Delays stall receipt of growth fund cash

An accountant closely involved in the process of assessing the legal and financial viability of first-round Regional Growth Fund (RGF) bids has made some suggestions as to why the process is taking so long. As Regeneration & Renewal's sister magazine, Planning, revealed on Friday, the Government has completed due diligence on just one of the 45 provisionally successful bids announced in April - despite a pledge to review all first-round RGF bids by the autumn.

Shadow business secretary Gordon Marsden had some strong words of criticism against the coalition government when the news broke. He said: "It is extraordinary that after four months, the government has only given the green light to one approved bid. The RGF is supposed to be the jewel in the crown of the coalition's regional policy, yet it looks as though officials have been sleeping at the wheel."

Certainly, during conversations with R&R over the past few months, members of the government's RGF advisory panel, including Sir Ian Wrigglesworth, have been keen to stress how important it is that the RGF funding reaches the recipients as quickly as possible, to help mitigate the impact of far-reaching public sector spending cuts. After all, the RGF is intended to support those areas that have become too economically dependent on the public sector. So why the delay? And how likely is it that due diligence for the remaining 44 bids will be completed before the end of the year?

Neville Bearpark, corporate finance partner at UNW, which is advising on due diligence for three of the first-round bids at the moment, said the process is highly complex and the Department for Business, Innovation and Skills' response last week - that it still intends to review all bids by the autumn - is "extremely optimistic". He gave the following reasons - all of which paint a rather chaotic picture of what is going on at BIS in terms of administering the RGF:

1) "The RGF is a new scheme, requiring a new assessment process for bids, and the exact requirements for due diligence are only just coming to light [from BIS]."

2) "There is only a relatively small team at BIS dedicated to the RGF, and they have a big workload."

3) "Thirdly - and most crucially - the due diligence process has not really started for many of the [45] bids because the applicants are still finalising the terms of their funding offer letters from BIS. Offer letters from the department have to be formally accepted by applicants before they can begin the due diligence process. But the parameters of a particular project - not the project itself, but things like other sources of funding, details about delivery partners and timescales, for example - might have altered slightly in the months since the initial bid was submitted. BIS must be made aware of these changes so it can include the revised details in its offer letter, resend this to the applicants, and wait for them to come back to BIS and accept. It is a very complex and long-winded process that is going on behind the scenes."

This is all fascinating stuff - I for one wasn't aware of the complexities of the offer letter procedure and how this could be delaying the process. It remains to be seen, then, when the funding, for both first and second round bids, is released.

sarah.townsend@haymarket.com

After the riots: 10 ways in which the Government has responded to the disorder

“This must be a wake-up call for our country,” said Prime Minister David Cameron earlier this week, in a speech in which he outlined a set of responses to the rioting and looting which swept English cities last week. “Social problems that have been festering for decades have exploded in our face.”

The Prime Minister’s speech, delivered at a youth club in his Oxfordshire constituency and available in full here, contained a number of measures unveiled in response to the disorder which caused mayhem in some English cities. Deputy prime minister Nick Clegg, home secretary Theresa May, communities secretary Eric Pickles and work and pensions secretary Iain Duncan Smith have also made their own policy announcements.

Read on for our summary of ten policy measures announced by the coalition in response to the riots:

1. Financial assistance for riot-hit premises and areas

Communities secretary Eric Pickles has announced a clutch of funding measures intended to get businesses trading again in areas affected by the riots. Last week, he unveiled a £20 million pot intended to finance measures that "will get businesses trading again and meet short-term costs" and a £10 million “recovery fund" to help councils with the immediate costs of making their areas "safe, clear and clean again". This week, Pickles also awarded £20 million of funding for improvements to two riot-hit parts of London - Croydon and Tottenham.

2. Planning shake-up mooted

Following a pledge from the Prime Minister to ‘weed out’ unnecessary planning rules following the riots, chief planner Steve Quartermain wrote to councils to urge them to help firms affected by the disorder to bring premises back into use as quickly as possible by prioritising the processing of planning applications.

Quartermain asked councils to treat applications for shutters as a priority, while the Department for Communities and Local Government said it would use the planned consultation on permitted development to consider whether shutters and other security measures should be permitted development.

