob Blackman: The proposition, obviously, is that the Government are taking the view that the resources available for regeneration will be reduced. Therefore, if you read the document, they are saying their approach is to concentrate on fewer targeted areas rather than a broad swath of things to allow local regeneration to take place. That is one way of paraphrasing the Government’s approach. What do you think will be the effect on the areas that have the targeted investment? Do you think that will work?

Neil McInroy: The key thing about the targeted investment is to understand how that money or input connects up within any given locality. In that, if money is given through the public sector, for instance, you would look to have a greater understanding of public sector spend in terms of supply chains and all those local economic multiplier activity effects. One needs to look at procurement, particularly public-sector procurement, to understand what benefits can be extracted through that process in any given locality.

You also need to look at social return on investment and different ways of measuring the inputs to any given locality. The local area needs to be much more clever or smart at understanding the ripple effects of any given investment, and needs to be much more voracious in trying to look at where that spend goes, what the social return on that spend would be, how it builds up capacity and resilience for it not to decline in the future.

Q19 Bob Blackman: Is it your view that there should be specific objectives associated with any targeted investment-that is, this is what you have to achieve to get this money?

Neil McInroy: Clearly, there needs to be that, so clear outcomes.

Q20 Bob Blackman: At the moment in the document, as I read it, it is a bit vague and open, which leads to the belief that you could succeed without really knowing about it or fail without understanding that you have.

Neil McInroy: There definitely need to be outcomes that relate to the document, but not just outcomes in terms of a number who entered work or whatever. It needs also to relate to process outcomes in terms of how that money and those resources will be utilised, and an understanding of its ripple effect at any given locality.

Q21 Bob Blackman: What is your view of the new homes bonus in encouraging regeneration?

Katie Schmuecker: It is not clear that it provides a huge incentive to many local authorities. What will be interesting is the way in which the new homes bonus intersects with the new neighbourhood planning powers. That is an interesting question to look at. In broader terms, we have a couple of concerns about the new homes bonus. One is the potential for it to act as a disincentive to physical regeneration where that means housing demolition, if it is based on net additions. The result of that may well be that building on greenfield sites becomes more appealing. There are some big questions there about thinking about what sort of development and regeneration we might want to see in places, and some of those issues around targeting areas of greatest deprivation and also issues of sustainability.

The other concern is that the new homes bonus will favour those parts of the country where the market is stronger and there is a much greater market demand to build more houses. That is less likely to benefit some of the sorts of places that we are talking about when we talk about regeneration. Finally, the prospect of top-slicing the formula grant to pay the new homes bonus could be interpreted as a reverse redistribution, so instead of being from wealthier authorities to authorities with a lower resource base, as formula grant currently operates, we could see money flowing in the opposite direction if-I say "if"-it is wealthier authorities that benefit disproportionately from the new homes bonus.

Q22 Bob Blackman: You specifically said in your evidence to us that the Government’s approach was likely to contribute towards long-term decline of many deprived areas. What evidence do you have that this approach will lead to that, or is it just your presumption?

Josh Stott: I said earlier, hands up, that JRF are not suggesting we have got the answers to regeneration, and indeed all of our evidence has got mixed outcomes in terms of the assessment of area-based initiatives. The point that was really emphasised in the submission was that the Government’s proposals are about promoting and incentivising growth. I do not have a problem with that. The problem is about the areas that will not grow. Our concern is that you have areas that are in decline and have the weakest housing markets, where the new homes bonus will not act as an incentive because, without public subsidy to begin with, the houses will not be built. The key issue is around linking people in deprived areas to jobs and connecting people in deprived areas to jobs.

Q23 Bob Blackman: Is not the evidence there that people in deprived areas that get jobs move, because they are more economically mobile and therefore choose to take a step up rather than staying put?

Josh Stott: Inevitably, some people do that, but the danger is that you end up with high concentrations of out-of-work deprived people in poor health. If you just focus on backing growth and winners, there will be losers and, wrapped up in that, severe social costs and costs to the Exchequer.

Q24 Bob Blackman: The problem is that, if you look across areas of London that I know very well, the same thing will be true. Millions of pounds have been thrust into them through regeneration schemes; the claimant counts have hardly varied.

Josh Stott: I think we all agree that what has gone before has not necessarily worked. I do not think anyone promotes a continuation of the policies of the past. I think what we are very much emphasising is that there needs to be a better connection between the neighbourhood level and the functional economic area level. There is a disconnect there.

Q25 Bob Blackman: There is a disconnect. Perhaps I may ask all of you what you think should be done to arrest the decline.

Katie Schmuecker: To arrest the decline of?

Q26 Bob Blackman: These particular areas. Clearly, there will be a position whereby, if you have targeted investment, other areas that are not targeted will not get investment, and potentially there will be decline.

Katie Schmuecker: I think the question is: who and how do you target? Currently, that is not very clear in the Government’s approach. The Government’s approach appears to be to target growth. As I have said once or twice already, that leads to the question in our minds: what happens to those places that fall outside of that, often places that are lagging and, if anything, are potentially going backwards? I think the question is: what is the additional effect that public money can bring? In the context of very limited public resources, does it make sense to spend that limited resource in places where growth would happen anyway because it is a growing area? We would argue that perhaps the priority should be to focus public money on where there is market failure to address those failures.

Q27 Bob Blackman: Just to take that example, Government would argue that it is going to implement high-speed rail, and therefore there will be regeneration and growth in all the areas where there will be stations that have high-speed rail. The Government invests and the private sector invests around it. That is a "creation" approach.

Katie Schmuecker: You raise an interesting point. If you look at the targeted investments listed within the document-Crossrail, high-speed rail, the Olympics-there is a very heavy greater south-east bias listed in those particular programmes that they have decided to highlight. We have to look at how this supports the Government’s wider objective of rebalancing the economy. I mean that in spatial terms. The Government has talked about rebalancing the economy away from an over-reliance on the greater south-east, but if you begin to look at how the detail of some of these policies is likely to stack up in practice, you get a picture of continuing over-reliance on the greater south-east of England and also a focus on those areas where growth is more likely to happen anyway. I think that is an issue.

