ITEM 5a AppendixNational Regeneration Framework by gegeshandong


									ITEM 5a

     Transforming places; changing lives
                    A framework for regeneration

Ministerial Foreword

Executive Summary

Chapter One: Regeneration – What it is and why we should invest in it

Chapter Two: What our priority outcomes are for regeneration

Chapter Three: How and where to target regeneration investment in future

Chapter Four: Who needs to act differently as a result of this framework


A:     Consultation questions

B:     Regeneration and global competition

C:     The rationale for Government involvement in regeneration

D:     Understanding the drivers of decline

EFG – to follow – how and where to intervene

H:     Examples of international best practice

I:     Local and Regional Strategic Planning

J:     Future arrangements for the appraisal of regeneration – to follow

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Ministerial Foreword

                                  To follow

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   Transforming places; changing lives
                    A framework for regeneration

Executive Summary

More than ever before, our national prosperity and competitiveness depend on
our ability to tap into the creativity, energy, ingenuity and skills of the British
people. To do that, we need to ensure that all regions, cities, towns, and
neighbourhoods across England have the opportunity to contribute to, and
share in, rising prosperity.

We have made great progress – as a result of sustained investment the gap
has narrowed between the most deprived areas and the rest; we have tackled
failing public services and driven up school standards; and we are tackling
head on the challenges of child poverty. But there is always more to do. There
are still too many young people not getting the chances they deserve, too many
neighbourhoods marred by worklessness, too many people unaware of the
opportunities which could be open to them.

This framework aims to tackle those challenges in the context of a changing
delivery landscape for regeneration. It’s aimed at the key delivery agencies
involved in regeneration – community and neighbourhood organisations; local
government and other members of the Local Strategic Partnership (LSP);
Regional Development Agencies (RDAs); the new Homes and Communities
Agency (HCA); Urban Regeneration Companies (URCs); Urban Development
Corporations (UDCs); as well as the private sector, the Third Sector and
central Government departments. In particular, it sets out proposed new
expectations of local government; RDAs; the HCA; and central

The framework aims to ensure that public and private regeneration investment
is focused on improving the lives of the most deprived people in our

The Government believes that regeneration in the future needs to be more
tightly focused on outcomes for deprived areas than it has been in the past.
This signals a move away from output measures towards the outcomes that
really matter to communities, and promoting economic independence. The
framework therefore sets out three priority outcomes, which will guide

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targets set for the Government expenditure on regeneration in future. They

          improving economic performance;

          increasing economic independence in deprived areas; and

          creating places where people want to live and work from
           deprived areas

The framework sets out proposals on how to co-ordinate regeneration
investment in the future, based on local and regional priorities - devolving
decision-making on regeneration, away from the centre, towards local and
regional partnerships.

Accountability is key to ensuring regeneration delivers value for money so
this framework also considers who needs to take responsibility for the
effectiveness of regeneration.

This is a draft framework for consultation. Annex A includes a series of
consultation questions and sets out the arrangements for feeding in your
views. The framework will be updated in the light of feedback and finalised
early in 2009, and will be part of the process of preparing for the next
spending review.

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Chapter Summary

What is regeneration?

1. Regeneration aims to reverse economic, social and physical decline in
   areas where market forces will not do this without support from
   Government1. It should bring opportunity to people living in areas in
   decline and empower residents to take advantage of those opportunities.

2. In doing so, regeneration should transform places, making them more
   attractive to residents and investors, enabling new and existing businesses
   to prosper. To achieve this transformation, Government’s investment in
   regeneration should be aimed at tackling barriers to growth that transform
   the lives of the most deprived in society. In this way, regeneration has
   both equity and efficiency objectives.

3. The transformation of places and communities takes time. In publishing
   this framework the Government is acknowledging the scale of the
   challenge and providing a framework for consistent, long-term investment
   that builds confidence and unlocks significant investment from the private

4. Regeneration investment should be targeted at where they can secure
   long-term change, rather than providing ongoing subsidy to
   underperforming areas. Clearly there will continue to be a role for directing
   mainstream interventions towards support in deprived areas – and for
   encouraging these service providers to work together in meeting the needs
   to people in deprived areas.

How are regeneration and economic development related?

5. Regeneration and economic development are closely related. But not all
   activity that promotes economic development will constitute successful
   regeneration – and evidence from the last 30 years shows that economic

 Review of sub-national economic development and regeneration, HM Treasury, BERR, and
CLG, July 2007

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    inclusion does not necessarily follow from wider economic growth. Despite
    strong national and regional economic performance, there is evidence that
    geographical inequality between the most successful and the most
    deprived areas has grown2 – both in terms of how local areas compare
    and how neighbourhoods compare. Disparities within regions remain
    greater than those between them.

6. Regeneration is also concerned with economic inclusion – and should
   contribute to the improvement of the lives of people in the most deprived
   areas. Successful regeneration will be dependent upon economic factors
   at a wider spatial level i.e. on city, regional, national, and global
   economies.3 But, the relationship is not one-way. The economic
   performance of cities, regions and even the nation can be held back or
   promoted by the extent to which all individuals have the opportunity to

Regeneration contributes to wider government priorities

Successful regeneration will improve the lives of those living in the most
deprived areas, and can lay the foundations for flourishing, empowered
communities. And through promoting economic independence, regeneration
can support happier,4 healthier,5 and safer lives6. In particular it will impact on
the following national public service agreement targets, to:

       Raise the productivity of the UK economy
       Improve the skills of the population, on the way to ensuring a world-
        class skills base by 2020
       Promote world class science and innovation in the UK
       Deliver reliable and efficient transport networks that support economic
       Deliver the conditions for business success in the UK
       Improve the economic performance of all English regions and reduce
        the gap in economic growth rates between regions
       Maximise employment opportunity for all

  A century of inequality in England and Wales using standardised geographical units Area;
Gregory, I et al (2001) 33.3 297-33.3. This is also covered by forthcoming JRF research led
by Danny Dorling – Understanding the Transformation of Prospects of Place
  The Economies of Deprived Areas, DCLG (2006); Syrett (forthcoming) Regional
Governance and the Economic Needs of Deprived Areas
  Life Satisfaction: the state of knowledge and implications for government, Strategy Unit,
December 2002
  Is work good for your health and well-being? Gordon Waddell and A Kim Burton, 2006
  Crime and Economic Incentives, IFS, 2000 (Meghir and Machin)

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        Halve the number of children in poverty by 2010-11, on the way to
         eradicating child poverty by 2020
        Raise the educational achievement of all children and young people
        Narrow the gap in educational achievement between children from low
         income and disadvantaged backgrounds and their peers
        Improve the health and wellbeing of children and young people
        Improve children and young people´s safety
        Increase the number of children and young people on the path to
        Increase the proportion of socially excluded adults in settled
         accommodation and employment, education or training
        Tackle poverty and promote greater independence and wellbeing in
         later life
        Promote better health and wellbeing for all
        Build more cohesive, empowered and active communities
        Deliver a successful Olympic Games and Paralympic Games with a
         sustainable legacy and get more children and young people taking part
         in high quality PE and sport
        Make communities safer
        Reduce the harm caused by Alcohol and Drugs
        Secure a healthy natural environment for today and the future

Why should the government invest in regeneration?

7. The government’s overall economic objectives are to raise the rate of
   sustainable growth and achieve rising prosperity and a better quality of life,
   with economic and employment opportunities for all. To achieve this goal,
   it is essential that every region and locality perform its full potential. There
   are strong social and economic arguments for investment in regeneration,
   these are summarised below and explained in more detail at Annex B.


8. Successful regeneration will improve the lives of people in the most
   deprived neighbourhoods. Decades of de-industrialisation and
   economic restructuring adversely affected millions of people. Despite
   significant investment and improvement in deprived areas over the past
   ten years, there is more to do to extend opportunity to all those living in
   our most deprived communities.

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9. Tackling place-based barriers to growth can help reduce spatial disparities
   in outcomes – narrowing the gap between deprived areas and the rest of
   the country.

                                  Key Regeneration Gaps for the Most Deprived Neighbourhoods; Ratio of outcomes for the most
                                                   deprived 10% of LSOAs compared to the England average.
                                              So , fo r % percieving high
                                              A SB , deprived LSOA s have a
                                              rate mo re than twice that o f
                                              the England average



              1.0                                                                                                                                                                                                         England
                                            27.7%                                    13.9                                     12.4                                    286                                                 Averages. 1 = no
                        17.5%                                    13.3%                                   28.8                                     15.8                              £206,721               94%


                    %percieving high       %Not in         %WA pop with no     Violence** per 1000 Burglery** per 1000   Theft ** per 1000   Criminal Damage**    Education Key    Average House     %people who enjoy
                     ASB* (06/07)      Employment* (Apr-    Qualifications*          (04/05)             (04/05)             (04/05)         per 1000 (04/05)    Stage 4 score**   Prices** (2006)      living in their
                                           June 07)         (Apr-June 07)                                                                                           (05/06)                          n'hood* (Apr- Dec


    *10% most deprived according to IMD2007
    **10% most deprived according to IMD2004


10. Markets alone cannot always drive the economic growth of some sub-
    regional economies, parts of cities and towns, and some rural areas. This
    weaker economic performance can lead to social and economic inequality,
    which is often reflected in spatial concentrations of deprivation.

11. There are also strong efficiency grounds for targeting regeneration.
    Barriers still exist that prevent markets from working effectively, reducing
    the scope for private investment, and leading to poor outcomes in deprived
    areas. They will vary from place-to-place, but can include externalities
    (where there are spillover effects that people or firms do not take into
    account),7 public goods (goods that have benefits that firms are unable to

  For example, investment that reduces dereliction, decay and contamination in an area is
likely to benefit local residents as well as the institution undertaking the work (through asset
uplift and potential operational returns). As a result, businesses will invest less in an area than
may be socially optimal given the value to residents and other businesses.

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       profit from)8, or information failures (where people or firms are unaware
       of true costs or benefits of an activity)9

12. By tackling such barriers, public sector investment in regeneration can
   provide the “enabling conditions” which reduce risks for private investors,
   for example, assembling land for re-development. Indeed, regeneration is
   successful when residents and institutional investors make long-term
   commitments to an area. Regeneration investments are one element of
   Government’s efforts to stimulate economic growth.

Costs to the taxpayer

13. Over a fifth of people claiming Incapacity Benefit or Job Seekers
    Allowance live in the most deprived areas in England. Effective
    regeneration can help to significantly reduce the estimated £5.8bn10 we
    spend each year subsidising rather than transforming the lives of residents
    of deprived areas. This figure does not include the increased dependency
    of deprived areas on other public services, including housing;11 policing;12
    and health services,13 or the physical costs of vandalism and higher levels
    of capital depreciation in such areas.

Why do we care about place?