3. Riot payback scheme outlined

Deputy prime minister Nick Clegg said earlier this week that a "riot payback" scheme would see rioters and looters "make up for the damage done" and "face their victims". At a press conference, he said: "I can announce today as well that in every single one of the communities effected there will be Community Payback schemes, Riot Payback schemes where you will see people in visible orange clothing making up for the damage done, repairing and improving the neighbourhoods effected." However, it is unclear how the scheme outlined by Clegg differs from the existing Community Payback scheme that offenders can be required to undertake.

4. Pledge to turn around 120,000 'troubled' families

In his speech on Monday, David Cameron said: "The broken society is back at the top of my political agenda … I have an ambition, before the end of this parliament, we will turn around the lives of 120,000 most troubled families … we need more urgent action on the families that some people call 'problem', others call 'troubled'. The ones everyone in their neighbourhood knows and often avoids." The drive to tackle the 120,000 "most troubled families" was first announced by the coalition in December 2010, but in his speech, Cameron pledged to put "rocket boosters" under attempts to help this group. It has been reported that the Government's community budgets programme - a key plank of its drive to help troubled families turn their lives around - has been held back by a lack of ambition on the part of the ministers involved and a lack of strong leadership.

5. Benefits sanctions mooted for rioters and evictions supported

Several London authorities have said they will seek to evict from council-owned homes people who are convicted of involvement in rioting. Last week, the London Borough of Wandsworth served a tenant with an eviction notice after that person's son appeared in court in connection with the Clapham Junction riot. The Prime Minister and communities secretary Eric Pickles have both said they thought plans to evict rioters from social housing were a good idea. But the eviction notice served by Wandsworth has proved controversial - a petition opposing the move has already attracted nearly 2,000 signatures.

Work and pensions secretary Iain Duncan Smith, meanwhile, has said that people convicted but not jailed for rioting could be stripped of their benefits.

6. All out war on gangs declared

In his speech on Monday, the Prime Minister declared a "concerted, all-out war on gangs and gang culture". "This isn’t some side issue," Cameron said. "It is a major criminal disease that has infected streets and estates across our country." The Prime Minister added: "Stamping out these gangs is a new national priority. Last week I set up a cross-government programme to look at every aspect of this problem. We will fight back against gangs, crime and the thugs who make people’s lives hell and we will fight back hard."

7. 'Family test' promised for domestic policies

A "family test" will be applied to all domestic policies to ensure they did not undermine or "stop families from being together", according to the Prime Minister. “I want a family test applied to all domestic policy,” Cameron said in his speech on Monday. “If it hurts families, if it undermines commitment, if it tramples over the values that keeps people together, or stops families from being together, then we shouldn’t do it.”

8. Independent panel to investigate riots

The coalition Government is to establish an independent panel to give victims of the riots a chance to "have their voice heard", deputy prime minister Nick Clegg said earlier this week. Clegg said that the communities and victims panel, which is to be chaired by an independent figure, would produce a report within six to nine months to be presented to the leaders of all three main political parties. Ed Miliband, the Labour leader, had pledged that if the Government did not launch a public inquiry into the riots and looting, then his own party would conduct one.

9. New curfew powers considered

Home secretary Theresa May has said it was necessary to look at giving the police the power to impose immediate curfews covering wide geographical areas in order to tackle the kind of fast-moving disturbances that swept across many of England's major cities last week. May is also keen to extend existing limited powers to impose curfews on individual teenagers aged under 16. But human rights groups have expressed alarm at the proposals, warning that a lack of police powers was not the problem in last week's urban riots.

10. National citizen service to be made 'rite of passage'

The Prime Minister said in his speech earlier this week that his flagship National Citizen Service scheme would be made available to all 16-year-olds ‘as a rite of passage’. The coalition Government’s intention has always been, over time, to offer the National Citizen Service programme to all 600,000 16-year-olds, but Cameron said in his speech that he would “put renewed effort into making it happen”. “This should become a great national effort,” he said.

Under the Government’s plans, the NCS will last seven to eight weeks over the summer months, including at least ten days and nights on a residential basis. But the initiative was heavily criticised earlier this year by the education select committee, which said that it could not support the programme in its current form as its costs may exceed the entirety of public spending on youth services.

