Sir Michael Lyons and Lesley Chalmers are in charge of one of the best-kept secrets in regeneration – a public–private venture set up to transform the grimmest areas in England. They are also a great comedy double act.

On the face of it, they're so different

The Chalmers & Lyons show
The Chalmers & Lyons show

She likes Irish whiskey; he drinks Burgundy. She has romantic dalliances with the likes of star architect Ian Simpson; he meets up with Gordon Brown for chinwags on council tax reform. She likes saucy banter like: “Our plan

is to go in early and come out late – there’s probably a joke in there somewhere”. He laughs, but replies: “Let’s not go there.” To put it another way: she’s techno; he’s concerto.

The odd couple are Lesley Chalmers and Sir Michael Lyons, chief executive and chairman respectively of the English Cities Fund. The ECF was set up in 2002 by regeneration quango English Partnerships, contractor Amec and investor Legal & General. This unique public–private venture aims to show the private sector that it can make money from regenerating even the most rundown communities. This year is crunch time: the ECF wants all six of its signed-off schemes across the country to be on site within the next 12 months.

At times, Chalmers and Lyons are a great double act – the Morecambe and Wise of the regeneration world. At others, they’re reminiscent of a long-married couple: she pours a glass of water for him when they arrive at Amec’s City offices, he touches her arm to apologise when he interrupts her. In fact, a leading developer is known to joke of them that “she leads him around by the hand so he knows where he’s going”.

Of the two, Lyons has the bigger reputation. He is a former Birmingham council chief executive, and has produced reports for the Treasury on civil service relocation and the sale of government assets (see “Q&A”).

He is also a non-executive director at support services group Mouchel Parkman. But Chalmers is the regeneration veteran, having led the renovation of the notorious Hulme district of Manchester during the early 1990s. She spent the five years between that job and her appointment at the ECF as a freelance consultant, advising the likes of the Prince’s Trust. Explaining her appointment, she says: “John Early of Amec, who had been on the board of Hulme, called me one day, wanting to talk about the ECF. I hadn’t even heard of it.”

If we can show that there is money to be made, others will follow. At the moment, people think of regeneration as working in dirty places ... But we’re not looking for world domination

Lyons was aware of the ECF from the start, having read the proposal for such a company in Richard Rogers’ urban taskforce report. EP picked up the idea, but the investment of a quango meant that the ECF was subject to European Union state aid regulations. As a result, ECF can invest only £50m at a time on a project, and schemes have to be located in assisted areas. As Lyons points out: “It’s a tight focus and we have been fairly cautious about our public profile.”

Chalmers and Lyons deliberately maintained that low profile while they negotiated deals with local authorities for the land they needed and the schemes they proposed. As a result, many people still haven’t heard of them.

The projects

Chalmers stresses that they are “taking on areas that have got a really poor image”. That means grim estates in Liverpool, Manchester, Wakefield, Gateshead, Plymouth and Canning Town in east London. The plan is to transform them into modern, mixed-use environments.

In Liverpool, for example, ECF will start developing 50 apartments in July, although the scheme will also capitalise on a location close to the city’s business district with a big office development.

ECF hopes that its projects can differentiate themselves from other large-scale schemes. Lyons was an east London lad, and recalls how he used to help his mum carry home potatoes from the market in Canning Town. (As one long-standing friend puts it, “he likes to let everyone know about his working-class roots”.) It clearly rankles with him to be reminded that one of the criticisms of the regeneration of London’s Docklands was that it did not boost the surrounding areas where he used to shop, or Poplar and the Isle of Dogs.

“Yes, when you get to the A13, regeneration comes to a standstill,” he says. “Something always has to have a boundary, but the rational answer is that you shouldn’t draw a line. We’ve learned that a hinterland is difficult to map, but you need to.”

We’ve got enough schemes to chew on for now, but we are already thinking of turning this into something bigger

Chalmers chips in to back up her brother-in-arms: “We’ve looked over the past couple of years for our six local authority partners to share our convictions. For instance, Plymouth – our “seaside scheme” – has an area plan that goes beyond our scheme. Without a full regeneration strategy, we might as well pour money down the drain.”

Each area earmarked by the ECF will cost more to regenerate than allowed for in the £50m cap, but projects will be phased to allow for additional investment over the years. This should not be too much of a restriction: at present, its total budget is just £100m, half of which is provided by the three equity investors and half by bank debt.

Drumming up competition

ECF’s running costs are minimal; the body has no dedicated offices and a staff of one: Lyons is on the books, Chalmers is employed by Amec. However, it has an eye on expansion. The £100m can be raised to £250m, but Lyons seems to have grander visions yet: “We’ve got enough schemes to chew on for now, but we’re already thinking of turning this into something bigger.”

It is not only investors that ECF is looking for, but also competitors. If the fund is to be considered successful, it needs to create a whole new market for private sector investment in the regeneration of the most rundown areas, which would also mean that institutional investors take on more risk. Chalmers says she looks forward to operating in a more crowded field. “If we can show that there is money to be made, then others will follow, because at the moment so many people think of regeneration as just working in dirty places. [But] we’re not looking for world domination.”

As the interview ends, Chalmers makes her comment on entering early and leaving late. She’s making a perfectly sensible point that the fund is investing in projects for the long haul, but this doesn’t prevent the pair sniggering like schoolchildren. Then Chalmers suddenly declares: “Our plan is both cunning and” – pausing for full impact – “multiple.” Forget Eric and Ernie – this is like being in a Carry On film.

Q & A

Lesley Chalmers

Do you have any concerns about the government’s sustainable communities plans?
Volume is my big worry. We must look at quality – you can’t just count numbers, otherwise someone will have to come back in 30 or 40 years and fiddle around with it again.

What about the Northern Way?
I’m a Manchester resident, so, as I see it, if we keep on just putting investment into the South-east we’ll tip into the sea. It would be a bit like the Titanic.

Does it help that the ECF has public funding?
Sometimes it can be unhelpful. A lot of hits on our website ask what grants we give.

Where were you born?
My family’s all Scottish. I was born in an army hospital – but don’t write that, I get enough of that dominatrix stuff ...

Quite ... What’s the fondest memory of your career?
The end-of-first-year party at Hulme. Thousands of people came, and there was not one arrest. There were all these interesting smells, almost tobacco-like, and I was standing next to the police [chuckles]...

Sir Michael Lyons
Do you think you upset a lot of civil servants in your report last year, when you said 20,000 should be moved out of the South-east?
I like to think of it as putting smiles on the faces of the 70% of the civil service who work outside of London and people forget about. It would also be of benefit to London, as it would reduce some of the overheating of the London economy.

What about the £30bn you said could be made by selling off civil service assets, including property and land?
The chancellor asked me to find out if this £30bn figure was achievable. What my report showed was that this was not unreasonable over the next five to six years. It will be a bit of a stretch, but there need to be clear targets. Already some of the big changes necessary are in place, such as the establishment of a National Assets Register.

Any hints on the content of your next report for the chancellor on council tax?
Part of it is about whether councils should start looking at a return to the business rate or the possibility of raising local income tax.

What’s Gordon Brown like?
I’ve only ever had good meetings with him.