14. To tackle these issues, place-specific approaches are needed alongside
    policies which are focused on the needs of disadvantaged individuals,
    regardless of where they live. A Strategy Unit report14 provides four
    reasons for intervening through area-based initiatives, which can be
    summarised as:

               Area effects – Concentrated poverty may have cumulative impacts
                and these ‘area effects’ can combine to increase the level of

  For example, private developers are normally reluctant to build large parks, provide public
squares which will be available to all who live or visit a community – not just those who live in
the new development.
  For example, businesses often undervalue returns to investment in regeneration areas. A
primary reason for this is simply a lack of existing market activity in some areas – developers
cannot judge opportunities on the basis of their previous experience or the experiences of
   Using Freud Calculations and DWP WACG data May 2007
   Ends and Means: The future roles of social housing in England, CASE report 34, February
   Crime and Economic Incentives, IFS, 2000 (Meghir and Machin)
   Improving the Prospects of People Living in Areas of Multiple Deprivation in England,
Strategy Unit, 2005

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             disadvantage. These can be social (low aspirations and cultural
             expectations; constraining social networks; stigmatisation of
             residents through the poor reputation of a neighbourhood; and a
             high burden on local service provision) or physical (poor-quality
             and/or absence of private services; lower standards of public
             service provision; features of the built environment; and high levels
             of environmental pollution’).15 These effects are difficult to quantify,
             and are likely to vary in magnitude between areas.

            Targeting – Where deprivation is highly concentrated, focussing
             resources on particular areas may be more efficient in tackling
             problems than an unbounded people based approach.

            Effective delivery – Delivery at a lower spatial level enables the
             tailoring of services to meet specific needs.

            Synergies – Tackling policy problems may require co-ordination
             across a number of policies. Policy coherence may be hard to
             achieve when decisions are taken at different spatial levels,
             creating a need for policies to be "joined-up" across government
             levels. An area based focus may help to ensure coordination
             between organisations and approaches, which is essential for
             tackling deprivation.

Why do we need a regeneration framework now?

15. Over the years the significant investment in regeneration has delivered
    improvements in outcomes for those who live in the most deprived areas –
    and helped narrow the gap between the most deprived areas and the rest.
    However, the time is right to shift our emphasis on to tackling the
    remaining economic challenges that hold back deprived areas. To
    ensure sustained improvements in housing, crime reduction and
    educational attainment, the framework needs to ensure regeneration
    tackles the underlying economic challenges.

16. The sub-national review recognised the potential role for targeted
    regeneration in improving outcomes in deprived areas, but also highlighted
    risks of competing priorities and poor coordination – and echoed concerns
    over a lack of emphasis on economic outcomes. To overcome these risks,

  Social Exclusion Unit (2004) Breaking the Cycle, para 5.11, Working Paper 99; Berube, A 2005 Mixed
communities in England: A US perspective on Evidence and Policy Prospects, York, JRF; Jobs and
Enterprise in Deprived Areas. SEU 2005

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     the SNR recommended a more consistent framework to help improve
     prioritisation and coordination – and to tighten the focus of investment on
     barriers to economic growth and economic inclusion.

17. The need for a more consistent framework is heightened by changes in
    delivery landscape for regeneration. At the national level, the new
    Homes and Communities Agency, to be launched on X will bring together
    the work of English Partnerships and the Housing Corporation – and offers
    potential to improve effectiveness and efficiency of housing and
    regeneration regeneration investment. At a regional level, Regional
    Development Agencies are take on a more strategic role in regeneration,
    working with local authorities to develop and agree the draft regional
    strategy and its delivery. And locally, the new Local Government
    Performance Framework includes a clear focus on regeneration, with
    greater flexibility to deliver against the outcomes that really matter.

The Homes and Communities Agency

The Homes and Communities Agency is being set up to improve the
effectiveness of Government investment in housing regeneration. The HCA
will contribute to delivery of Government’s objectives for housing supply,
secure the delivery of new affordable homes and help meet objectives for
regeneration as well as contributing to the achievement of sustainable

The new, single organisation will enable local authorities to engage in a single
conversation across a range of issues concerning housing and regeneration
programmes. We expect the Agency’s programmes to be developed by
working closely with sub national delivery partners, for example RDAs and
local authorities, in line with regional and local priorities, which will include
measures and development necessary to support economic renewal. 16

18. The new regeneration framework will also help drive improvements in the
    value-for-money of the Government’s investment in regeneration.
    Regeneration has been identified as one of the Departmental public
    value reviews, aimed at improving the value-for-money of regeneration
    spending over the CSR and laying the groundwork for the next spending
    review. The new framework offers a real opportunity to ensure value-
    money is embedded within Government’s approach to regeneration by

  Consult Delivering Housing and Regeneration: Communities England and the future of
social housing regulation, CLG, June 2007

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      ensuring investment is focussed on underlying drivers and targeted where
      there are opportunities for change.

Building on Success

19. Over the past decade, government investment in regeneration has built a
    strong partnership between communities, the public and the private sector
    which has delivered real improvements in outcomes for the most deprived
    in society.

Past approaches

The Urban White Paper, published in 2000 set out Government’s plans for
supporting urban renaissance, building on Lord Roger’s Urban Task Force
report, which recommended that urban policies needed to improve people’s
prosperity and quality of life – not just address the physical environment.

Soon after, Government published the National Strategy for Neighbourhood
Renewal (2001) to focus on deprived neighbourhoods – to ensure that within
10 to 20 years no one would be seriously disadvantaged by where they live. It
was based on a holistic approach, covering physical environment, public
services and partnership working. It provided focus for mainstream funding
and dedicated resources in New Deal for Communities and Neighbourhood
Renewal Fund.

In 2003, this approach was strengthened by the Sustainable Communities
Plan, which set out a long-term programme for urban and rural areas,
launching the Housing Market Renewal Pathfinders, which aimed to tackle
low demand and improve the quality of our public spaces.

