Cities outlook: Key to growth is diversification

Last week, I attended the launch of think-tank the Centre for Cities' annual report on the economic state of the country's cities, Cities Outlook 2011. You can read my take on the report, which suggests Northern cities will remain vulnerable to public spending cuts for the next four years, here. Here's a round-up of some other interesting points raised by those who attended at last week's launch.

1) Anthony Browne, policy director to the mayor of London: "London fell into recession slower than other parts of the country and is moving out of it quicker than some - the City, for instance, has bounced back. But it is easy for the government to be complacent and forget that London is very much a tale of two cities: the 'other', less prosperous, side of London has some of the highest rates of poverty in the UK, some of the highest unemployment levels and some of the most deprived neighbourhoods. It will be affected by public spending cuts as much as other cities."

2) Mike Emmerich, chief executive of Manchester's Commission for the New Economy: "The biggest cities - the ones that have a critical mass and are already thriving economic hubs - are where the market is going to create the jobs. People will continue travelling to these cities from hinterlands whose economies have not improved much because of long-term structural flaws - so the Government would be wrong to attempt to create jobs in those areas. It should continue to invest in 'travel to work' policies instead."

3) Dave Smith, chief executive of Sunderland City Council: "The key to achieving sustainable economic growth is diversification. Any structural dependence on one particular industry is bound to make a city vulnerable. In the 1960s, the North East was over-reliant upon shipbuilding, in the '70s it was coal mining. Now, it is over-dependent upon manufacturing, which is why the council is trying to invest in small businesses and the knowledge economy, to try and boost economy recovery in the region."

Read the first column by Centre for Cities' chief executive Alexandra Jones in the current issue of Planning magazine.

Potential growth fund bidders in dark over Round 2

Officials at the Department for Business, Innovation and Skills (Bis) are currently sifting through the 450 bids that were submitted to the first round of the £1.4 billion Regional Growth Fund (RGF) last Friday.

In the current issue of Planning magazine we reveal the value of a number of these bids - many of which were submitted by new public-private local enterprise partnerships (LEPs). For example, the Tees Valley (pictured) LEP submitted bids totalling £80 million, while bids from Birmingham and Solihull LEP totalled £39 million. On top of the bids mentioned in the story we tracked down a lengthy list of other applications submitted independently by the private sector or other public-private partnerships - for example Barrow Regeneration submitted two separate bids totalling almost £30 million and city development company 1NG submitted two bids worth £50 million.

A number of other organisations confirmed that they had placed bids - for instance Durham County Council said that some 15 bids had been submitted for the region, and the Black Country LEP said it had submitted a bid for a project to develop Dudley Zoo - but declined to reveal their value due to commercial sensitivity.

Bis, too, has refused to provide a full list of bids for the same reason, or to comment on their quality or otherwise, but it doesn't take a genius to work out that demand for the three-year RGF fund is massively outstripping supply. The Government will allocate around £250 million in the first bidding round so, clearly, just four or five of the largest bids to have been submitted would gobble up all of the available cash.

'If many don't qualify for the first round, there will more money available for the second' Sir Ian Wrigglesworth

Given that the RGF is pretty much the only major economic development funding programme that the coalition has launched, the level of competition that applicants face is alarming, if not entirely surprising.

The news is likely to increase interest in the second bidding round - details of which are due to be unveiled by the Government over the next few weeks - as some would-be applicants decide it might give them a better chance of success. The Government has been vague about criteria for the second round, but the available information has suggested that the focus might be slightly different. For example, bids for programme funding will be invited, not just bids for one-off projects.

Speaking to Planning magazine, Sir Ian Wrigglesworth, deputy chair of the independent advisory panel for the RGF, was coy about divulging information on the second round. He said: "We won't be determining the focus of the next bidding round until we have been through all of the current bids and know more about their character and quantum. In other words we will see what the demand is like.

"For instance, if many don't qualify for the first round, there will more money available for the second."

He added that unsuccessful bids might be able to be re-entered in the second round, and that, subject to available resources, Bis intended to publish feedback on the first round bids in order to provide some guidance to round two applicants.

Wrigglesworth also said he acknowledged that "the Government has been criticised for pressing ahead too quickly with launching the RGF and giving applicants little time to put together decent bids". But, he said, the reason for pressing ahead quickly is to "ensure funding reaches those economies most dependent on public sector employment before public spending cuts start to bite".

So how the RGF's second bidding round will differ from the first remains to be seen. What are your thoughts on both Wrigglesworth's comments and the RGF's objectives?

Regional Growth Fund: Round one deadline day

Today is the deadline for bids for cash from the first round of the coalition Government’s £1.4 billion Regional Growth Fund (RGF). Please get in touch if you have submitted a bid or have anything to say about the bidding process at jamie.carpenter@haymarket.com or on Twitter @J_J_Carpenter
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First bids drawn up for Regional Growth Fund

Regional Growth Fund: A Primer

Is the Regional Growth Fund jam being spread too thinly?