Neil McInroy: CLES undertook some work-this is a shameless plug, by the way- in 8 economic areas in 16 local authorities around the UK, including affluent and not so affluent places. The work was a diagnostic; it worked out how those places operated and the effectiveness of the connection between the commercial, social and the public in those localities. We found that, in those areas where there was a good connection between those strengths, there was more likely to be effective use of investment and more effective regeneration schemes than in the past. We found that the conditions in those localities were perhaps more ripe to benefit from any ongoing investment. I would say to the Government-a shameless plug-that they should look at doing a diagnostic of localities and become spatially and socially aware, and not focus on the traditional deprivation indicators as much. They should focus on the relationships, networks and connectivity between the various elements in those places.

Q28 Chair: So, you will just abandon those areas that do not have that in place, because the money is not being put in?

Neil McInroy: If you have to have prioritisation in terms where regeneration money should go, clearly you need to set criteria where it goes and where you focus your activities. What I am saying is that there is more likelihood in those areas where there is a bigger bang for the buck, if you like-where there are better connections, relationships and networks-then you may wish to focus on those; or, if you do need to focus on those that are particularly deprived, one seeks to put in place interventions that build up the networks and connections in those places.

Q29 George Hollingbery: Neil, I think your organisation is very clear that TIFs and enterprise zones are something you favour. Can you say why?

Neil McInroy: We favour TIFs. We favour any mechanism that allows a greater level of autonomy and control over the economic destination of place, and thus enterprise zones allow more local powers over breaks in tax and those sorts of things. Again, TIF allows a different mechanism for those benefits to be accrued by appreciation of land value to be harnessed by that locality. So, we are supportive of them on that basis.

They are, however, in our view limited. TIF is predicated on levels of land appreciation and some areas may not have that. The enterprise zones can have perverse effects in a given locality. What happens when you stop the period of tax breaks? They do not come without their flaws, but certainly they are welcome. I would advocate a whole suite of other types of local economic instruments to be placed at a local level.

Q30 George Hollingbery: Others have given us evidence that enterprise zones particularly can attract all the investment in a particular area and then abandon the harder-to-reach areas. Is that a reasonable view?

Neil McInroy: Very much so. It is like the earlier response I gave. It is about when you put in place these mechanisms, how long you allow them to last and then how you decant and over what period. Those are very careful calibrations. I believe that in the 1980s they were deployed in a clunky way rather than a very bespoke and adroit way. That was part of the problem then. I hope that this time they are much more careful, selective and lighter on their feet in terms of when and how and how deep they do things.

Q31 George Hollingbery: On enterprise zones, are there any particular lessons from the 1980s we should look at?

Katie Schmuecker: On enterprise zones, we have concerns, because certainly our evidence from using them in the past is that they are much better at attracting employers from the surrounding area to relocate than they are at creating new employment opportunities. That is our big concern with enterprise zones. If that can be overcome, great, but I have not yet seen any convincing means of doing that.

Q32 George Hollingbery: A little earlier I was asking about that block to innovation and regeneration. What more could enterprise zones do? What could the zone do that would really help regeneration?

Katie Schmuecker: One potential thing would be for an enterprise zone perhaps to come with other supporting services to support growing businesses and perhaps be specifically targeted on a growing business rather than any business to relocate, and perhaps having some rules around who can move into the area. One slightly disappointing thing about the enterprise zones, as I understand it, is that there is an expectation that they will be around about 100 hectares, which is a relatively small area. I think that, if they were larger, it might help to overcome some of these issues about displacement.

Q33 George Hollingbery: Is there anything you would do about less rules?

Katie Schmuecker: Specifically relating to enterprise zones?

Q34 George Hollingbery: Yes. What would be taken away to make those jobs and lives easier to regenerate an area?

Katie Schmuecker: Specifically in relation to an enterprise zone?

Q35 George Hollingbery: Let’s not worry so much about enterprise zones as specific measures the Government would take in a certain geographic area to make things easier.

Neil McInroy: Growth and enterprise come in many guises. Clearly, there are things that you may wish to remove to stimulate a whole sea of different creativity and energies. Clearly, you could have temporary relaxation of a whole range of legislation that is forced upon any given place. If that is determined locally, and done on the understanding that it is being relaxed for a certain period, clearly you could have a look at a whole sea of legislation pertaining to any given locality. That would be welcome. It would be a free space, an innovative space, a free zone. Let’s explore that. Of course, there are powers you would not want to overstep, in terms of health and safety and other elements, but you could relax some elements I think within a period of time, at least to animate in any given locality.

Q36 George Hollingbery: Do you have any thoughts on land auctions?

Josh Stott: It is not an area that JRF have researched in great detail.

Q37 George Hollingbery: What about the other areas we were just talking about?

Josh Stott: Katie has picked up the key point I would raise in terms of the displacement effect. Essentially, you are moving jobs around an area rather than creating new jobs. As I say, land auctions is not an area about which I know a great deal, but there could be a danger that they promote development in unsustainable locations and areas from which local authorities are likely to derive the biggest receipts.

Q38 Simon Danczuk: In terms of the Government’s document, you have used very polite and sophisticated language to describe your thoughts. Like you, I have read many hundreds of Government documents of various kinds. I have to say that I find this a more unusual one in terms of its content and what it does and does not include. In all seriousness, using tabloid language, in a few words how would you describe this document?

Neil McInroy: I think I go back to the very first question: there is no narrative, no connections, bits missing and nothing on assets, physical focus. If one of our junior members of staff had written this after two weeks, I would be disappointed.

Katie Schmuecker: I think we can safely say it is not a strategy. My question would be: is this implicitly suggesting some kind of sink or swim approach for places? Lots of opportunities are outlined in this document, many of which we would welcome. Some of which, though, are for areas that do not currently have the capacity-I am aware that I am moving away from "tabloid".

Q39 Simon Danczuk: We were going to point that out to you. You won’t get a job with the Sun, that is for sure. Go on, Josh. What is your response?

Josh Stott: I think the three words I would use are: thin, weak and disappointing. There is a failure to recognise the importance of place and the complex challenges faced by the most disadvantaged communities.

Q40 Chair: On that point, thank you all very much for your evidence.

Examination of Witnesses

Witnesses: Michael Gahagan, Housing Market Renewal Pathfinder Chairs, Jim Coulter, Housing Market Renewal Pathfinder Chairs, David Orr, National Housing Federation, and Julian Dobson, Urban Pollinators, gave evidence.

Q41 Chair: Thank you very much for joining us. For the sake of our records could you indicate who you are and the organisation you represent?

David Orr: David Orr, Chief Executive of the National Housing Federation.

