The government has promised £3.6bn to 100 ‘left-behind’ towns. After years of neglect, does this mark a U-turn in regeneration policy – and are there opportunities for construction firms to make a real difference?
Barrow-in-Furness. Blackpool. Grimsby. Great Yarmouth. The list of 100 places set to benefit from £3.6bn of government regeneration money includes many of the towns most synonymous with the 2016 vote to leave the EU. The Towns Fund, launched at the start of this month by Boris Johnson in Manchester, is very consciously designed to appear to address those “left-behind towns” – the prime minister’s words – where the argument to leave the EU most clearly struck a chord. The folk of Boston, Lincolnshire, are rated as the Brexitiest in the entire country – the only place where more than three-quarters of people decided to vote to leave. Their reward, seemingly, is not yet the UK actually leaving the EU, but at least a chance to bid for a share of this cash.
The money, according to the government, is to ensure these places have “a prosperous future”, by developing “innovative regeneration plans”, in particular to support challenged high streets and town centres. But the money comes against a backdrop of town halls starved of almost all regeneration funding for a decade, and amid furious political positioning for an imminent general election. From the industry’s perspective, the 100-strong list of places is hardly a catalogue of the most desirable investment opportunities. So could this funding make a difference to those areas, and does it mark a return to the generous “regeneration” spending that sparked development in deprived areas during the New Labour years? Could it be enough to tempt the development industry outside its more traditional stomping grounds?
Yes, we’re interested, but so far we don’t really understand how to access it […] we’re seeing it as a political announcement rather than something with substance
Chief executive of a listed developer
If some places in the UK are now “left behind” – to use the current parlance – there is an argument that it is no accident but rather a conscious outcome of government policy. From the 1980s onwards, both Conservative and Labour governments directed large amounts of money to the most deprived parts of the country in an effort to turn them around. It was when Gordon Brown became prime minister that this commitment to “area-based” regeneration waned. Then, in 2010, the incoming coalition government abolished regional development agencies alongside nearly all remaining regeneration-linked funding streams including the Neighbourhood Renewal Fund and Housing Market Renewal programme.
A 2015 study of regeneration funding by the Centre for Analysis of Social Exclusion found the result was that New Labour’s annual spend of circa £1bn on neighbourhood renewal collapsed by 97% to an average of £32m under the coalition government, while spending on regeneration overall – including housing, infrastructure and community programmes – fell from more than £11bn in 2009 to £4bn by 2011. Chris Brown, chief executive of regeneration developer Igloo, says: “Gordon Brown turned off the tap in 2008 – that was the last time the UK government did anything significant in regeneration.
“I personally believe strongly that this decision is what led pretty directly to people in low-income areas concluding they weren’t getting anything out of the political process.”
At the same time, the capacity for local authorities to fund these kinds of programmes themselves reduced as council funding fell by an average of 40% under coalition government austerity programmes. Councillor Sean Fielding, leader of Oldham council, which has seen funding more than halved, says councils have no obligation to continue to spend in this area. “Regeneration is not a statutory service,” he says. “In theory we could de-establish our town team tomorrow – it’s only because we believe it is so important that we carry on doing it.”
Towns Fund – how will it work?
The Towns Fund is a combination of two previously announced funding streams – Theresa May’s £1.6bn Stronger Towns Fund, designed to help “left-behind towns” and the £675m, October 2018 Future High Streets Fund – topped up by Boris Johnson with an extra £1.3bn of cash. Pulled together, the government says it expects eligible places to negotiate “town deals”, building on the 31 City Deals under which the government has allocated £9bn of funding in return for meeting government priorities.
Announcing the plan, the government said the deals, administered by the housing ministry rather than Homes England, would “improve connectivity, provide vital social and cultural infrastructure and boost growth” as part of wider plans to increase “productivity, skills and living standards”. The government said it will publish a prospectus setting out exact criteria against which local authorities can bid “shortly”, with the prospectus also due to set out a timeline in which funding will come forward.
Chris Brown, chief executive of developer Igloo, says: “This is going to be a normal competitive process where government says what it’s looking for and local authorities try to second-guess that and tailor bids accordingly.”
Martin Curtis, associate director at Curtin & Co, says: “The interest will depend on whether the money is available as a loan or a grant. If it’s a grant, developers will be biting the government’s hand off. But if it’s a contract between a developer and a local authority, the interest will depend upon what the margin and the risk is.”
Fixing economic fundamentals
In this funding context, therefore, any money from the government is welcome. The government has pledged to publish a prospectus setting out the exact criteria under which towns will be able to bid for funding, and over what time frame. So far it has made clear it will be prioritising issues such as broadband infrastructure, transport links, local skills and culture. Jackie Sadek, chief executive of developer UK Regeneration and an adviser to Bill Grimsey’s landmark town centres review, describes the money as “incredibly welcome. There’s a new understanding that town centres are important.”