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We already know the details of a number of the emerging bids – here’s a quick summary of some of those that have already been reported:

- Newcastle-Gateshead city development company 1NG is bidding for £50 million, reports the Journal. Of this, £10 million would go towards the Science Central building planned for Newcastle’s city centre. And £40 million is being sought to help build a new conference centre next to the Sage, Gateshead.

- Regeneration leaders in East Lancashire are bidding for RGF cash to build four major projects. Council chiefs want £22 million from the fund to create 3,000 jobs in Blackburn, Rawtenstall, Hapton and Brierfield, says the Lancashire Telegraph.

- A triple bid is being made to get two major Middlesbrough housing regeneration projects back on track and maintain momentum on a third scheme. Among the first bids from Teesside to the Government’s new Regional Growth Fund will be: £8 million for the Gresham regeneration scheme; £4.2 million for Grove Hill regeneration; and £2.5 million to develop regeneration in St Hilda’s, says the Evening Gazette.

- Wakefield Metropolitan Borough Council and transport body Metro are bidding for cash from the Regional Growth Fund to fund work on a transport interchange in Castleford, PlanningResource.co.uk reported on Wednesday.

- Kent County Council is making a bid for £10 million RGF investment into a train station to serve Manston airport, reports ThisisKent.co.uk.

- Also worth a read is today’s Financial Times, which has found that bids exceeding the first round’s £250 million allocation have come from just nine areas alone ahead of today’s deadline. The FT contacted 20 of the 28 local enterprise partnerships and found that they are submitting well over 100 bids between them, a number of which are listed in this article.

Meanwhile, Sir Ian Wrigglesworth, deputy chair of the panel which will recommend to ministers which projects should receive RGF cash, has admitted the South East and other regions where the private sector dominates are “not in as good a position” to meet fund criteria. He told Insider ahead of the deadline for fund bids: “A lot of people think we’re Father Christmas, but it will be more like Scrooge.”

Digested: Yesterday’s Localism Bill debate

Yesterday, for six hours in the House of Commons, MPs debated the coalition Government’s flagship Localism Bill, which has now moved to committee stage (you can read our online news coverage of yesterday’s events here and here). The debate was preceded by oral questions to the Department for Communities and Local Government’s ministerial team. Here’s a quick summary of five key things we learned from both of yesterday’s debates:

1. Labour's bid to derail the Localism Bill was unsuccessful. A Labour motion to halt the bill’s progress was defeated by 228 votes to 332 and the bill was passed to the committee stage of the legislative process by 329 votes to 227.

2. The Bill would allow the London mayor to designate any area of London as a mayoral development corporation, which would take over the local authority’s planning powers. Former housing minister Nick Raynsford told MPs that this may have consequences that current DCLG ministers might not be comfortable with. “Let us imagine that the mayor of London changes,” he said. “What if the new mayor is not from the party of the Government? He might look at house building performance in Bromley, for example, and decide that not enough homes are being built there.”
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Big Issue: The Road to Localism

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3. The coalition Government has no plans to introduce third party rights of appeal in the planning system, planning minister Bob Neill confirmed (the Conservative Party’s planning green paper, published in February last year, had said that residents would be given powers to appeal against planning permissions won by developers). Neill told MPs that the coalition had considered introducing such powers, “but believed that the better route is to give communities greater control over what is considered to be appropriate development for their areas at the very beginning, through our neighbourhood planning system”.

4. The row over local government cuts is rumbling on (and shows no signs of stopping). Shadow communities secretary Caroline Flint claimed that the Localism Bill is a “smokescreen for unprecedented cuts to local communities up and down the country”. She hit out at the “myth that local councils can spare front-line services simply by cutting executive pay, trimming waste and sharing backroom functions, because they cannot”. Flint continued: “It is not localist to cripple local councils with devastating cuts and to stop them delivering the essential services on which local communities rely.” But housing minister Grant Shapps said: “Unless an authority has already merged its human resources, legal services and planning departments and cut the chief executive pay that opposition members are so keen to defend, there is no excuse for trying to charge more for those services, or indeed … for trying to shove them off on to, perhaps, parish councils.”

5. Plans to appoint existing council leaders in the 12 largest English cities as "shadow mayors" ahead of mayoral referendums in 2012 have met with criticism. Under plans in the Bill, ministers would make an order whereby the council leaders in the 12 largest cities in England outside London would become shadow mayors and be given the powers available to existing mayors. These cities – and any other area that calls for a mayor – will then hold mayoral referendums on local election day in May 2012. But speaking during yesterday’s debate, Caroline Flint asked: "How democratic is it for the secretary of state to appoint a shadow mayor ahead of a referendum for local people? Would not such a person have an advantage when standing for mayor? It cannot be right or democratic for the leader of whatever party it might be to have such an advantage in a mayoral election."

jamie.carpenter@haymarket.com Follow me on Twitter at @J_J_Carpenter

Growing pains for growth fund?