Julian Dobson: Julian Dobson, Urban Pollinators, an organisation for sharing learning about regeneration.

Michael Gahagan: Mike Gahagan, I represent the HMR Chairs; I was Chair of South Yorkshire.

Jim Coulter: Jim Coulter, I was Chair of Bridging NewcastleGateshead until we closed a month ago.

Q42 Chair: If you do agree with what has been said before you don’t have to go into great lengths to explain why. How effective did you think proposal in the Government’s document, Regeneration to Enable Growth, will actually be? Do you see that there are risks attached to the approach? Certainly some of you have read the Scottish Government’s approach and have a better view of that. Perhaps you could also say why, while you are summarising the points.

Julian Dobson: I am not sure that you could say that the Government’s document is an approach; it does not have any clarity about it. As Neil said, it lacks a narrative. It is not clear what regeneration is or why regeneration is needed. It is not clear how regeneration is to be attained, so it is really difficult to know where to start with it. I think the Scottish Government document, while I would say it is far from perfect, does at least make a pretty good stab at saying what regeneration is, why it is needed and what we are trying to do with it. If anyone from CLG is going to be reflecting on this, that would be a very good place for them to get back and start.

David Orr: I start slightly earlier. The Comprehensive Spending Review is the Government’s statement of where it intends to invest money over a four-year period. I think the Report of the Comprehensive Spending Review runs to 104 pages, and the word "regeneration" does not appear in it anywhere. I think that is quite a telling indicator of the starting point for Government consideration of regeneration. I think the documents that we have seen are a post hoc attempt to say, "Measures that we are putting in place elsewhere for different reasons might themselves make some contribution to regeneration," but I think that is rather a heroic assumption at present. If regeneration and the whole growth agenda are about ensuring that places work effectively-not just about those places that are economically viable at present, but those that are not and need to be in the future-I really don’t think that there is a strategic approach to addressing the economic failure, and some of the related housing market and other failures, in some of those areas.

Michael Gahagan: I think it is fair to acknowledge there are good some points in the document that have not come out: some of the issues around decentralisation; some of the policy elements; the RDAs’ assets going to the HCA; ending some of the ring fences. All of those are very valuable and contribute. But as our evidence said, that is more than offset by the absence of resources that there now is, and the lack of coherence in the document. I have an additional sadness about the document, which is it does not make the most of what we have, and I would not have given the same answer to Mr Morris’s question, for example. We have a pretty good track record. I was President of the International Urban Development Association, so I have looked at regeneration around the world. None of them are ideal, all of them have faults. We are better at it than most. We have got a lot of the structures and skills in place in the public and the private sector, and in a lot of communities, and we need to build on that. And that was not recognised in this document. It is almost as if we are starting afresh, whereas we are not bad at it actually.

Jim Coulter: I won’t repeat everything everybody else has said on the basis of your invitation, but I can’t resist saying in the context of Mike’s last comment that the year zero approach, which elements of the language in this document seem to represent, is a very poor account of what CLG as a department has achieved over the years, and it ought to have reflected rather more on what past strategies have been successful and unsuccessful at in order to get a better handle on a strategic framework that can have objectives set for it and outcomes established and, underneath that, measures agreed to be able to judge whether they have been successful or not.

Q43 Chair: That information is available isn’t it-

Jim Coulter: Absolutely so.

Q44 Chair: -n ot merely in terms of overall analysis programmes, but comparing one new deal programme against another , and why one works and one does not?

Michael Gahagan: Yes, there is a tonne and a half of evaluations around including, in terms of housing market renewal, very substantial pieces of work have commissioned by CLG itself, done independently by the NAO, done independently by the Audit Commission.

Q45 Chair: Obviously there is less public money around; that is a fact. The Government’s view seems to be that we have therefore got to get the private sector to come in and take the slack up. Is there a worry that that may happen in some areas which are probably slightly more affluent, where the possibilities for growth are more obvious, but in the real deprived communities that simply isn’t going to happen, or do you think some of the measures in the document may stimulate private money to come in?

Michael Gahagan: They will help, but I don’t think they will be enough. You are absolutely right, you have got to have public money; for example, in development terms you have got to have money to take the risks out of a site, because in a time of recession developers go, understandably and quite rightly from their point of view, to the lowest risk areas. They will not go to regeneration areas. You have to improve the quality of the housing stock and the retail offer around the area where they are going to develop otherwise they will not go there. So it needs that mix of public and private investment in these areas, and it will not happen just through the private sector. Quite the reverse, there is a risk of some of the investment we have put in in the past in some areas, where they have not reached the tipping point, going backwards.

David Orr: I think almost everyone who has been involved in this conversation has said something along these lines: in those places where there is a viable, relatively thriving economy at present, there is a realistic opportunity for the private sector to be the catalyst and the driver for greater economic growth. But in those places that are characterised by economic failure, by market failure, it is highly unlikely that the market, the private sector, will go to those areas to seek to generate a new economic benefit for itself. So if you want to have a nation where every part of the country is benefitting from growth, it is almost certainly the case that to attract that kind of private investment, there will need to be a hook that brings it in.

Julian Dobson: I would echo that. I refer you back to the Scottish Government’s Regeneration Discussion Paper, which said that the property based regeneration model of the last 10 to 15 years is no longer viable, certainly in Scotland. That is a model financed by speculative development where a private developer will come in and there will be sufficient profit to finance regeneration activities. That is not just unique for Scotland. The British Property Federation’s written evidence to this Committee makes the same point. I was looking at Knight Frank’s recent assessment of the commercial market, and their assessment as of April was "The market has to get a bit worse in order to get better. However, the pain this time will be localised to lesser quality stock in certain parts of the country, and not the general pain seen in 2008." In other words the markets that are doing well will do well over the next few years; the markets that are not doing well will continue to decline. Now if you are looking at a property based model for regeneration, looking at where people are going to putting their investments in future, the investments that are doing really well at the moment are houses over £10 million in Central London and English farmland, but I do not see any regeneration benefits accruing from either of those. So if investors work on the principle that they are going to put their money where they can get the greatest return, then I think our most deprived communities with the most difficult economies are likely to be at the bottom of the pecking order.