20. Many of our regions, cities and towns are now more economically
    competitive than they were a decade ago. At a regional level, recent data
    suggests that the poorer performing regions have now started to narrow
    the gap in growth rates with London, the South East and East of England.
    In cities, one million extra jobs were created between 1997 and 2003,
    accounting for almost 65 per cent of the new jobs in England (1997 and
    2003) with around 40 per cent created in cities other than London.17

21. Over the same period, the gap between deprived areas and the rest has
    narrowed considerably, as shown in the chart below. Between 2001 and

     State of the English Cities Report, Office of the Deputy Prime Minister, March 2006

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      2006, the Neighbourhood Renewal Fund provided £1.87 billion for
      England’s 88 most deprived local authorities and another £1.05 billion has
      been allocated for 2006-2006.18 This massive investment has borne fruit:
      in deprived areas supported by the fund the gap with the national
      average in crime, liveability, health, and education outcomes has
      narrowed considerably.

22. This has been complemented by both significant investment in deprived
    areas through mainstream spending by Government Departments services
    and also in physical regeneration which has transformed the face of many
    estates, towns and cities and breathed new life into stagnant economies.
    Since 1997 English Partnerships has attracted over £5.5bn of private
    sector investment into regeneration.

23. The performance of most local authorities has measurably improved, and
    satisfaction has increased, although not at the same rate. We have
    strengthened opportunities for local people to shape local decisions and
    take matters into their own hands, and will continue to do so through the
    proposals in the 2006 Local Government White Paper Strong and
    Prosperous Communities and our forthcoming white paper on

     Communities and Local Government

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[Empowerment WP]

The Government is committed to giving people more control over their lives.
The [name of Empowerment White Paper], published on X, promises a
transfer of power away from Government to citizens and in doing so help build
vibrant and cohesive communities.

The White Paper seeks to accelerate the process of providing better quality
opportunities for people to get involved in things that matter to them, so that
they have real power and influence and are encouraged to participate in the
decisions that affect them.

The end result will be a new relationship between the Government and the
people, one that offers the potential for transforming the ways in which people
live their lives.

Tackling underlying economic challenges

24. These significant improvements in outcomes in the most deprived areas
    (driven by regeneration and heavy investment in mainstream services like
    schools and the police) have had positive effects on people’s satisfaction
    with and trust in local government and other local public bodies.19
    However, we have not seen a significant reduction in the number of people
    without work in the most deprived areas20 and while the gap has closed,
    patterns of concentrated deprivation have remained largely the same.21

25. The Government therefore believes that regeneration needs to be
    more tightly focused than it has been in the past on tackling these
    underlying economic challenges. That means addressing the place-
    specific barriers that prevent markets working effectively; enabling
    households, businesses, private developers and investors in deprived
    areas to adapt to new challenges and opportunities as they arise.

26. Tackling these challenges through connecting people living in deprived
    areas to jobs can lay the foundations for flourishing, empowered
    communities. Work provides an opportunity for social and economic
    mobility – particularly for the most deprived in society, for whom it can be

    New Deal for Communities 2001-2005: An Interim Evaluation, CRESR, November 2005
    Worklessness is a less familiar term than unemployment to describe those without work.
   People use it because common definitions of unemployment miss out important groups of
   people who are not working but who would like to.
   IMD analysis (unpublished)

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     an important first step on the road to independence – and evidence shows
     that those in employment are happier,22 healthier,23 and are less likely to
     get involved in crime24.

27. Getting people into sustained employment is key to tackling child poverty
    and improving their lives, offering people the opportunity to fulfil their
    potential. It empowers individuals and helps build self-respect,
    independence and confidence.

Case Study: Manchester                        [DN consider alternative case study]

Economic output fell in real terms in most areas of Greater Manchester and its
City Region during the 1980s and the early 1990s, reflecting both the de-
industrialisation and restructuring of the economy from a primarily
manufacturing base, as well as the effects of the UK recession in 1987 and
the other more significant global slowdown between 1990 and 1991, which
had a particular prominent impact on the North West and the City Region
economy, as compared to the UK as a whole.

Manchester has benefited from a range of Government regeneration
initiatives, including:

o £191.5m in Neighbourhood Renewal Fund to Greater Manchester
  between 2001 and 2006
o The North West Development Agency has allocated £70m to date in East
  Manchester contributing to a total of £800m of private and public sector

Greater Manchester generates 39 per cent of the North West’s total economic
output or GVA and is part of the largest city-regional economy outside London
(contributing 5.0 per cent of the total national GVA output).

However, despite strong economic growth within the city region, and
regeneration that has made places look smarter and feel safer, over a fifth of
Greater Manchester’s neighbourhoods remain in the most deprived decile
nationally.25 Over two-thirds of neighbourhoods did not improve on their
starting decile position between 2004 and 2007. And progress on

   Life Satisfaction: the state of knowledge and implications for government, Strategy Unit,
December 2002
   Is work good for your health and well-being? Gordon Waddell and A Kim Burton, 2006
   Crime and Economic Incentives, IFS, 2000 (Meghir and Machin)
   IMD 2007

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worklessness has been slow; over 200,000 people in Greater Manchester
remain in receipt of incapacity benefit or job seekers allowance.

