Poll: Is London a special case?

Should London be treated as a special case for public investment?

Certainly that’s the view of London mayor Boris Johnson, who, in the run-up to last month’s Comprehensive Spending Review, lobbied the Treasury in an attempt to ensure that the capital was not clobbered too hard when it came to spending cuts. His basic argument is that London is the engine for the UK economy as a whole, and as a result should be spared the worst of the cuts, lest this engine start to splutter.

Johnson has also warned that more than 80,000 London families could be forced from their homes by the Government’s reforms to housing benefit, unless the plans are softened. The mayor has reportedly lobbied for an existing hardship fund to be allocated 90 per cent towards London.

The spending review settlement was kind to Johnson on Crossrail - London’s new east-west rail line was one of a number of transport infrastructure schemes to escape the cuts.

The Government has also confirmed that the mayor will be able to coordinate bids from London to the £1.4 billion Regional Growth Fund, which is curious given that one of the main objectives of the pot, according to ministers, is for it to boost the private sector in areas currently over reliant on the public sector. The public sector contributes 22.2 per cent of employment in London – well below the national average, according to a report published last year by urban policy think-tank Centre for Cities.

There’s also the none-too-small matter of the £9.3 billion being spent on the Olympics in east London, up from the original budget of £2.4 billion.

So in our latest poll, we want to know if you think London deserves to be considered a special case by Whitehall or if you think a greater proportion of resources should be directed north of the Watford Gap. Vote in the poll at the top of this blog and comment below.

Councils bid to maintain regeneration activity in face of cuts

Regeneration remains a priority for council chiefs following the spending review but will be expected to take its share of the pain, finds Ben Willis

When I called around some of England’s councils in preparation for Regeneration & Renewal’s coverage of local authority funding cuts, Sheffield City Council’s John Mothersole offered a brief glimpse into the present realities of life for the average council chief executive.

Returning my call a couple of hours after the allotted time, Mothersole pointedly made light of the fact he was taking time out to talk to me. “Don’t worry, I’m not too busy,” he said wryly. “It’s as quiet as a mouse up in the town hall at the moment.” There was no attempt to disguise the irony in his voice.

It’s only a couple of weeks on from chancellor George Osborne’s much dreaded comprehensive spending review (CSR), and councils across the country are heads down trying to work out how to make the savings imposed on them by the coalition Government. Local authorities fared badly in the CSR, collectively taking a 26 per cent hit to their funding from central government over the next four years. This and the in-year cuts already announced to the area-based grant that covers pots such as the Working Neighbourhoods Fund have left councils facing real difficulties in meeting their regeneration and economic development commitments in the coming years.

The good news is that while precisely how the cuts will affect local authority business is not yet known, councils seem generally optimistic over the future of regeneration and economic development. “Not everything has gone,” Mothersole said. “We mustn’t just give up because things got a bit more difficult.”

This seems to encapsulate the prevalent mood in other town halls at the moment: regeneration is as much a priority as it ever was, but the rules of the game – the means by which it will be achieved – have changed. “The era of ready access to grant has gone, so let’s not waste time looking around for what no longer exists; let’s look at different ways of achieving what want to achieve,” said Mothersole.

In Greater Manchester, Stockport Metropolitan Borough Council chief executive Eamonn Boylan said future regeneration and economic development work would involve a greater emphasis on collaboration. “In Greater Manchester, we’re looking as ten authorities across the whole range of what we do in order to find ways in which we can do things more effectively, and instead of ten times, do it once. We’ll be looking at things like economic development in that light and whether there’s more that we might do collaboratively in order to increase the efficiency of delivery across what is a single economic geography.”

And the retreat of the state means a greater role for the private sector. In the North-East, Newcastle City Council’s executive director of regeneration David Slater said the authority was looking at new ways of using the private sector’s financial muscle to keep regeneration moving.

“We’re looking at Tif [Tax Increment Financing]; we’ve got a pilot ready to push on that,” he said. “We’re looking at new funding mechanisms for housing investment. [and] all those things where we can unlock private sector funding or find different ways of using public money. We can use our resources as a city, which are still very significant, to make investments and de-risk.”