Jim Coulter: Could I slightly qualify that and, as they say, put a gloss on what my learned friend says? I will give you an illustration of where the public/private mix in housing market renewal has actually worked, but over a timescale that took a considerable amount of investment to get there. In Newcastle a few months ago the local authority and a consortium of three house builders signed a joint venture deal worth over £200 million on the back of housing market renewal, Homes and Communities Agency investment. In Gateshead the parallel process has almost concluded-it has got to the preferred partner stage of the tendering process-again on the back of pre-existing public investment to de-risk sites, to provide infrastructure to get to a market clearing position. Roughly £600 million of private investment over the next 15 years will be built on the back of about £150 million of the public investment. So it will vary from place to place. Those are still deprived areas, but there is a substantial opportunity that has been created by the amount of public investment. I think the question going forward is: over what timescale and in what areas is a comparable level of activity actually needed?

Julian Dobson: And I think the important thing to say about that is that it is the public investment that de-risks it for the private sector. So if you are talking about reducing public investment or taking it out of the equation, then the capacity to do that kind of thing is reduced.

Q46 Chair: You were saying about the private sector following on. Is there any way in which we might be able to develop models-such as the gap funding of the 1980s-where the public sector puts money in to stimulate the private investment and help it happen, then there is an opportunity for the public sector to recoup some of the eventual gains so we can make better use of public money?

Michael Gahagan: Yes, we are doing that all over the place, or we did until the recession. Now most of the agreements with developers are open book agreements with an overage element in them so that the public sector gets back where they are successful. The problem is that that has become extraordinarily difficult to negotiate in the recession. All the Section 106s are being renegotiated. All those sort of deals are being renegotiated in these areas because the risks have grown.

Q47 James Morris: Mike, you made the assertion, "Actually we are not bad at doing it," and I was struck, again, by the definitional point. What is the "it" in that particular sentence?

Michael Gahagan: That is a good question; I wish I had an answer. I was thinking that earlier. I think it is taking lousy neighbourhoods, and people who have got all sorts of disadvantages within those neighbourhoods, and bringing them to a state where they can participate fully in an economy and look after themselves. That is my definition of it, which is a working definition.

Julian Dobson: I would agree with Michael that we are not bad at doing it, but I would also say we are not good enough.

Q48 James Morris: How do we evaluate "not bad"? I know you said you have international experience.

Julian Dobson: Well there have been, as Josh was saying in the first session, huge amounts of research that the Joseph Rowntree Foundation has done. It is well worth looking at. I think that tells you an awful lot about working in the most difficult neighbourhoods and communities, and what needs to be done in order to make it work. This conversation has started around property, but I really want to make the point that regeneration is not just about property. Sorting out property is an aspect of regeneration. If I was to put it in terms that everyone can understand, I would say regeneration is about making places that are fit for our kids and grandkids to live in, so that everyone who lives there would be happy to bring their children up in that area. Now of course there are things that stop that. Number 1 is crime. A lot of crime tends to accumulate when you have poor housing problems.

Q49 James Morris: Sorry to interrupt, I just have one more point. If we are not bad at that, what does "not bad" mean in terms of concrete measurement?

Julian Dobson: If you take somewhere like the Brackenhall Estate in Huddersfield, 12 years ago, out of 1,000 council homes, 200 were tinned up. People were moving into those homes, which were being re-let by Kirklees Council, and they were being robbed on the day that they moved in. Clearly that is not a sustainable neighbourhood. Now that particular estate has benefitted from interventions that went with the grain of the rising housing market; they were lucky in some ways. The result has been to demolish a number of those houses, replace them with a number for owner occupation, and generally create a community where people had more of a stake in their community.

Now owner occupation is not the only way of doing that. There is a crude assumption that you just knock down council houses and replace them with private ones and you will get an okay community. I do not think that is regeneration. Regeneration is recreating a local economy that works and gives people opportunities. In the context of interventions like regional growth funds, you have to ask which of those opportunities that are coming out of that investment are going to the people living in the most difficult and disadvantaged areas. That goes back to the point that Neil McInroy was saying about connectivity: you have to be able to connect up opportunity with the places that are most disadvantaged, otherwise people do not have hope. When you do not have hope then you have a spiral of decline and areas that people just want to get out of.

Q50 Simon Danczuk: I want to pick up on a point that Jim alluded to. You said that public investment over a period of time- and I got the impression that it was a considerable period- eventually attracted private sector investment, which is a good thing. Is there a possibility that we are going to lose a r eturn on the public investment, p articularly in terms of HMR , but it could apply to selling off RDA assets at a time when we will not get much money for them. Is there a possibility that turning off the tap, as the Government have done immediately, creates a problem in terms of getting a return on public investment that has been going on for some years?

Michael Gahagan: Yes, that is my worry. Everybody expected cuts; we know we had to have cuts. It was the fact that last year it was £260 million, this year it is nothing. It is not just HMR, remember. Other associated budgets have also disappeared. One that springs to mind in the housing field is the single housing pot. In my area it was £26 million HMR, £13 million single housing pot; that is £39 million disappeared. The single housing pot funded loans to private sector and environmental improvement. Some areas have got beyond the tipping point. There are still issues there of employability and skills and so forth. Other areas exist-I have been to several in my area, Clive might know them-where in the worst case scenarios we have left families with houses boarded up next door to them, there is vandalism, there is anti-social behaviour, all sorts of problems. We should not leave families like that. Some of those areas we have had private investment in, we had private housing going in, and they were really starting to take off. Now there is a real danger that those areas will go backwards.

There is also the cost associated with these areas. Rotherham did an assessment in Canklow; it is going to cost them an extra £100,000 a year in additional callouts on the fire brigade and so forth just to try and keep the lid on that area to make it a half decent place to live. It is a real issue.

Q51 Simon Danczuk: Jim?

Jim Coulter: I agree with that. I do think it is a very serious risk that the value for money that has been delivered so far will be at risk. We will end up at some future point redoing things that have already been done, and that itself has been a historic problem of some elements of regeneration. If you look at, for example, the most placed based regeneration in housing that I can remember in recent times, which is Estate Action, quite a large number of areas of Estate Action across the country have had to be reinvested in simply because the process was not continued, and the holistic nature of the more successful elements of later regeneration have not been secured. The other issue, which that Mike has just alluded to, is quite significant: the additional revenue costs to local government to police local environmental harm, where there is incomplete demolition, for example, or vacant sites that have not got a good opportunity for alternative use in the short to medium term.