Rebecca McDonald, analyst at the Centre for Cities think tank, says: “It is great to have the investment, and when you see where it’s going, it’s definitely welcome.” She says her research demonstrates that the broader health of the local economy is the most important issue. “You’ve got to fix the more fundamental economic problems of these areas by thinking beyond the high street. The focus on skills and transport here is one of the reasons we think this intervention has a better and broader scope than many.”
UK Regeneration’s Sadek says the money should be used to implement the conclusions of the Grimsey review, to diversify towns away from the current reliance on retail and towards leisure, restaurant and office uses. “No one’s going far enough to really look at a future which is not, not, not about retail. It’s got to be experiential – people won’t be coming into towns to buy stuff.”
However, while the £3.6bn overall figure may sound large, does it really mark a return to an old-style regeneration programme? Though it is not known what period it will cover, it is unlikely to match the £1bn spent annually on neighbourhood renewal before 2010 – equivalent to £1.3bn once inflation is factored in.
Tom Russell, the former boss of the New East Manchester development company, says there is little evidence of the long-term and focused programmes which he says have proven to be effective. “Michael Heseltine was right when he said you have got to be clear about your objectives and long-term funding to make a difference, particularly if you’re trying to draw in private investment. The private sector has got to be convinced there’ll be a sustainable improvement.”
Moreover, some doubt how much, split between at least 100 places, the money will be able to achieve. Just £241m will be made available in the 2020/21 financial year, suggesting each authority will receive on average a little over £2m. Igloo’s Brown says: “There’s not much you can do with just a couple of million.” Lyn Fenton, a consultant and former development director at the Ancoats area regeneration in Manchester, says: “My first reaction is this is it’s papering over the cracks.
“It is getting a little bit back of what local authorities have lost under austerity, and of course if local authorities can take it and do good with it, then all power to them. But it is only a little.”
To give a scale of the challenge, in just one of the 100 areas – Oldham – the council’s masterplan for regenerating the town centre requires a £350m investment. Oldham’s Fielding says the council has already been working hard to identify the money itself, and that any extra from the government, while welcome, is not likely to make the difference. “All of our plans are there anyway,” he says. “If there’s extra government money, that’s welcome, but really it will just free up money to spend on other things. It’s local leadership that makes the difference.”
Moreover, Fielding rejects the “left behind” label that is so liberally bandied around. “Having a struggling town centre is bad for the local economy and bad for civic pride. It knocks people’s confidence.
“But the phrase ‘left behind’ implies we want to end up being like somewhere else, if only we could catch up. Actually, we’re quite proud of our identity; we don’t want to be a clone.”
And if the overall amount is not sufficient, the money is also tainted by the suspicion it amounts to pork barrel politics – buying votes – amid a splurge of election-friendly cash promises made by the prime minister since taking office. In 94 of the 100 towns identified as recipients of the fund, residents voted to leave in the 2016 referendum – making them places where the Conservatives may be vulnerable to voters opting to support the Brexit Party in the upcoming general election.
While it could be argued that these towns were picked just because they are also the most in need of help, what has particularly aroused suspicion is the inclusion of very marginal constituencies such as Cheadle, Manchester, on the list, despite being much wealthier than neighbouring areas that didn’t make the cut. Sean Fielding describes the Cheadle allocation as simple “electioneering. It’s relatively affluent.” Tom Russell describes the whole exercise as “feeling like another Brexit bribe for parts of the country that need to be kept in line”.
Overall, an analysis by the Manchester Evening News shows that one-quarter of all allocations are in Conservative “super-marginal” seats – where a swing of 1% either way could make all the difference between winning and losing – despite such seats making up just 3% of constituencies overall. Moreover, nearly two-thirds of allocations are in constituencies with majorities of less than 5,000 votes.
Martin Curtis, associate director at public affairs consultancy Curtin & Co, says this is a reasonable conclusion: “We all know we’re heading toward an election and the government will be looking to distinguish itself from the Brexit Party in marginal seats.”
However, a spokesperson for the government said that the initial 100 towns were chosen using a genuine methodology based on “analysis of deprivation, exposure to Brexit, productivity, economic resilience and investment opportunities” and that “wider eligibility criteria and the procedure for funding” would be set out in “due course”.
Either way, the idea of places that have struggled most from poor productivity and declining high streets getting a bigger share of public funds seems a likely outcome, whatever the colour of the government after the election. Igloo’s Brown says: “If we have another PM and another government and a new Queen’s speech, this might be in another wrapper but this priority will likely remain.”
But the political instability and lack of clarity so far as to exactly how and where funds will be allocated is so far limiting the private sector’s ability to get involved. One listed developer chief executive says: “Yes, we’re interested but so far we don’t really understand how to access it and how we might get involved. It’s not a sudden yippee – we’re seeing it as a political announcement rather than something with substance.”
Brown says: “It’s just not clear enough yet for the private sector to benefit from this. The people who will know about this are those on the ground involved in those specific areas already – it won’t be easy for other landowners and property developers to move in and get involved.”
The construction industry will be hoping that the government’s promise to unveil more detail “shortly” doesn’t get sucked into the Brexit vacuum and delayed until after the election.