Wasted opportunities

What do these cock-ups have in common? Behind all of them is English Partnerships, the government's urban regeneration agency. A body supposedly at the helm of the urban renaissance, it has instead managed to steer a string of flagship projects on to the rocks.

Leading figures in regeneration have queued up to criticise EP, complaining that although it may know how to get corrugated sheds built on former coalfields, it lacks the expertise to deliver complex design-led urban schemes. Others say the body's risk-averse culture and onerous appraisal systems stifle the innovation it is supposed to foster. It is, say the critics, highly bureaucratic, inept at managing the delivery of projects and poor at dealing with affected communities.

"They lack experience of the things they are pontificating about," says Piers Gough, a partner in architect CZWG. "Organisations like [housing association] the Peabody Trust show the way and EP trundles along afterwards."

Martin Crookston, a director of Llewelyn-Davies and author of a report for the DETR on the millennium villages, published last August, agrees. "When you compare the millennium villages with the work of other small and innovative bodies, it did not innovate at all, technically or organisationally."

Developers are equally critical. "With English Partnerships, fear of failure is a greater driver than taking risks on success," says Tom Bloxham, chairman of northern developer Urban Splash. "Regeneration is as much an art as it is a science and if you try and make it too scientific and button down every button, you'll stifle innovation. They rely too much on independent reports, on end values, costs and existing use values."

In retrospect, it seems that EP was ill-equipped to take on what Prescott described as "a new era in UK housebuilding". This could be the result of historical factors. EP was set up in 1993 with a simpler remit – to regenerate derelict, vacant and underused land and buildings throughout England, particularly inner urban areas. It has a major property portfolio and £438m-a-year investment programme supported by compulsory purchase powers.

In April 1999, the new regional development agencies took over much of EP's regional project work, but it continues to invest in national portfolios including the millennium villages and a £348m, 10-year coalfields regeneration programme. This devolution of power makes EP a shadow of the organisation it was, but it still lays claim to a key role in implementing the government's urban white paper, due to be published in November. In its latest annual report, it describes itself as an "unparalleled source of best practice and expertise in urban regeneration".

Yet in both millennium village competitions, EP seemed out of its depth. It chose development partners with a shaky commitment to achieving groundbreaking results, and lacked the savvy or negotiating skills to hold them to their promises. The Greenwich village developer negotiated a reduction of its energy- and water-saving targets in the first phases, did not pursue supply-chain management or prefabrication to the extent originally envisaged and abandoned timber-framed cladding in favour of environment-unfriendly brick. At Allerton Bywater, Aire Regeneration Partnership also tried to stray from the brief, according to a spokesperson for Leeds City Council. "They won the competition on the basis of terraced properties of a certain energy efficiency but then wanted to build traditional detached houses."

EP was forced into damage limitation exercises – parachuting in development experts to keep the schemes on track. Both schemes have been mired in delays, as their commercial viability has been questioned and designs and consultants changed.

With EP, fear of failure is a greater driver than taking risks on success

Tom Bloxham, Urban Splash

One view in the development industry is that EP's commercial imperatives are at odds with its brief to promote innovative – and therefore untried and tested – models of urban development. Since EP uses taxpayers' money to purchase and remediate sites, it is duty bound to seek the best return on this investment. The invariable result is that it ends up in partnership with companies that make the highest bids for its sites. And these are invariably volume housebuilders – the least innovative sector of the market. As the Llewelyn-Davies report, Millennium Villages, Sustainable Communities, points out: "The millennium villages could be criticised for seeking unconventional, trend-breaking results from a development process that is competitive, developer-led, top-down and project-driven."

Dickon Robinson, development director of the Peabody Trust, agrees: "Housebuilders are not interested in creating markets; they follow markets. Most people want to identify a trend, minimise risk and follow that trend. EP shouldn't be supporting that."

EP insists that working with volume housebuilders as development partners is key to its strategy. They do not want to preach to the converted, but to promote a revolution in the mainstream of the industry. "We do not back winners. We help to make winners," says Paula Hay-Plumb, EP's chief executive, in her introduction to the agency's annual report.

Trevor Beattie, director of corporate strategy and communications at EP, reiterates that view: "The whole point of these millennium communities competitions is that it is not done in a special situation in a special way. We need to move to a position where the development industry as a whole finds quality mixed-use development the norm. You don't do that quickly or easily. We have always seen the millennium communities competitions as a learning process."