At the worst peak of the West End of Newcastle, in the 90s, when abandonment was really rife, the local authority was spending about 40% of its environmental budget in Scotswood and Benwell, a relatively small area of the population. I am not saying that is going to be repeated at scale, but that is the risk. Some of the points that we have been making in the short term to Ministers and to officials have been about making sure that this literal abandonment of the programme without an exit strategy is tackled and we get some resource into dealing with the problems of dereliction in the worst places now. It surely is no coincidence, but today the Minister announced an additional £30 million, when he visited Liverpool, for housing market renewal for five of the 10 areas. I guess if we came back every day for another seven days we might come back to the level. But it is only five, and we have got problems at a different scale across the whole of those areas, so that is the literal, physical cost of the suddenness of change.

David Orr: One of the things that most of us felt was absolutely right about the housing market renewal idea was that it was going to require investment over a sustained period of time. We have lots of examples of where public money has been spent and, because it has not been sustained to the point at which the communities in question are economically, socially and environmentally sustainable, the money has in practice been wasted, and there is a very severe danger that that is going to happen here. These are large scale complex things. Julian is absolutely right to say that property based regeneration is not sufficient. It is not. Property is a necessary, but not sufficient, condition. There are all kinds of things that are necessary but not sufficient. One of those is sustained investment, and I do think that there is a real danger that the value of the investment that has already been made will be made much less because of not just the fact of the disappearance, but the manner of it. The axe coming down and a complete stop is not good use of public funds.

Q52 Mark Pawsey: I was going to pick up on some points that Mike made, if I may. My colleague said you spoke about us having the structures and skills in place, us being good at it and being good about regeneration. You said there was lots of activity up until the recession. Isn’t it the fact that the recession changed everything, and that operating in the present climate means that we are not going to be able to reproduce many of the good things that you saw happening in the early Noughties?

Michael Gahagan: No, I don’t think it is. The scale will be different, but if you read the report that Michael Parkinson, sparing his blushing, was responsible for on the regeneration in the recession, what it basically said was developers will fly to quality, the public sector has to stick with it because we cannot afford for these neighbourhoods to become disengaged from the mainstream economy. I think that is still the case. What I was trying to say was: whatever the level of resources-of course there is not going to be the same level, but there should be more than the zero there is at the moment-we now have, almost by accident, developed or evolved over 40 years a set of regeneration policies, governance structures and skills. We have got some very capable people in the private sector. We have got some very capable local authorities. We have got some well informed communities now. We have got the LEPs who can provide a strategic overview. We have got an agency in the HCA that understands regeneration. We can build on all these things. The foundation is there, and, as someone said earlier, everybody is looking for the silver bullet. There is none. It is a hard long-term slog of pulling everything together and getting it on the ground. We do now have the structures, and my worry is that we are going to try and invent more new things and take our eye off the ball of making work what we have got and what we have learned.

Q53 Mark Pawsey: I am getting conflicting messages then, because I am getting a message that regeneration cannot possibly take place because the Government are not putting any money into it and are not too bothered about it, and you say to us you have got engaged local authorities and great people at the private sector and that things can happen. Where does the truth lie?

Michael Gahagan: They are not mutually incompatible, because what I am saying is all the structures are there, but you do need that stimulus of a bit of public money. After all, these areas are only as they are because the private sector has fled. So you have got to have some public money in to provide that glue that holds everything together, and that then gets the private sector involved. They know how to get involved now. We know how to do the deals with them.

Q54 Mark Pawsey: How do we capture that information. Urban Pollinators have a proposal for a national learning body? Doesn’t that contradict the whole principle of localism?

Julian Dobson: No, learning is about applying what you learn in a broad context to the local situation. I don’t think a sensible view of localism would be to say you have all got to reinvent the wheel wherever you are. I think there is an awful lot of learning that has taken place in regeneration. JRF have a very good cache of regeneration learning, CLES similarly. What is lacking, which is inexcusable, is a way of bringing this all together at a national level to make it available. This is something that the Government did try to do, setting up the Academy for Sustainable Communities, the Regional Centres of Excellence, which were recommended in the Urban Taskforce Report. What we have seen, even prior to the change of government-and I certainly blame this Government’s predecessors to some extent for this-is a disintegration of the Regional Centres of Excellence, a continual chopping and changing about the Academy for Sustainable Communities, which then went into the Homes and Communities Agency and has now been decimated within the HCA.

Generally there has been a failure to understand the importance of learning. As well as that there has been a failure to apply learning at ground level. For the last couple of years I have been doing a piece of work with Bradford Council on what they call their Regeneration Academy, training up frontline council officers to understand basically what makes a place work. The level of understanding among many people who are involved in planning, in economic development, in infrastructure related jobs about what regeneration is, why it is needed and what makes it work is very, very low. If we are going to move into an environment with much reduced resources, which clearly we are, then we need to up-skill the people who are out there at the moment, and we need to find ways of doing that. It doesn’t really matter how that is done, whether it is through an exterior body like JRF or an independent body, but it does need to be done, and it needs to be a priority. There needs to be a way in which frontline council officers, developers, people who are actually involved in making things happen on the ground have access to learning. What we are finding at the moment with the reduction in public sector funding is the first thing local authorities and others cut back on is staff training and learning. We can see why they do it, but it is short-sighted and it will result in problems further down the line.

Q55 Mark Pawsey: Now I am confused. We have got the people there with those skills already, and a lot of them are going.

Michael Gahagan: Yes, I would not be quite that dismal. A lot of them are going. All my staff have been made redundant. The good local authorities are still struggling to retain their good staff, and they are managing, I think, to keep a corps of staff. That is what I am hanging on to. I agree with Julian across the piece that there is a need for better learning; there always will be. But it has happened; Pathfinders ran seminars and conferences amongst ourselves with private developers and with training providers. I do not know whether Jim’s experience is the same. In my area they are just managing to keep that corps together. We did suffer from that in the 1960s. At the end of the 60s all the experience in slum clearance, in compulsory purchase disappeared, and we had to recreate that, to an extent. I think we might just avoid it this time. I am a bit Pollyanna-ish, sorry about that.

Q56 Mark Pawsey: Can you point to bad examples of regeneration that happened because of the loss of those skills?

Michael Gahagan: I always blank out of my mind the really bad ones. There were bad cases of CPOs that went on that were not properly prepared and that were not properly carried through the inspection process, the public inquiry and so forth.

Q57 Mark Pawsey: Would it be your fear that if we don’t keep them, taking your point about not reinventing the wheel, what limited funds we can put into regeneration are going to get wasted because there are not going to be the people who know how to use them most effectively?