Sources: Manchester Independent Economic Review, Economic Baseline 2008; IMD 2004 and 2007;
City Strategy Operational Plan, March 2007

The link between worklessness and concentrations of deprivation

28. Economic inequality is often reflected in spatial concentrations of
    deprivation. Benefit payments are three times more prevalent in the 10%
    most deprived neighbourhoods than elsewhere.26 Indeed, in our most
    deprived 10% of neighbourhoods 1 in 4 people are claiming out-of-work


In England the current employment rate is 74.9%. Over 29 million people are
in work; the highest number since comparable records began in 1971. The
term ‘worklessness’ describes the remaining 25.2% of working age people in
England. Of those 1.64 million are unemployed – that is they are not currently
in work but are looking for, or are capable of work.

The remaining 7.9 million people are ‘economically inactive’ – neither working
nor looking for work. Of this group around 2.7 million people are claiming
Incapacity Benefit, around 1.9 million are students and 2.3 million are looking
after the family home.

29. These pockets of deprivation are in part driven by provision of social
    housing. There is a strong correlation with social housing – in part
    because provision has become much more tightly constrained over recent
    years, and new lettings have become increasingly focused on those in
    greatest need. In the 10% most deprived areas, 51% households are
    social tenants compared to 16% elsewhere. In the social housing sector
    over half of working age households are workless, up from 34% in 1981
    (compared to 23% and 9% in the private rented and owner-occupied
    sectors respectively27).

     [DN add source from Paul Kirk]
     Labour Force Survey, 2007

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                                  Areas within a weak economic sub-region
                                    map closely to areas of concentrated
                                       deprivation and social housing

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Recognising diversity

30. The demographic characteristics of a local area are also important. We
    know that BME communities are over-represented in deprived areas
    and a recent report28 from the Commission for Racial Equality suggests
    that people from ethnic minorities have not always benefited from
    regeneration investment or been fully engaged in the regeneration
    process. Bangladeshi and Pakistani people are the most likely to live in
    deprived areas, making up four times as high a proportion of the
    population in the most deprived local areas as they do for England as a
    whole. For the Black African and Black Caribbean groups, this figure is
    approximately two and a half times as high.29

31. That is why regeneration strategies need to be built on a sensitive
    understanding of the local population, and be informed by resident

            Ethnicity in the most deprived 10% of LSOAs
                  compared to the rest of England

                                                          Most Deprived 10%
     12%                                                  Rest of England






             Mixed        Asian or      Black or      Chinese       Other
                        Asian British Black British

Consultation Questions

  Regeneration and the Race Equality Duty, CRE, September 2007
  Deprivation and Ethnicity in England: A Regional Perspective Regional Trends 39: 2006

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Chapter Summary

32. Regeneration is most likely to be successful when people living in a
    deprived community as well as those working in local government and
    regional and national agencies all own a shared vision of the future of the
    community. Often it is difficult to achieve this shared vision in light of the
    multiple agencies involved in regeneration, often pursuing related but
    distinct agendas, using a range of funding streams each with their own
    accountability. It is therefore important to be clear on the outcomes that we
    are trying to achieve – and that objectives are consistent between delivery

What is regeneration investment

Many forms of government investment can contribute to the regeneration of a
community. Between 2007 and 2011, the Government will invest over £18bn on
a range of targeted programmes which have a particularly an impact on
transforming the lives and the neighbourhoods of the most deprived in society. In
particular, we expect the following programmes to contribute to regeneration:

      Decent Homes
      Regional Housing Pot Grant
      Housing Market Renewal Fund
      Coalfields
      ERDF
      Thames Gateway
      RDAs investment
      Safer, Stronger Communities Fund
      Local Enterprise Growth Initiative
      New Deal for Communities
      English Partnerships investment
      Working Neighbourhoods Fund
      New Communities Fund

This investment is considerable and demonstrates our long term commitment to
regeneration. But it represents a small proportion of the public sector investment
in deprived areas, through mainstream services and new infrastructure (like
schools and hospitals). This framework aims to harness this investment to

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improve lives and act as a catalyst for regeneration.

Mainstream spend by OGDs in deprived areas

[dn: To add ]

                    CSR07 Provisional Regeneration Budgets: Total
                                  Revenue £5.8bn
                                                                            Coalfields Regeneration Trust
                                                                            Coalfields Enterprise Fund

                                              £2,350,000                    ERDF Old programme
          £120,000,000         £45,150,000
                                                           £159,882,000     ERDF new programme
       £50,000,000                                                          Thames Gatew ay revenue support
                                                   £558,226,000             Housing Market Renew al Fund
                                                         £74,391,000        RDAs
                                                                            EP revenue support
                                                                            NDC - New Deal for Communities
                                                                            WNF rew ard
                                                                            New Communities


                CSR07 Provisional Regeneration Budgets: Total
                               Capital £13.1bn  Social Decency - Arms Length Management
                                                                            Social Decency - LSVT Gap funding
                       £51,929,000       £96,188,000
                                                                            Regional Housing Pot Grant (inc DFG top-up,
                     £354,865,000                                           clearance and private sector decency)
                                                                            Housing Market Renew al Fund
                                                   £3,302,690,000           Coalfields Regeneration Trust

                                                                            Coalfields Enterprise Fund

                                                                            ERDF Old programme

   £3,813,104,000                                                           ERDF new programme
                                                           £320,000,000     Thames Gatew ay (Direct Funding)

                                                                            RDAs & LDA
                                                        £1,583,376,000      EP : Urban Regeneration Agency

     £624,000,000                                                           NDC - New Deal for Communities
       £581,232,000                                                         SSCF
                   £345,736,000 £25,450,000            £10,000,000

New Success Criteria

33. Effective regeneration reverses decline by creating places where people
    want to live and work. To ensure regeneration is targeted on improving
    the lives of the most deprived in society, this framework proposes three

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     priority outcomes. They will guide targets set for the Government
     expenditure on regeneration (described above) in future. These are:

           improved economic performance in deprived areas;

           increased economic independence in deprived areas; and

           creating places where people want to live and work from
            deprived areas

34. It will be important that we measure performance against these outcomes
    consistently – at a national, regional and local level. The national
    performance indicators already include priority indicators for regeneration
    that could be used to measure these outcomes – and many are
    measurable below the district level to enable more accurate targeting of
    the most deprived neighbourhoods.