Reacting to the riots

The unrest seen in towns and cities across England has sparked widespread condemnation. But there has also been much soul-searching as society tries to understand how the factors behind the events of recent days.

For years the regeneration sector has worked in some of the communities affected. Some are now questioning not only the effectiveness of this work but the methods themselves.

Regeneration & Renewal spoke to some of those working in the field in an attempt to find out what the riots mean for regeneration.

Jess Steele, director of innovation at social action network Locality:

“Having been working in regeneration for 25 years it’s really quite simple that we’ve never got it right so far,” she said. “Regeneration has been done to communities rather than by them. That creates a sense of powerlessness, even if things are technically improving.

“The future of regeneration policy has to be about listening. We’re not talking about big inward investment programmes. We’re talking about helping people in poor areas create their own small scale enterprises.”

Jackie Sadek, chief executive at Regeneration UK:

“I’ve been banging on for years now that we have got to get cleverer with our regeneration programmes, it’s not just about the built environment, it’s about the people in the communities, they are at the heart of regeneration,” she said.

But she also warned against taking reactionary measures. “Over the last 30 years we have gained huge experience of what works and, more importantly, what doesn't, in urban regeneration. There should be no kneejerk reaction.”

Sir Peter Hall, Bartlett professor of planning and regeneration at University College London:

“Tottenham is among the most deeply deprived areas in London. It has estates that have suffered more and more problems as they have received more and more residents with social problems. It has led to a concentration of anti-establishment types and the creation of a sub culture that sees itself in some kind of heroic gang battle against the police.

“We have lulled ourselves into a false belief that this is a very happy city. When the Paris riots happened, we said they couldn’t happen here. There is clearly a proportion of the population that is very alienated indeed, with no attachment to wider society at all

“In Ealing the rioters were marauding through the streets because they couldn’t get into the enclosed shopping mall. High streets are vulnerable, I’m afraid”.

Tony Burton, director at Civic Voice:

“There’s no doubt that from our point of view that we need to reflect on the question of what can be done. I suspect we’ll find it’s very complex and there’s no single answer,” he said.

He also stressed that there was more to the riots than bad news stories. “It’s important that we also look at the positive reactions in the face of the negativity,” he said. “You will see other responses from people who love their areas and feel very personally about the effects of what was happened.”

Martin Blackwell, chief executive at the Association of Town Centre Management:

“Within a relatively short space of time the physical things can be redressed but it’s the reputational things that are important. In terms of making town centres a destination of choice this has done enormous damage in London therefore the town centre management network and its role as broker between businesses, the police and local communities will be crucially important.”

The Association of Convenience Stores:

“Experience from Northern Ireland suggests that retail areas can take a long time to recover from rioting. In some cases retailers decide not to re-open.”

Gavin Poole, executive director at the Centre for Social Justice:

“These are the actions of people who live in chaos, hopelessness and poverty. What they are doing is criminal, completely wrong and must be punished,” he said. “But it is not entirely random; they believe they have nothing to lose and no one to answer to. Some even consider it normal.”

“Yes, we need political leadership and a debate about policing techniques. But when the violence ends, we need deep rooted social reform which understands that a section of Britain is badly broken and needs to be rebuilt.”

Matt Thomson, head of policy and practice, Royal Town Planning Institute:

“People are always going to question if there is something about [the urban] environment that has been a factor. The question is whether we want to plan around the small risk of some sort of urban unrest.

"One way of reacting would be to put steel shutters on shops and gated areas on high streets. Would that be appropriate, or would it add to a feeling of oppression? We want to avoid kneejerk reactions. We have got to get to the bottom of why these things happened before jumping to conclusions.”

Joe Montgomery, chief executive for Europe at membership organisation the Urban Land Institute, and former director general for neighbourhood renewal at the Department for Communities and Local Government:

“Previous regeneration initiatives in places like Tottenham may have delivered results at the time, and in a few years that followed, but needs have to be considered afresh, as a new generation of people finds themselves on the margins of the economy.

“Bricks and mortar aspects of development are crucial to creating strong and prosperous communities. But people-focussed interventions are crucial too. Without well-functioning community safety, training, employment, enterprise and inward investment programmes, some of these neighbourhoods may not make the progress that they could.