Julian Dobson: There is that risk.

David Orr: I’m going to tell you a good story. Because this whole question about localism has only recently become part of the public and political narrative, there’s become an assumption that it didn’t already exist, but of course it did. Successful regeneration: yes, it needs investment; yes, it needs to invest in housing and economic regeneration and those things; but it needs fantastic local leadership. You will not get sustainable long-term regeneration without there being effective local leadership. There are lots of small and large scale examples around the country where local leadership has made that difference. For example, in Wythenshawe in South Manchester there is a ward called Benchill, which was at one point assessed as being the most deprived council ward in the country. There was a stock transfer, and that stock transfer became the catalyst for a long-term strategic approach to reinvesting and reimagining what that area looked like. So the promise was about kitchens, bathrooms and double glazing. The reality was that first we have to make this safe. There was investment in CCTV, even mobile CCTV, so that people could begin to feel safe. There was investment in property, local facilities and the people who lived in Benchill. It is now a thriving community with a waiting list for the housing, and private developers building spec housing for sale, something that would have been unimaginable 10 years ago. It needed all of those things. You can take that fabulous local leadership and deprive it of investment and it will still be able to do things, but it will not be able to do things as comprehensively as they have been able to do.

Q58 Mark Pawsey: But to go back to the point about recession, did that happen because the economy was booming, the house prices were rising pretty fast? If we were to try to replicate that now would it still happen, in your view?

David Orr: It wouldn’t happen in precisely the same way now. It would be harder to do from scratch now, but the fact of transfer created a mechanism to create investment potential. You could still do that now, although it would require some big decisions by the Treasury. But you have to have the mechanism to begin that process of investment. You need to have the cash up front that allows good things to happen, and thereby generate the kind of economic growth that makes that place sustainable and contributing to the economy rather than being a drain on it.

Q59 George Hollingbery: Did somewhere replace Benchill at the bottom of the list? Yes, somewhere did. Did you poke a balloon in one place and it stuck out somewhere else? It is something that has been intriguing me throughout all these discussions.

Michael Gahagan: If you improve an area does the one next door become a problem?

Q60 George Hollingbery: You are withdrawing resources from something somewhere else-you have to be-or some money that could have gone somewhere else. Do you poke the balloon on one side and it pokes out somewhere else?

Michael Gahagan: That is a danger, and that is why the LEPs have got a role in looking strategically across the piece. But you don’t ignore the other areas; that is a very important element. The question was asked earlier about whether you invest in the areas that are likely to get over the tipping point, or do you invest in the worst first. In a sense you almost have to invest in the worst first, otherwise you will get them back into the difficulties that we faced 20 years ago. I don’t think we are in that situation, but you do have that issue, and you don’t ignore the other places.

Jim Coulter: The NAO looked at this in relation to the housing market renewal in 2007 and found that, on the whole, there wasn’t a displacement effect because it was an anticipated effect that was more carefully managed than might otherwise have been the case.

Q61 James Morris: We have talked a little bit about localism. David, you said localism already existed. Is there anything distinctive or different about this Government’s approach to localism and regeneration that you are seeing emerging?

Michael Gahagan: I think it is a difference in degree. The rhetoric is important. The ending of some ring fencing of budgets is immensely valuable, because a lot of time can be spent on trying to twist the budget to fit your local regeneration scheme. The support to some of the communities is also valuable, but I think the really important thing is the confidence of the local leadership. It has been talked about a lot. You mentioned Hulme. I was involved in Hulme, and there were a whole range of things that contributed to Hulme’s success. But if I had to pick just one, it would be the quality of the political leadership and the leadership of the officers at the local authority. I think that is absolutely fundamental. They were confident enough to do it. I think if the localism can build up, generally, that confidence that exists in the best authorities, and the willingness to deal with the local communities-you have got to be confident to do that.

Q62 James Morris: There are still going to be some issues about cross-boundary regeneration. For example, the Black Country, part of which I represent, has lots of integrated economic geography, some deprived areas, some slightly less deprived areas. I think you said some positive things about the Local Enterprise Partnership’s role. We talked about the Enterprise Zones earlier; the Black Country is going to have an Enterprise Zone, but you might have a situation where a lot of the regeneration just gets sucked into one place. So how do we deal with those issues? Will the LEP have the power and resources to deal with and overcome those cross-border issues, do you think?

Michael Gahagan: A LEP can be almost anything it wants to be. There is a huge variation at the moment between, at the one end, the Greater Manchester LEP followed by others such as Sheffield. Interestingly enough, Sheffield has got a subgroup, which is a joint board with the HC on regeneration housing, so they are not ignoring this, and they can take a strategic view across the piece. Enterprise Zones are a bit different. I was responsible for Enterprise Zones in their first incarnation, and I would recommend anybody read the Roger Tym evaluation of them. They can stimulate activity in an area by bringing together a critical mass and focusing attention on that area, but there is a big dead weight cost and there is boundary hopping. They are a mixed message and a mixed baggage, Enterprise Zones, and you do have to be very careful where they are located.

One of the interesting issues about the new Enterprise Zones is that the business rate is going to the LEP, and that will provide some resources.

Q63 Bob Blackman: Turning to the Regional Growth Fund, which obviously is the Government’s view of saying, "We are going to target private sector investment in places where the public sector has been predominant," so we get the switch from public sector employment to private sector employment and grow through that. Do you think they have got it right? Is that the right approach?

Michael Gahagan: I think that is the right approach to tackling the loss of public sector jobs, but I don’t think it is a regeneration approach. My personal view is the Regional Growth Fund is fine and it is serving a purpose. But you should not present it as being the answer to a regeneration problem.

Julian Dobson: I would echo that. It is about business support, and clearly, if you have business support that helps produce investment in regions of the country that are underinvested, that is a good thing. But there is a big, big question about whether that is going to produce jobs and opportunities in the most difficult and most disadvantaged areas.

Q64 Bob Blackman: If that is your view, what changes would the Government need to make in order to provide such opportunities, apart from increasing the amount of money?

Julian Dobson: The money from the Regional Growth Fund is going to businesses that have high prospects of growth, and interestingly a lot of them are subsidiaries of international and multinational companies. So there needs to be something different that is done at a very micro level, at the level of estates and neighbourhoods that are particularly stressed and distressed. That has to be about working with individuals and families to create skills, boost education, connect up with jobs where they are available and effectively to rebuild those economies from the ground up, and that will be very, very long-term.