35. The suggested indicators are:

           Overall employment rate (working age) at neighbourhood level (in
            deprived areas)
           Percentage change in average weekly earnings in Primary Urban
           New business registration rate in deprived areas31
           Percentage change in the employment rate in Primary Urban
           Overall general satisfaction with the local area (in deprived areas)33
           Performance against key indicators to narrow the gap on crime34,
            anti-social behaviour35, health36 and education37 within deprived

Consultation Questions

Are these the right measures?
Should we measure inward investment to deprived areas, and how could we

   As measured by National Indicator 166 in Primary Urban Areas
   As measured by National Indicator 171
   As measured by National Indicator 151 in Primary Urban Areas
   As measured by National Indicator 5 at LSOA level
   As measured by National Indicators 15 and 16
   As measured by National Indicator 17
   As measured by National Indicator 120
   As measured by National Indicator 77

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do so?

36. Economic performance and independence are priorities because evidence
    indicates that people in employment are happier,38 healthier,39 and are
    less likely to get involved in crime40. Evaluation evidence confirms that
    promoting work can lead to improved outcomes across a range of other
    measures. For example, the recent NDC evaluation concluded
    worklessness change scores are significantly positively correlated with
    health theme scores; hence as the worklessness rate of an area
    decreases health outcomes improve41.

37. However, improved economic performance and independence is a
    necessary, but not sufficient success criterion. Success in regeneration will
    also require that improvements in economic outcomes translate to real
    improvements in the lives of residents of deprived areas. For this reason,
    this framework also includes improved satisfaction with living as a key
    success measure.

Working Neighbourhoods Fund

We have taken a major step towards supporting people in the most deprived
areas into work through the Working Neighbourhoods Fund (WNF). The £1.5
billion fund has been allocated to those local authority areas which the
evidence indicates face particularly significant challenges as a result of high
numbers of people without work and low levels of skills and enterprise.
Eligible areas will have the flexibility to use their WNF element alongside other
spending in innovative ways to tackle local priorities.

Authorities eligible for WNF are those that have met one of the following

        any authority that has 20 per cent or more of its Lower Super Output
         Areas (LSOAs) in the most deprived decile on the Employment
         domain; or
        any authority that has 20 per cent or more of its Lower Super Output

   Life Satisfaction: the state of knowledge and implications for government, Strategy Unit,
December 2002
   Is work good for your health and well-being? Gordon Waddell and A Kim Burton, 2006
   Crime and Economic Incentives, IFS, 2000 (Meghir and Machin)
   New Deal for Communities 2001-2005: An Interim Evaluation, CRESR, November 2005

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       Areas (LSOAs) in the most deprived decile on the overall IMD; or
      any authority among the top 40 districts on an equally weighted
       measure of key benefit claim rate and employment rate.

We recognise that for some areas the road to developing talent and skills and
promoting employment and enterprise will be challenging. We therefore want
to reward progress. That’s why we have set aside £50 million to reward those
communities that make progress in turning around long-term unemployment
and in increasing the level of skills and enterprise. The reward will be paid on
successful achievement of agreed milestones up to 2009/10.

WNF authorities will work with Government Offices to identify ‘up to five’ of the
35 targets in their Local Area Agreement which will constitute their WNF reward
basket. Targets included in this basket will support efforts to tackle
worklessness and the causal drivers of worklessness and will attract 50% of the
reward funding available. The other 50% will incentivise performance against
the other 30 targets included in the LAA.

Should regeneration only focus on improving economic performance
and reducing worklessness?

38. Our proposed approach does not mean that all regeneration activity, or
    indeed all agencies involved in regeneration, should solely focus on
    creating and connecting people to jobs. We know that for some areas the
    road to developing talent and skills and promoting employment will be
    challenging. We expect local partners to work together to deliver on this
    challenge, and to build on existing expertise and knowledge. Local
    authorities; housing providers, Jobcentre Plus, Welfare to Work providers,
    schools, colleges and heath trusts all have a role to play in tackling this

39. However, in future it will be important that improvements to the physical
    environment are linked to wider economic improvements that reduce
    worklessness and support those living in the most deprived areas to
    progress in the labour market. So, for example, in an area with high
    worklessness, local authorities, the HCA and other partners should deliver
    social housing investment within a clear strategy for how worklessness is
    going to be tackled in the area; and how substantial regeneration activity
    will provide not only the transport links between residents of deprived
    areas and the wider job market, but the support that individuals in these
    areas need to overcome other barriers to work.

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Education-led Regeneration

A good school can support effective regeneration, and a good HE institution
can impact on an entire city or sub-region, improving skills and attracting
expertise and investment that can transform the local economy.

In a recent consultation document published by the Department for
Innovation, Universities and Skills (DIUS)42 we encouraged local communities
to bid for funding for a higher education centre or university campus to drive
economic regeneration through creating a highly skilled workforce and
stimulating entrepreneurship.