“We have learned that it is vital to have first class communications in place that dispel myths that would otherwise ramp up tension. Communication with community networks needs to be skilfully managed to make communities feel safe and restore law and order.

“Communities like Tottenham and Croydon are resilient, and will want a resumption of normal life as soon as possible. At the moment, the priority is the restoration of calm, while working out how to continue to make the inner city an attractive place to invest”.

More reaction will be added as it comes in.

Report questions wisdom of Manchester Airport enterprise zone

A report has been published today claiming that the Government made the wrong decision in locating Greater Manchester's enterprise zone at Manchester Airport.

The report, which was commissioned by lobby group the Campaign to Protect Rural England (CPRE) and undertaken by the Metropolitan Transport Research Unit, is based on an analysis of outline development proposals for the Airport City enterprise zone on which the city council is currently consulting. (The proposals themselves have been put forward by Mag Developments, the development arm of the Manchester Airport company.)

The report claims that the consultation document contains little concrete evidence to support the case for an enterprise zone at the airport rather than somewhere else in the city-region. A few of its key criticisms are listed below:

- "The idea [a key plank of the proposals] of attracting internationally mobile companies into the enterprise zone which would otherwise locate elsewhere in Europe is not supported by any specific evidence in the consultation document."

- "The enterprise zone location is within current green belt, and there are some environmental issues on sites currently proposed immediately north of the airport which haven't been fully investigated."

- "The airport enterprise zone is likely to displace jobs and economic activity from areas outside of the zone that are also in need of investment."

- "Many crucial details [about the development site], such as much of the land area, the planned mix of uses and proposed conditions such as parking, are not available."

- "The benefits to urban regeneration of Wythenshawe [the deprived area of Greater Manchester in which the airport sits] do not depend in any major way on the proximity of the airport and associated developments, but rather on the efficacy of a wide range of other measures, particularly social mobility and training. In fact it is far from clear that the proximity of ‘Airport City’ will be more effective in urban regeneration than development at other locations within commuting distance have been."

It's not necessarily surprising that the chosen location of an enterprise zone has been challenged - the local papers are full of reports of various councillors and/or business leaders/members of the public expressing disappointment that their preferred site missed out, because everyone wants their own area to benefit from the perks an enterprise zone could offer.

However, this report made me think of comments put to me by sources while I was researching another enterprise zone-related story recently. At least two planners I spoke to, who wished to remain anonymous, raised concerns that the quality of enterprise zone plans put forward by the first four 'vanguard' zones at the beginning of this year - of which Manchester Airport is one - is likely to be lower than those of the other first and second-wave zones.

This is simply because, the sources argued, the first four were chosen by Government some time before ministers consolidated the policy on enterprise zones, published guidance for those bidding for a zone and started sending out officials to advise LEPs on their plans. The sources suggested that the vanguards were therefore at a disadvantage having been selected straight away by the Government and then having to go about finalising plans, rather than having to submit detailed plans as part of a competitive bidding process.

This is an interesting observation, and one that might explain why I have been chasing each of the four vanguards for almost three months now to find out concrete details about the incentives they hope to use and how they want their zone to work, but as yet in vain!

Regional growth indicators: do they need an overhaul?

When business minister Mark Prisk told Regeneration & Renewal's Northern Summit last October that Labour's regional development agencies (RDAs) had failed to close the north-south divide, what he failed to observe is that they had probably played a part in preventing the economic gap from widening.

Prisk told delegates: "The economic divide between the Greater South-East and the rest of England is as wide today as when the RDAs were established, despite having spent £19 billion of public money.

"Between 1990 and 1999 – the year the RDAs were set up - Gross Value Added (GVA) growth averaged 2.5 per cent a year in the Greater South-East, and 1.9 per cent in the remaining English regions - a gap of 0.6 percentage points.

"Between 1999 and 2008, under the RDAs, annual GVA averaged 2.1 per cent in the Greater South-East, and 1.5 per cent in the rest of the country - also a gap of 0.6 percentage points.

"That, by any measure, is a failed policy."

We don't know for sure what the situation would have been like had the RDAs not existed - just as we have no idea really what impact the coalition's abolition of the RDAs and introduction of a smaller-than-regional approach to economic development is going to have on different parts of the country. As yet, we can only speculate.