Yet reliance on the private sector to play a larger role in regeneration is not without its concerns. Down in west London, Pat Hayes, executive director of regeneration and housing at the London Borough of Ealing, said the Government’s aim of relying more generally on the private sector was predicated on a growing economy. What happens, he asked, if the cuts instituted by the CSR prevent this from materialising?

“The issue is whether it causes a dip. We’re just starting to see the property market coming out of recession; if CSR chokes that off, then that could be a problematic as far as we’re concerned. This is probably most significant thing for us, because so much of what we do is about investor confidence and channelling that confidence, and shepherding the private sector. We’ve never been a big recipient of state money.”

And of course the bullish attitude of senior town hall personnel does not disguise the fact that part of local authorities’ new way of doing things will mean their being lighter on their feet – in other words losing staff.

The first signs of what is to come emerged last week when Stoke-on-Trent Council announced it was likely to shed 70 members of its regeneration team as a part of a planned cull of 700 members of staff over the next year. How many regeneration staff will be lost from other authorities is not yet clear, but all of the council bosses I spoke to said job cuts would be unavoidable. Their message was that regeneration is as much of a priority as it ever was, but that it would be expected to take its share of the pain.

POSTED BY BEN WILLIS

Interactive timeline: Cuts - the story so far

Use our interactive timeline, below, to track the cuts to regeneration funding implemented by the new coalition government since May. For best results, click "View in Dipity", the click "Full screen" and select the one month view using the bar on the left. Grab the grey background to scroll back through time. Click an entry to read Regeneration & Renewal's coverage of each cuts story.

Jamie C. on Dipity.

You can also follow our coverage of the cuts using the interactive list below and over at our new Regeneration Cuts Tracker blog.

Jamie C. on Dipity.

Live blog: Osborne unveils £6 billion of savings

16.45 Also got some info on how the £1.165 billion of local government savings break down. The figures don't seem to add up, but it's all we've got at the moment. The figure, according to DCLG, relates to the amount of funding local government gets from across Whitehall. Here are the savings in local government spending that each department is making:
- £362m from CLG
- £175m from local government
- £311m from Dept for Education
- £309m from Dept for Transport
- £8m from DEFRA

16.40 More detail now on how the DCLG's contribution to the savings breaks down... It says that, of the £740 million it is contributing, £268 million will come from "cutting waste and inefficiency", including £186 million from the RDAs and £82 million from cutting waste and inefficiency in the department and its quangos. A further £150 million will be saved from the Labour government's housing pledge, while £362 million "will be delivered through reducing grants to local government". A further £405 million of savings will be delivered from the DCLG's spending on local government, including £160 million from PFI underspends, £41 million from unallocated funds, £29 million through scrapping quangos (including the Audit Commission) and £175 million by reducing grants to local government.

16.32 New Local Government Network acting director Anna Turley said: "Whilst local government has been anticipating significant spending cuts since 2008, many councils would have expected their 2010/11 grant allocation to remain as they have budgeted rather than significantly amended downwards. The scale of cuts which the sector will have to implement before March next year is a colossal challenge and points towards local government facing a difficult Spending Review later on this year."

16.30 South East Diamonds for Investment and Growth (SEDfIG) chair Andrew Finney said: “We hope that the announced budget cuts to regional development agencies don’t amount to a hammering of the South-East. The Government is quite right to cut the cost of public agencies, but we can’t short change the areas with the most economic potential."

14.39 The £270 million cut to the RDAs' budgets is being shared by four departments: DCLG; Business Innovation and Skills; Defra; and the Department for Energy and Climate Change. £74 million of cuts will be from the business department's contribution.

13.33 Sarah Webb, chief executive of professional body the Chartered Institute of Housing, said: "These are difficult times, and it is clear that funding for housing has come under close scrutiny. Today's announcement suggests a mixed-bag for housing. On the one hand there are cuts from housing pledge initiatives; on the other hand these savings have been re-allocated into new affordable housing." She added: "What isn't fully clear, however, are the nature of cuts to existing initiatives and the impact their withdrawal could have. It also remains to be seen what reductions in funding for local government and devolved authorities could have on their respective housing responsibilities."