40. Not all regeneration investment must take place in deprived areas. Often,
    outcomes for deprived areas will depend on employment opportunities in
    the wider sub-region. Developing employment hubs that can be
    accessible to – though not necessarily in – deprived areas is an essential
    element of successful regeneration. For example, the evaluation of the
    coalfields concluded that a significant factor in the relative rates of
    regeneration for coalfield areas was accessibility to adjacent to areas of
    employment growth.43 Similarly, the NDC evaluation found that
    regeneration areas within the vibrant London sub-region areas saw more
    positive change against their comparator areas for more indicators than
    was true for any other cluster of areas.44

41. However, the type of jobs available is as important as the location45. For
    example, high levels of worklessness persist in Tower Hamlets
    neighbourhoods despite close proximity to the employment hub of Canary

What does a focus on outcomes mean in practical terms?

42. This framework signals a departure from output targets in favour of
    outcome targets – allowing agencies at different tiers the flexibility to
    address local priorities. Regeneration success should no longer be
    measured by the outputs generated (i.e. brownfield land remediated,

   A New University Challenge: Unlocking Britain’s Talent, DIUS, March 2008.
   Regenerating the English Coalfields – interim evaluation of the coalfield regeneration
programmes, CLG, 2007
   New Deal for Communities 2001-2005: An Interim Evaluation, CRESR, November 2005
  Job Proximity and the Urban Employment Problem: Do Suitable Nearby Jobs Improve
Neighbourhood Employment Rates? Immergluck, Daniel, Urban Studies, Volume 35 Number
1 January 1998, pp.7ff. Also Information on the Spatial Distribution of Job Opportunities within
Metropolitan Areas. Ihlanfeldt, Keith R. 1997Journal of Urban Economics 41:218–42.

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   floorspace created, etc) but by the outcomes that it will deliver for
   communities, with a priority focus on improving economic outcomes.
   This does not mean that a broad range of activities should not still take
   place but their success should be measured on the extent to which they
   deliver improved outcomes for target groups.

43. Government will encourage those organisations putting together LAAs and
    MAAs to focus on relevant outcome targets, particularly in relation to
    employment and economic development. We will work with the Homes
    and Communities Agency to support locally led regeneration in partnership
    with RDAs, and supports.

44. Nationally, we will draw together and monitor a small basket of
    indicators from existing PSA targets and Departmental indicators
    that focus on worklessness, crime, education, health and residents’
    satisfaction with the local area in deprived neighbourhoods.

Double Devolution

The Local Government White Paper was a radical devolutionary White paper.
It built on success and set out proposals. Of most relevance to the
regeneration framework are:

      It proposed a new approach to local partnerships giving local
       authorities more opportunity to lead their area, work with other services
       and better meet the public’s needs
      It set out the important contribution of our cities to the economic health
       of our communities by offering greater power to cities and city-regions
       matched by stronger governance and accountability
      It put in place a more streamlined and proportionate performance
       regime which committed the Government to a radical simplification of
       the existing system and a massive reduction in the number of targets
       for local partners
      It strengthened local leadership
      It gives more power to citizens and communities to have a bigger say
       in the services they receive and the places where they live

In particular the move to a more streamlined, outcome-focused approach set
out in the regeneration framework consultation document is reflected in the
new Local Performance Framework, and LAAs, with a reduced reporting
burden on local authorities, simplified central funding and a move away from a
“Whitehall knows best” philosophy and reduced bureaucracy. Through MAAs

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as well, we are already seeing a stronger focus on tackling the complex and
interlinked barriers to regeneration and economic prosperity across real
economic areas, reflected in the ambitious outcomes being negotiated.

In future, we aim to further embed LAAs and their focus on the priorities that
matter to local people. We will empower and incentivise local authorities to
translate their clear stake in the economic fortunes of their area into creative
and practical actions.

We will continue working with partnerships to deliver ambitious MAAs which
seek to deliver real change for the people and businesses in their area. For
example the proposals being developed with Greater Manchester will enable
the local authorities collectively to address the barriers to growth and
prosperity. This will involve genuine, practical changes for the long term to
improve outcomes for people across Greater Manchester- more people in
work and progressing in work, an even stronger relationship between public
and private sector, stronger economic growth and resilience.

45. As the box below shows, residents of the most deprived areas can face
    multiple barriers to work, which may include skills and qualifications. Sixty
    five per cent of the working age population in England is qualified to at
    least level two (5 GCSEs A*-C or equivalent), but less than half of those
    living in the areas in receipt of the Working Neighbourhoods Fund are
    qualified to that level.

Concentrations of worklessness – the causes

A CLG study46 found evidence of particular attitudes and perceptions towards
employment and education within many deprived neighbourhoods. These
were characterised by reduced expectations and aspirations of
employment and an acceptance of ‘getting by’ via benefits and unpaid and
paid informal work.

Concentrations of deprivation contributed further to the barriers of entry to
formal employment. Factors here included the lack of social networks to
find jobs particularly via informal networks; a lack of contact with the world of
work leading to the poor development of interview and work skills; and a
lack of mobility limiting search radius.

Other barriers reflected practical problems relating to limited flexibility and

     The Dynamics of Local Economies and Deprived Neighbourhoods, CLG (June 2006)

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high transport cost in relation to low wages and an absence in some places
of good, reliable and affordable public transport.

Area stigmatisation and discrimination was routinely reported, although
analysis on to whether this translates into active postcode discrimination has
not been carried out. There is some evidence that the tightening of labour
markets reduces the scope of employers to exercise such discrimination.