In the first issue of the rebranded Planning, published last week, we report on the emerging first bids to the coalition Government’s £1.4 billion Regional Growth Fund (RGF), which is intended to rebalance local economies overly dependent on public sector jobs. While researching this story I discovered that, at the time of going to press, the Department for Business, Innovation and Skills (BIS) had received no bids to the fund – despite the fact that the first bidding round opened in October with a specified deadline of 21 January, now just days away.

A spokeswoman for the department said last week: “This is not something we are concerned about.” The full statement from BIS read: “It’s typical in any competitive bidding process for applications to be received at the last minute, so we expect bids for the first round of funding to reach us nearer to the 21 January deadline. 


“There has been considerable interest in the fund. Since its launch, Lord Heseltine and Sir Ian Wrigglesworth [chair and deputy chair, respectively, of the Government’s advisory panel on the RGF] have hosted a series of RGF workshops across the country, where we have met with well over 1,000 individuals and businesses who have expressed an interest in applying.”

But why hadn’t more local authorities and other applicants submitted their bids by the end of last week? Does their failure to have done so indicate that they are experiencing difficulties putting together robust bids that match the fund’s criteria? Or is the delay to be expected given the relatively short timeframe specified by the Government and the fact that the Christmas break fell within it?

In a comment piece for Regen.net earlier this month, Scott Dickinson, associate director of consultancy SQW, which recently hosted its own series of RGF workshops, claimed that more guidance was needed on the fund and how it would operate – including the EU state aid implications of bids, which we discuss in Friday’s news story, and what criteria will be used to judge the eligibility of submissions.

He wrote: “There was a degree of consternation among workshop attendees at the call for projects to be “large”, transformational, “ready to go”, and “new” [as specified in the Government’s initial guidance for applicants]. This, seemingly impossible combination of features led some attendees to suggest the winners of Round 1 were probably already known, and that they would, therefore, concentrate their efforts on bidding to Round 2.”

Another factor could be that BIS was slow to release details of the key location metrics that will be used to assess bids, which might have resulted in applicants remaining confused about the geographical areas the fund is intended to support. According to the document above, these are the areas with the highest proportion of residents claiming out of work benefits, the largest public sector job share, the lowest rate of private sector job growth, and the lowest number of active enterprises per 1,000 residents. The metrics, along with data corresponding to the specific circumstances of each local authority, were only published on 6 January.

A statement from BIS said: “The objectives of the RGF are to provide support for projects with significant potential for sustainable economic growth and employment and to help areas and communities that are currently dependent on the public sector make the transition to private sector led growth. Therefore the level of public sector dependence in an area will be a key consideration when individual bids are being assessed. 



“There is no single measure of public sector dependence. To help assess an area’s dependency on the public sector we will use all four metrics together. We are clear that these nationally available metrics may not tell the whole story, which is why the RGF application form asks applicants to provide additional local intelligence on public sector dependency.”

Scott Dickinson said: “As there is no incentive to submit early, I am not surprised that no-one has submitted. I don't know if the lack of bids at this stage is due to the time it takes people to grapple with state aid rules or just the time it take to develop good projects.
 
“I think that the timescale for Round 1 was tight but I expect Round 2 to open pretty quickly - so I think some people who can't quite get their bids right - for whatever reason, such as lack of private sector funding - might wait until they have a better bid and submit later in the year.

“In terms of the difficulty of the process - I think for people who aren't used to accessing public funds subject to Green Book appraisal, the process was always going to be challenging.

But Alexander Rose, a lawyer at One North-East and chair of advisory body the UK State Aid Technical Group, said: “Personally I think it’s not unusual for organisations to wait until the last couple of days.”

What are your thoughts on the RGF application process – has it been well managed, and why do you think no bids have yet been submitted?

POSTED BY SARAH TOWNSEND

Agenda: 10 key dates in 2011

Colin Marrs takes a look at 10 key events to keep an eye out for over the coming year.

January
A consultation on revised draft energy national policy statements will finish on 24 January. Subject to the consultation, the Government says it intends to finalise and formally approve the new national policy statements in Spring 2011. The statements are intended to speed up planning inquiries by establishing the principles of need at an early stage.

February A full public consultation on the proposed route for the high-speed rail link between London and Birmingham will begin. Before Christmas, the transport secretary Philip Hammond published a revised route attempting to address concerns from environmental groups and property owners along the route. A separate consultation on the Government’s overall high-speed rail strategy will start at the same time.