What is crucial is that, in order to properly evaluate this in the coming years, it would be useful if the Government retained the same - or similar - data set that has been used for much of the past decade to assess the economic state of the regions.

But the Department for Business, Innovation and Skills (Bis) is consultating, until the end of August, on the future of the so-called Regional Economic Performance Indicators (REPIs) - which gather statistics on indicators such as average property prices, numbers claiming benefits, job creation and deprivation levels, across the regions.

Although a Bis spokeswoman told me this week that the statistics would continue to be collected annually, she also said that, when the latest stats were published [in May], the department launched the consultation because "we want to make sure the data being collected remains relevant to the shift in policy".

The consultation itself says: "Given the recent large changes in government policy in some areas, in particular a shift from regionalism to localism, it is important that Bis ensures that the [REPIs] publication continues to provide the range of sub-national statistics which are relevant to users."

And one of the consultation questions asks: "To what extent would your work/business be disrupted if the statistics that you use were discontinued?" - which suggests that the Government might consider doing that.

It will be interesting to see the consultation responses. If, for whatever reason, local government, regeneration practitioners, policy experts and others no longer think that the current indicators are the best way of measuring growth now that we have a different economic geography, then fair enough - change can only be a good thing. But any revised data set must ensure that it is still possible to judge the success or otherwise of localism versus regionalism.

Click here for details of the consultation.

Picture credited to David Chadwick

Enterprise zone bids 'overestimate job creation'

New research reveals that the bulk of proposed enterprise zones are expected to create a total of 75,000 jobs by April 2015, but challenges the bidders' estimates at the same time.

Regeneration & Renewal's sister magazine, Planning, reports today on some of the key findings of the first independent analysis of enterprise zone bids submitted to ministers. Consultancy SQW's research, which is based on analysis of 19 of the 29 second-round bids and one first-round bid, reveals that more than half of proposed zones cover more than one site. This is despite the Government indicating that its preference is for single-site zones.

While this is the focus of the Planning article, there are a couple of other interesting findings that emerged from the research and that are worth writing about separately.

- The first is on job creation. Although SQW only obtained data on employment expectations from 16 enterprise zone proposals, it found that these 16 expect to create around 75,000 jobs in total. This averages about 4,700 jobs per zone, with the range stretching from 700 and 12,420 jobs per zone, according to the data.

Most of these jobs are expected to be "additional", SQW says, meaning that they won't be jobs displaced from nearby areas or 'deadweight' ones that would have been created anyway. In fact, more than a quarter of the 16 bids stated that they expected zero displacement of jobs from outside the zone.

However, as SQW points out, "since the high level of displacement was one of the key criticisms of the original 1980s enterprise zones, the expectation is questionable".

SQW also considers the timescale within which these jobs are expected to be created "very optimistic". The report says: "The question on the application form was specifically about jobs to be created by April 2015 - less than four years from now. Although individual circumstances vary, there will - in many cases - be a significant 'lead-in' time: local development order (LDO) powers are not finalised, some sites require infrastructure investment and [in many cases] the building process itself needs to proceed."

It continues: "Our view is that the lead time for jobs to be created will be significant in terms of supply side issues. There is also the question of demand: inward investment and business support strategies feature prominently, but how long will these take to bear fruit, and at what scale?"

This is a valid point - the coalition has warned that it will favour 'ready sites' that don't require too much extra construction work, but looking at the bids that R&R has reported on over the past few weeks, it's clear that many will require a significant amount of work before jobs are created.

- The second point worth mentioning is around business rate retention. SQW's analysis of the bids found that few LEPs were clear about how they wanted to use this revenue stream - "mostly the inference was that plans for this will be "sorted later", the research says. SQW points out that "the question of how the value of an uplift in business rates from the enterprise zone will be distributed across the wider LEP geography could raise some interesting challenges".

Some LEPS, however, suggested that uses for retained business rates could include the creation of evergreen investment funds, site-specific infrastructure investments and small-scale inward investment and/or business support services.

Chris Green, chief executive of SQW raises a crucial point when he says: "A key issue is whether a two-tier LEP landscape will eventually emerge: 21 LEPs with enterprise zones have the prospect of a long-term reveue stream, albeit one which will not kick in immediately.