Q65 Bob Blackman: I am sure if the Minister was sitting there he would say, "Well, yes, that’s fine, but that is a local decision, that is local activity, that is not what the Government is intending to do. The Government is for the big picture issues, and those sort of things are absolutely relevant but should be done at local level."

Julian Dobson: Well if the Government is talking about strategic intervention and regeneration then it has to look at those very local areas. That does not mean it has to deliver actions in those areas, but it does need to take a strategic decision that additional investment of one sort or another needs to be applied to those areas. There is another issue, which is about the macro, much bigger picture, which we have not touched on yet but I think is relevant to this, and that is about the environmental imbalance in our economy, and the fact that areas of highest growth at the moment are the areas of highest environmental stress. There was a very interesting report that was produced quite recently by the Royal Commission on Environmental Pollution on demography and environmental change. We are now seeing a situation where, for example, Thames Water is spending £250 million on a desalination plant in order to sustain the water infrastructure for London.

So at a macro level there is a very strong argument for the Government investing strategically in areas where there are fewer environmental pressures and in greening the economy in terms of new areas of business and technology that are going to provide opportunities in areas that have previously been underinvested. So, for example, there is no reason why an area like Sunderland should not be a centre of offshore wind manufacturing. So there are big strategic issues that could be done by Government that will have regeneration effects in the long term. But against that you must also link the very micro interventions that need to be connected up with the strategic interventions if benefits are to be felt by people in the most disadvantaged communities. I think you have to say: why bother with regeneration at all? Why bother with the most disadvantaged communities? And the answer to that is because they have been failed time and time again by both the private market and public sector interventions, so we have to find a way of reconnecting the interventions that we do as Government with those communities that have lost out as a result of poor planning and poor policy.

Michael Gahagan: It may be that in phase 2 the Growth Fund will move a bit more towards the regeneration dimension, but even if it does not, in answer to your question, there are things that could be done, not through the Growth Fund, but that can take off some of the benefit. I think customised training is a classic case where you train people particularly for the jobs that the Growth Fund is creating, and you try and target your training on particular communities. We have done it in the past; it is that sort of day-to-day thing that you need to do locally.

Q66 Heidi Alexander: Can I ask you all about the various new financial mechanisms that the Government are promoting to fund regeneration such as TIFs, New Homes Bonus, Community Infrastructure Levy. You don’t have to say what you think about all of them. We have already touched on Enterprise Zones and we can probably leave those. What are your views on how effective these financial mechanisms will be in promoting regeneration?

David Orr: I do not think that any of these measures are specifically designed to stimulate regeneration. They are designed to do other things, and they may in the right circumstances be able to contribute to regeneration, but they are not themselves a strategic set of measures designed to create an environment for effective regeneration. Consider the construct of some of them. If Community Infrastructure Levy takes precedence over Section 106 then it might mean that there is a reduction in the delivery of new affordable housing. I don’t think that would be a good outcome in housing or regeneration terms. It is almost inevitably the case that the way the New Homes Bonus is structured will lead to money being moved away from low value local authorities, mainly in the North, to high value local authorities, mainly in the South. I do not think that would contribute fundamentally to regeneration, so I think that they are measures that do, or may do, the things that they are designed to do. But I do not think they are really about regeneration.

Q67 Heidi Alexander: Would you agree with that assessment?

Julian Dobson: Yes, I would go along with that. I would say TIFs in particular work well in a rising market. It is significant that, in Scotland, the place that is piloting TIFs is in Edinburgh, which is the area with the highest values; again, is it going to address the issues that we are concerned about with regeneration? I could imagine the successor to this committee sitting here in 50 years’ time saying, "Well they completely messed up about giving hope to our kids and our grandchildren, but boy, didn’t they do some exciting stuff with taxing and financing?" I think a lot of it is tinkering, and there might be quite effective ways of tinkering, but they are not really addressing the important issues.

Jim Coulter: Can I just add on the New Homes Bonus, it is a point that has been made in this session and earlier, the approach of "net new" is substantially disadvantageous to areas that are going through the restructuring of their housing market stock. That is a process that will continue across the North and Midlands for quite some time to come, actually driven by communities and not simply by a technical appraisal.

The second point to make essentially is that, as well as its redistributive effects, the actual net cash coming out of New Homes Bonus is nothing compared to the interventions that we have been accustomed to. The figures for Newcastle and Gateshead for first year’s allocation between the two authorities are just over £500,000. In the last financial year on new build investment through the Housing Market Renewal Programme we committed about £17 million to site preparation and infrastructure investment and so on. There is an absolutely enormous mismatch between the resource that we produced and what is actually required in order to get land to be development ready.

Michael Gahagan: We have done slightly better than that in South Yorkshire because we had more development, and we have lost about £26 million. This year’s settlement is about £3.5 million through New Homes Bonus. So we are one of the better off, but still nothing like. I agree with Julian about TIF. It has got a role to play. All these things might have a role to play, largely in the city centre, but it is not what the Act is really about. I think CIF might help in the sense that it gives a developer more certainty about the tax he is facing. But I suspect that in areas like this, if you can get anything, and you may not be able to, anything you gain through CIF you will lose through Section 106. You can only tax a development once if you can tax it at all. So I think it will help the development industry a bit, but I do not think it will add to the sum total of investment or social good that comes out of the development.

Q68 Heidi Alexander: In some of your evidence you referred to other options that might be explored as well. Someone referred to local asset backed vehicles.

Michael Gahagan: Oh, yes, we did.

Q69 Heidi Alexander: Could you say a little bit more about why you see potential in those?

Michael Gahagan: They are a scheme where the local authority puts in the land and a company is formed jointly with the private sector. Even with the market as it is now, there is still some activity in these. They are unproven as yet, but they might well be quite a useful vehicle. I am not absolutely sure how they balance up against the local authority borrowing. Where I have seen them-there is a similar sort of operation starting in Doncaster, for example, though it is not a full LABV-I think they could be a weapon in the armoury. But I keep coming back to this point: don’t look for any single silver bullets, it is the long hard slog over a prolonged period of time with a prolonged commitment that is necessary.

Q70 Chair: My understanding is that strictly speaking 106 money has to be applied to the planning permission given for a particular development. That is what it is supposed to be, and local authorities do stretch it slightly.

Michael Gahagan: Well they are allowed to charge money instead, which can go into social housing, which I think is David’s point.