13.25 Some comment now on the implications of the spending cuts for regeneration. Tim Johnson, director in development consulting at real estate adviser DTZ, said: "More clarity is needed on what the Government deems to be 'lower value' RDA spend. With public sector budgets so stretched, it will be crucial to use clear tests to demonstrate which regeneration projects are viable and should be prioritised for investment. The focus should now be on regeneration projects where public sector money can help to de-risk and facilitate private sector investment. This would not necessarily take the form of a grant, but could involve public bodies taking an equity stake in a scheme, allowing them to benefit from any future uplift once projects are delivered as well as sharing risks."

13.23 Richard Lambert, CBI director-general, said: “We have been calling for a strong focus on deficit reduction to underpin the UK’s fiscal credibility and position us for a strong private sector led recovery. It is encouraging that the Treasury has managed to find slightly bigger savings than first expected. The measures announced by the Chancellor, including departmental spending cuts and a civil service recruitment freeze, are painful but necessary steps to demonstrate the UK’s seriousness about tackling the deficit. Just as private sector firms had to take strong action to cut costs during the recession, so too must the public sector. We believe there is still considerable scope to make even greater savings by re-engineering public service delivery.”

12.44 Gail Cartmail, Unite assistant general secretary for the public sector, said: "Within a fortnight of coming to office, the coalition government has taken a fundamental economic wrong turn by sucking £6bn out of a still fragile economy. While the cuts, such as reductions in civil servants’ travel, management consultants and quangos, may appear to be peripheral to the central deficit debate, this is the harbinger of some very painful cuts that will be come in the Budget on 22 June and in the comprehensive spending review in the autumn."

12.19 This from Andy Sawford, chief executive of the Local Government Information Unit: "This means that local government will have to contribute 20% of the government's £6.2bn cuts in public spending this year. It leaves local government carrying the can for wasteful spending in Whitehall and footing the bill for political promises on those areas of 'protected' spend. The bright spot is that some ring fencing will be removed to give councils more flexibility at a local level, but to make this much more effective, councils should be given the responsibility to bring together all local public spending using a Total Place model."

11.41 Further details now emerging... RDAs will have to find £270 million in savings in 2010/11, through "ending lower value spending". The Future Jobs Fund has been scrapped. Local government has taken a big hit - it will make a contribution of £1.165 billion towards the overall saving of £6.2 billion.

10.27 £500m of savings reinvested. This includes £170m in social rented housing in 2010/11, leading to 4,000 housing starts. Also includes £150m for apprenticeships and £50m for capital investment in further education facilities.

10.25 RDAs will have to cut back on spending that would have a low economic impact, Laws says. He adds that there will be cutbacks to Train to Gain.

10.24 Government to end Child Trust Fund payments

10.20 Government to remove ring fence from £1.7bn of local authority budgets in 2010/11. Departmental savings outlined by Laws are huge - DCLG £780m; DFT £683m; Business more than £800m.

10.13 £1bn savings on consultancy, £2bn on IT, £700m on recruitment & quangos, £500m from 'low value' programmes. Osborne promises to protect schools spending, Sure Start and 16-19 education spending.

10.08 £500m of the cuts will be "recycled", Osborne says.

09.50 The announcement should be in just 10 minutes. You can also follow our coverage on Twitter - @regenerationUK @regencarpenter @regentownsend @regenhickey

09.17 Former Labour ministers Rosie Winterton and Phil Woolas have warned in an article in yesterday's Observer that the cuts risk deepening England's north-south divide by hitting regions heavily dependent on public sector employment hardest.

09.10 Later this morning, chancellor George Osborne will announce how the new coalition government will make £6 billion of savings in the current financial year. According to media reports over the weekend, regeneration spending could be hit hard, with regional development agencies in particular likely to face cuts. The cuts are likely to be spread across Whitehall departments, but the Times says that the business department will have to find £900 million of savings over the next nine months. We'll be updating this live blog throughout the day, bringing you up to the minute news of where the cuts are going to hit and reaction from the regeneration sector. Send any comments to jamie.carpenter@haymarket.com, or post them below.