"Will the remaining 15 LEPs be left without comparable resources?"

From ceramics to railways: emerging second-round RGF bids

Details of bids submitted to the second round of the £1.4 billion Regional Growth Fund (RGF) are slowly starting to trickle out.

A spokeswoman for the Department for Business, Innovation and Skills (BIS) told me earlier this month that the department would make an announcement about the total number of bids received - broken down per region as officials did for the RGF's first funding round - "within the next couple of weeks". I'm still waiting. In the meantime, I've compiled a selection of the bids that have emerged so far...

(Note that the second round of the RGF allows applicants to bid for 'programme' funding for third party funding bodies to administer grants and loans to small businesses, for example, as well as 'project' funding for one-off schemes.)

Leeds City Region LEP: has submitted a bid for £15 million of RGF funding to support "programmes and projects that will leverage up to £78 million of additional investment", a LEP spokesman said, but he did not specify what these projects were. The LEP also backed a further 29 bids to support major infrastructure projects in the region, including a project to invest in Bradford City Centre. It also backed 17 other company-led bids to help develop advanced manufacturing firms in the area.

Stoke-on-Trent & Staffordshire LEP: has backed ten business-led bids from the region, but would not say how much they are for. The bids are for the following projects: ISE Estate Ltd at Beacon Business Park, which wants funding for roads and related infrastructure that will open up 4.5 acres of employment land; Steerlite International, to develop a new manufacturing facility to produce bone china in the UK; North Staffordshire Chamber of Commerce, for a project that aims to attract private investment offering new gross-value-added local jobs; CERAM, a programme that would help develop the processing capabilities of the UK ceramics industry; Moorland and City Railways, for a project to acquire a series of disused railway lines in North Staffordshire which will be renovated and re-opened to create the UK's largest sustainable private railway network; REALIS, a scheme that aims to reposition Stoke-on-Trent and North Staffordshire as a key destination for businesses, developers, shoppers and tourists; Dunston Business Village, a scheme that works to convert former agricultural buildings into business units; Etruria Valley, a site that has been earmarked for development into a business park and which has been forward as the areas's enterprise zone; Zytek Ltd, for a project that would create a facility for the research, development, training and manufacture of advanced motor and control technologies, and Rapiscan, for a scheme to establish a high technology factory in Biddulph.

The LEP has also supported bids to support four regional funding programmes: Business Growth 360, Accessible Finance Ltd, West Midlands Kick Start Partnership and the Coventry and Warwickshire Co-operative Development Agency.

Sheffield City Region LEP: has supported eight bids from around the region. These are for: Finance Yorkshire, which seeks to provide access to finance for small and medium sized firms in the area and is seeking an £8.5 million contribution from the RGF to an overall £17 million fund; Visions of China, a culture-led development at Rother Valley Country Park that is seeking £5.7 million of RGF funding; Chesterfield Waterside, a regeneration project at Chester, which wants £1.1 million to bring forward the first phase of office development in Basin Square; Markham Vale, a business park that wants £1.1 million to deliver the second phase of development and become the city-region's enterprise zone if approved by Government; the Advanced Manufacturing Growth Hub, which wants £3.3 million towards a £27 million scheme to create a new business hub on the Advanced Manufacturing Park at Waverley; the Barnsley Dearne scheme, which wants £4 million for a series of retail and construction projects to develop the town of Goldthorpe and the village of Thurnscoe; the Employment Growth Programme, which provides funding for local SMEs, and the Tech Accelerator Programme, which provides funding for start-ups with high growth potential.

Tees Valley Unlimited LEP: has endorsed bids from the region worth a total of £156 million. Of these, 26 are submissions from companies to grow their business, with a total RGF ask of £79.4 million. The LEP did not disclose details of the individual projects and programmes that have been supported, but said that they were from industries including logistics and distribution, low carbon, manufacturing and the digital and creative sector.

North Somerset Council: has submitted a bid for £43 million to reopen the Portishead to Bristol railway line. A further £4.8 million needed for the project would be met from council resources and planning agreement money earmarked from developments in Portishead, according to the local press.

And car manufacturer Lotus has bid for £10 million to build a new production factory in Norfolk for its new models, according to the Financial Times.

Image by Renee V