Unlocking regeneration in cash-starved regions

Over the next financial year, Britain’s councils will offload a record £1.4bn of assets and cancelled projects as they seek to raise funds to plug giant holes in their finances.

After years of austerity, councils up and down the country are falling to their knees as budgets fail to match up to the demands being placed on them to deliver statutory and crisis services, such as temporary housing and adult and child social care.

And while these services are vital, is the rush to plug funding gaps through asset sales the right move? Or is a comprehensive overhaul of council finances and a fresh look at the real role of regeneration what is really needed?

That was the question EG posed to a panel of experts at UKREiiF in Leeds last month.

John Cotton, leader of Birmingham City Council, is probably best placed to answer the question. His local authority was put into special measures last year and he will deliver the lion’s share of that £1.4bn of assets to be sold or projects cancelled.

“There is a forest fire that is raging in local government finance at the moment,” he said. “We’ve seen 40% reductions pretty much across the board in English local councils over the past decade. For Birmingham that means we’ve lost £1bn effectively over that period.

“We are seeing, like every other council in the country, rocketing demand for most hard-pressed crisis services – adult and child social care, homelessness, etc. All of this has created a perfect storm in terms of finance.”

But Cotton pointed to partnership and investment coming into the city and insisted that, while he has to deliver core services, focusing on longer-term, regenerative projects that can fix a range of the city’s socio-economic issues has to stay front of mind.

“We have to remain fixed on those longer-term goals, otherwise we’re not going to be able to move anything forward. We’re going to be in permanent crisis management,” he said. “This is the big trick we need to achieve across the public sector. How do we ensure we are focused on those longer-term objectives, focused on early intervention and prevention. That then enables us to look at how we invest in some of the big-picture opportunities.”

For Mark Williams, executive director at RivingtonHark, which works alongside local authorities, the problem lies almost entirely in the funding structure.

“The lack of investment in our town and city centres has been built up over a long time and suddenly caught us up. Therefore, you have to plan ahead for the next 40 or 50 years,” he said. “Local government finance isn’t done on that basis. It is done on an annual basis, which is a crazy system. It is very difficult for any political party to say it will look at a long-term funding strategy for local authorities in a five-year election cycle, but we need to plan that financing on a longer basis and start to look at the halo effect.”

That halo effect of which he talks is about the added value that regeneration brings. While on its own it may not help bring people above the poverty line or reduce homelessness, it has the capacity to make change.

But, said Patrica Brown, vice-chair of the British Property Federation development committee, more local authorities need to step up and become those agents for change in their regions.

“Local authorities need to be the client for place,” she said. “The local authority needs to come in and be the conductor for that place, that investment and the social impact so that the impact is going to where it is needed rather than to the “fluffy” regenerative stuff, which is the low hanging fruit of nice public realm and a nice coffee shop.”

“We need people,” she added. “People on the ground who can go out and talk to partners and come back and imagine what good looks like together.”

Unfortunately, many local authorities just aren’t equipped to be clients for place, says Simon Kaye, director of policy at the think tank Reform. He brought the conversation back to the short-term, begging bowl nature of public sector financing.

“It is a begging bowl culture which really hamstrings regeneration,” said Kaye. “All the agencies that want to participate in regeneration tend to get thrown back into that begging bowl culture where they can invest enormous amounts of effort only to realise they have no efficacy when they don’t win the bid, when it gets postponed, when the rules change, when political instability in Westminster shifts the rules at the last minute, when Enterprise Zones become Investment Zones and when your application round shifts back on yourself.”

“There has to be something about moving away from a model in which central government has to get its act together to make regeneration possible,” he added. “We need to de-centralise and devolve well enough so that when there is will in a place there is also the autonomy to see it through without depending on that largesse from the centre.”

But that will is only going to come, when confidence and capacity returns to the UK’s local authorities, agreed the experts.

“It can’t be a zero-sum game for regeneration,” concluded Brown. “It needs to be about renewal, long-term vision and genuinely working in partnership towards an overall shared goal.”