Q71 Chair: But in terms of other infrastructure it shouldn’t be so used, but still can be used, perhaps in different market conditions than today, to raise money for projects in more upmarket areas, and apply them to improving the infrastructure in more deprived areas. Isn’t that one of the advantages of it? It probably won’t be much use to them in the current market conditions, but in the future it might well be.

Michael Gahagan: Yes, I think that is true. I don’t share David’s concern that they might not put it in housing. If that is not their priority, fair enough; they are the elected representatives to decide what their priorities are. So I think it does give them that discretion, but they have quite a lot of discretion under Section 106 in many respects.

Q72 Simon Danczuk: How important is the planning system in terms of regeneration?

Michael Gahagan: It never impinged on me, to be honest, it is not a problem. In all my time in regeneration, I have only once known it be a problem. That was in Hulme, where the local authority soon overcame it. My experience of the planning system is, outside of AONBs and greenbelt, where there is a will, there is a way.

David Orr: I think that is probably true. It is often harder to get consent for half a dozen new homes. Regeneration schemes tend to be larger scale, tend to be a bit more strategic, and they tend to have the engagement of the local authority across the board so there is a greater understanding of what people are trying to do. No one suggests that the planning system is presently perfect, but in terms of regeneration it is not one of the major difficulties.

Julian Dobson: I will add one thing to that, which is that one aspect of the planning system has been particularly helpful: the concentration on town centres first, and the way that the planning system has militated against out of town developments over the last decade or so, and that has been hugely helpful in terms of keeping a lot of town centres alive and helping a lot of city centres to thrive that otherwise would have lost a lot of trade to out of town shopping.

Jim Coulter: Can I just add one further point on this? One of the reasons-and I agree entirely with what Mike said about planning not having been a problem, certainly in housing market renewable-is that a substantial commitment to know what you are planning, with significant community engagement, has been a critical part of making sure that people understand the process of what is going on, and support for it gets generated through that means. The decisions at the end have become more formal as a result of that in their action plans. Certainly Newcastle and Gateshead have been supported by significant majorities on local polls and local surveys: well over 60% in areas where the turnout at a local election would be at best half of that.

Q73 Bob Blackman: Given the resources are limited, given that there is a whole range of different areas to be addressed in terms of areas of the country, should we be taking the view that some areas are beyond regeneration, just leave them as they are and concentrate on areas which can be regenerated with smaller sums of money?

Julian Dobson: I think the question has to be asked because it concentrates the mind. We then have to ask why we are doing this. It brings us back to the fact that regeneration is not about theory, it is not about property. It is actually about people, and people who live in particular places that have been distressed and disadvantaged for all sorts of reasons. Now, places change. So the question is how to work with natural changes that might occur as a result of market changes, but also how to complement that with a strategic overview which says, "At a Government level, we think that investment in such and such a region is more important for the good of society than to simply invest where the market is already strong." If the market is already strong there’s a question, why put extra public investment in it anyway? If you are looking for areas to reduce public investment, why not reduce it in the areas that are most likely to succeed?

Q74 Bob Blackman: My counter argument to that would be that the investment of a certain amount of public money may then lever in large scale private investment, which then helps to regenerate the area for the benefit of everyone.

Julian Dobson: You have to work out those trades off. But what I would come back to is saying that in those areas where private market has failed and where public policy has failed, there are hundreds of thousands of people whose lives have been messed up for one reason or another, and it is ethically unacceptable just to say, "Fend for yourselves."

Michael Gahagan: There are some areas that were built up in the industrial revolution which you cannot sustain at their current level. If I was a North American, in some areas I would say, "Well, tough, let them go." I suspect in this country, if only because we all live within 50 miles of those areas, we can’t bear the social and political cost of that, as well as just the sheer fairness that Julian mentioned. You do have to put some money into an orderly downsizing of those areas, you can’t just walk away from them. But I agree, in a sense the more optimistic focus is on those areas where you think you can get them up to the level where they can look after themselves.

David Orr: I think Benchill might have been regarded as one of these places that you would abandon. There is often a theoretical construct that says, "We have got extra properties that we do not need." For a long time there was a debate that ran in Glasgow that said, "There are four major peripheral estates, now we only need three of them. Should we just decant, close one of them down and demolish it?" The difficulty is that if you go and speak to the people who live in those peripheral estates they say, "Me and my family have been here for 50 years. We like it here, we don’t want to go." If localism and the views of local people are a driving consideration, you will find it very hard to find places that you can just abandon because people have connections to those places. So you can only do it-

Q75 Bob Blackman: Can I just interrupt? Is there not a risk that you are concentrating money on the areas where you have got money and you invest, and these places just go by the board? There is no investment, nothing happens to them, and then they just go nose-diving down into a terrible state of decline.

David Orr: There is a real risk of that happening. But this is a country where the population is growing, and where our focus needs to be on thinking how do we accommodate this growing population with different kinds of household formations and different needs. Abandoning useful housing is quite a difficult thing to do. The issue here is how you create a strategic environment where those decisions are part of a strategy rather than a kind of specific, "It doesn’t look like this is going to work very well so let’s just get rid of it." I do think that if localism is to be a driving concern you do have to pay attention even when people in the local area say things that you don’t want to hear.

Michael Gahagan: I think adding to that, it is really important to assess what kind of local economy can be created in some of these places. I think that is a really important job for the LEPs. If you look at somewhere like the Derwent Valley in South Yorkshire, a former coalfield area that never really recovered from the de-industrialisation of the 1980s despite huge amounts of public investment, there is a real issue about how do you create a working local economy in that area? However, I am pleased that it is one area that the Sheffield City regional LEP is looking at, coming up with a vision for creating a working economy in that area, and I hope that works. But that is the kind of exercise that the LEPs really need to be doing in all these sort of places.

Jim Coulter: But it does not have to be at the population level necessarily in all the places that it is now.

Julian Dobson: It is about creating the circumstances in which people and places change, accept change, work with change, and create the new opportunity to live, work, invest and learn.

Chair: Finally, just brief answers.

Q76 Simon Danczuk: So in tabloid language what do you think of the Government’s document?

David Orr: The Emperor’s New Clothes.

Julian Dobson: Vacuous.

Michael Gahagan: If I was still in CLG I would be disappointed. A bit strong, but-

Jim Coulter: I wrote down, "Spads rule okay."

Chair: Okay, thank you all very much indeed for coming to this hearing.