However, some developers say the way EP goes about its job is intrinsically hostile to innovation, because innovation is by nature risky. They complain that EP's overcautious culture results in proposals being subjected to a gruelling appraisal. The high cost of complying with the system – which can be hundreds of thousands of pounds – kills a lot of smaller projects off. As Urban Splash's Bloxham puts it: "If EP wants to get the highest price for the land, it will go to the people who put in the highest bid, with a scheme that's a safe bet rather than anything radical.

"If it was prepared to sell land at low prices and wait for its money, then everyone could compete on the basis of design and the amount of profit share they are offering."

The Peabody Trust's Robinson agrees. "The surveying profession puts a lot of emphasis on measuring things, being precise and professional and not taking risks. Development is a risk-taking profession. There are far too many risks involved in successful development for them to be obsessed with key performance indicators and audits. You can't get things right all the time if you are trying hard."

EP's Trevor Beattie admits that the organisation is risk averse, but points out that this is what parliament requires from bodies dealing with public funds. "We have to account for taxpayers' money," he says. "Necessarily and rightly, we are more risk averse than a private sector body."

However, Beattie rejects allegations that EP's methodology stifles good design. "Good design does not necessarily have to cost more. And a well-designed project will generate more value. But the value-for-money question is very complex," he says.

[EP is an] unparalleled source of best practice and expertise in urban regeneration

English Partnerships Report

But although EP has preached the value of good design in publications like this year's Urban Design Compendium, it has often not practised it. In 1998 it chose developer Centros Miller's plans for a £20m mixed-use redevelopment of the Docklands Light Railway's Cutty Sark station in Greenwich. This was decried by English Heritage as "fundamentally flawed" and of "poor overall quality". EP responded by saying: "Centros supplied a better financial offer than [rival developer] MAB for a scheme which complied with the development brief."

Despite its frustrations, the development industry acknowledges that EP is an important catalyst to regeneration. "They have had to address some of the most difficult sites in the country with varying degrees of success. As long as they learn and we all learn it has not cost too much," says Charmaine Young, director of regeneration at housebuilder St George.

EP aims to play a key role in the implementation of the urban white paper and together with the RDAs it is piloting the new urban regeneration companies in Sheffield, east Manchester and Liverpool – dynamic but relatively powerless bodies that have inherited EP's job of delivering the urban renaissance. And EP still has an important national role in unlocking underused public sector land: they are about to release Pontoon Dock at the Royal Docks in east London to a development competition for a new urban village. Meanwhile, the millennium village programme finally restarted in August, but in contrast to the fanfare that launched the first two, the third scheme began with a low-key consultation exercise in Ancoats, east Manchester.

EP is also developing the national land use database, and is proposing, jointly with the Prince of Wales's Foundation for Architecture, mixed-use extensions to new towns to relieve housing pressure in London and the South-east.

Developers cannot afford to ignore EP, but they need to forge more successful partnerships with it. Last December, EP's Partnership Investment Programme, which provided gap funding as an incentive to developers to invest in depressed markets, was outlawed by the European Union as state aid. This is set to be replaced by new funding, but a more intractable problem is the agency's institutional culture and organisation.

"EP lacks quality of leadership and imagination. Urban regeneration is a phenomenally sophisticated business. They need someone red hot," says Gough.

Others are calling for EP to rethink its development strategy. "It needs to change its institutional models to be more open, imaginative, varied and lively," says Crookston, who suggests that instead of remediating huge tracts of land, which only a major developer could take on, it should consider developing sites scattered across an urban area in partnership with smaller developers.

Crookston also suggests that better results could be achieved through development models used in The Netherlands and Germany, where land is sold at below market rate to not-for-profit agencies that then forge partnerships with a developer.

But Beattie says this development strategy, which he calls the "endowment model", is interesting, but "does not fit with current Treasury theology". And this seems to be the essence of EP's dilemma – the government wants it to promote and subsidise an urban renaissance without using public money to pump-prime it.

But the politicians must share the blame with the civil servants – ministers have a habit of foisting their grand ideas on EP and disappearing when it all goes wrong. Prescott seems to have mysteriously forgotten about his villages, and Lord Falconer has stopped hailing the dome as an outstanding example of regeneration. Yet EP is still left with the task of finding a new taker for the £750m landmark to save Falconer's blushes.