March
The first charging schedules from councils leading the way in introducing the new Community Infrastructure Levy are expected to be published. The Department for Communities and Local Government will select up to eight councils to work up their plans with help from the Planning Inspectorate and help spread good practice. The infrastructure levy is intended to charge developers receiving planning permission, with proceeds returned to local communities.

March A decision will be made on the tenant for London’s Olympic Stadium (left) following the end of the 2012 Games. The Olympic Park Legacy Company announced in November that a consortium led by Tottenham Hotspur FC/AEG would go head to head with a joint bid by West Ham FC and the London Borough of Newham.

March
The month also spells the end of an era for a raft of regeneration projects introduced by the previous Labour administration. The end of the 2010/11 financial year will see the funding tap turned off for major programmes including the housing market renewal pathfinder initiative which provided hundreds of millions to revive areas of low housing demand in the North and Midlands. Also disappearing will be dedicated funding for housing growth in the south of England.

April The start of the new spending review period will usher in a number of new initiatives which the coalition Government hopes will spark an economic revival and boost housing supply. Grant Shapps’ New Homes Bonus will punish councils which fail to build new homes. The first round of successful bids from the £1.4 billion Regional Growth Fund, aimed at boosting economic development, will be announced. In addition, housing associations will be given the power to offer homes at a new “affordable rent” level – 80 per cent of market rents.

JulyIn the days when deputy prime minister Nick Clegg was a face of hope, he announced that the coalition Government would give local authorities a new tool to raise money to fund infrastructure development. The tax increment finance (TIF) model is a mechanism for councils to borrow money on the premise that development will increase business rate revenue in a particular area. The government has announced its intention to introduce a bill dealing with TIF in July.

September

Estimating when a Bill will be finally passed by Parliament is not an exact science, but it is likely that the Localism Bill will become law in the autumn. The act will finally abolish the system of regional spatial strategies. The act will also allow councils and local bodies to bypass the planning system if applications are in line with new neighbourhood plans. Decisions on large-scale infrastructure proposals will be returned to ministers following abolition of the Infrastructure Planning Commission.

October
By October, we should know which areas of England will sit within a council and business-led local enterprise partnership (LEP) and which will not. LEPs are being established by the government as a replacement for regional development agencies. Officials will work with bidders up to the deadline to help proposals move forward, but it remains likely that some areas might not end up being covered by a LEP.

December
By the end of the year, we should be clear on the powers that a new generation of directly elected city mayors should take on. Local referenda on the principle of holding mayoral elections are set for May 2012.

POSTED BY COLIN MARRS. Follow Colin on Twitter at twitter.com/yellercol

Stunell under fire over empty homes announcement

Guardian bloggers are reporting that Andrew Stunell, the Lib Dem communities minister, is being accused by Labour of breaching strict rules designed to prevent governing parties using their position to unveil policies during election campaigns.

According to the blog, Labour’s shadow cabinet office minister John Trickett has written to Sir Gus O’Donnell, the cabinet secretary, to ask whether their has been a breach of these rules. Trickett’s letter followed a press release issued by the Lib Dems under a Sunday midnight embargo, which saw Stunell highlight the “scandal” of empty homes on a visit to Oldham, where voters will be voting in a crunch byelection on Thursday. The press release highlighted coalition plans to invest £100 million in bringing empty homes back into use and making empty homes eligible for the New Homes Bonus.

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Video: Interview with Andrew Stunell

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The Lib Dem press release was followed by this press release issued by the Department for Communities and Local Government the next day highlighting “new incentives to tackle the blight of empty homes”. “Communities minister Andrew Stunell has set out how local people can bring back into use empty homes that attract antisocial behaviour and cause misery for neighbours,” the press release said.

Responding to the press releases, Labour’s John Trickett wrote to Gus O’Donnell highlighting a “possible breach of the ministerial code”. His letter said: “I understand the minister for communities in the DCLG, Andrew Stunell, made an announcement of government policy in Oldham this weekend, issued together with substantial detailed information. This related to and was in supplement to government proposals to use £100 million extra government funding to bring empty homes back into use. This statement was sent out as a Liberal Democrat party press release … and was followed by a press statement on the DCLG website during today … This announcement was clearly made to influence the outcome of the by-election campaign.”

The Lib Dems deny that an announcement was made on the campaign trial. But it will be interesting to see how the cabinet secretary responds.

For me, the odd thing about this row is that the key announcement in the DCLG’s press release – that the Government will match through the New Homes Bonus any council tax raised from a property that previously stood empty – is not a new announcement. Housing minister Grant Shapps said in November 2010 that empty homes would be included in the New Homes Bonus scheme.

And the £100 million highlighted in the Lib Dem news release is not new money either – this was announced in the October spending review.