46. It’s not just about qualifications. Many of those who are furthest from the
    labour market require help to develop the kinds of skill that is often difficult
    to measure or test. We need to offer tailored support to help people to
    build realistic aspirations and move towards actively seeking employment.
    That involves providing a range of support services that can help people
    overcome the personal barriers that they face to getting in to work and
    equip them with the appropriate skills to enable them to compete for

47. We need to work with local communities to empower residents to access
    jobs – which we recognise will require different forms of activity in different
    areas. For example, in some areas, residents may identify poor transport
    links as excluding them from nearby economic opportunities. In others,
    integrated housing and employment services may deliver real benefits.

48. Recently the Government published an implementation plan which sets
    out arrangements for integrated employment and skills provision and has a
    particular focus on a local partnership approach to supporting those that
    are furthest from the labour market.

Integrated Employment and Skills

[DN: Paul Kirk to add summary when published on 12 June]

Regeneration and environmental change

49. Regeneration should take account of environmental change. For example,
    deprived coastal areas may face particular challenges, including the risk of
    coastal erosion. In such cases, the appraisal of regeneration capital spend
    should include a thorough assessment of risks, including those posed by
    coastal erosion. Where a significant risk is identified, local and regional
    strategies should:

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      be adaptive to risks and seek to identify the benefits of change; and
      consider innovative ways of delivering regeneration in at-risk areas.


50. We will develop a new set of success measures to drive regeneration,
    based on:

          improving economic performance in deprived areas;

          increasing economic independence in deprived areas; and

          creating places where people want to live and work from
           deprived areas

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Chapter Summary

51. The Government’s view is that decisions about how and where to target
    regeneration investment should be made locally. In line with the Local
    Government White Paper – Strong and Prosperous Communities, and the
    SNR, this framework puts local authorities at the heart of our approach to
    regeneration, setting local regeneration priorities and negotiating delivery
    arrangements with local; regional; and national partners.

52. But we recognise that all regeneration investment decisions need to both
    inform and be informed by investment decisions made at a different spatial
    level – sub-regional; regional; or national. It is therefore vital that partners
    at each of these spatial levels take a consistent approach to targeting
    economic and regeneration investment.

53. Local partners should also be mindful of regional regeneration priorities in
    determining their local priorities. This transparent approach should make it
    easier for RDAs and other Government agencies to delegate funding to
    sub-regional and local delivery partnerships where appropriate structures
    and capacity exist.

54. The regional planning bodies should consider both regeneration needs
    and opportunities in developing regional strategies. Following the
    recommendations of the SNR, Government is proposing that in future the
    existing spatial (RSS), economic (RES) and other strategies, would be
    replaced by a regional strategy, prepared by the RDA working in
    partnership with the local authorities through a Leaders' Forum and
    engaging stakeholders. Such strategy preparation will be informed by local
    assessments of economic circumstances as well as the local LDF and
    SCS. While the strategy itself would indicate regeneration requirements
    and opportunities over the long term, an accompanying delivery plan
    would serve to identify short term regeneration investment priorities
    agreed between the regions and central Government departments.

55. However, until the new regional arrangements are put in place, Regional
    Assemblies and Regional Development Agencies will work closely
    together to ensure that the Regional Spatial Strategy and Regional
    Economic Strategy work together to support regeneration and guide

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   regional partners in preparing Regional Funding Advice to prioritise
   public spending in the region. Government intends to issue guidance
   for the next round of Regional Funding Advice in summer this year.

56. Regeneration activities should be undertaken in partnership with the
    private sector at all levels. The Under-Served Markets project (see box
    below) is a good example of how this can be achieved.

Working with the private sector to deliver sustainable communities -
Under-served Markets

Working with the private sector to tackle barriers to employment and
investment is an essential element of successful regeneration. The Under-
served Markets (USM) initiative was an example of a commercially based
investment strategy aimed to promote retail investment and employment to
benefit residents in deprived areas and stimulate regeneration. Under-
served Markets exist where people cannot access the best quality choice of
affordable goods and services. This initiative has been about finding
practical ways of unlocking markets in deprived areas that are often
neglected in favour of more affluent areas.

Retail investment to serve deprived areas can be commercially successful
for the private sector and contribute to and support wider regeneration and
renewal goals. New retail investment can be a catalyst for attracting further
investment and regeneration of a deprived area, and provide increased
access to products and services, and employment and training
opportunities for local people.

The first pilot store, a Tesco regeneration store opened in Failsworth, Oldham
in July 2007, creating 390 jobs, 75 of which went to local long-term
unemployed and socially disadvantaged groups.

In particular, the initiative has shown the critical importance of local
leadership in brokering deals between the public and private sectors. For
example, the good working relationship between the LSP and Tesco was
crucial to the success of the Oldham pilot. The pilots have also shown that
local authority planners and regeneration staff can work together effectively
to achieve success, in applying planning policy statement 6 to benefit
deprived communities.

An evaluation of the initiative is currently underway and is due to complete in
December 2009.

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57. Regeneration is more sustainable when it puts citizens in the driving seat.
    Community driven regeneration can provide peer support and peer
    pressure to deliver improvements in the outcomes that matter most to the
    residents. Neighbourhoods need to be able to take ownership of activities
    in their neighbourhood, and have incentives to participate in shaping the
    future of their community in partnership with the Local Authority. This
    means fewer ‘one size fits all’ national programmes, and greater
    devolution of spending decisions.

Communities in control – Chesterhill Neighbourhood Management Pilot

In March 2007, Chesterhill Avenue in Thrybergh was identified as the most
vulnerable community in Rotherham and in need of immediate support. A
pilot neighbourhood was agreed incorporating the streets surrounding
Chesterhill Avenue (650 households).

The Chesterhill Pilot was funded by the local authority. This ensured that a
truly bottom-up approach was required, bringing residents and local
partners together to tackle local problems and target services on local

Achievements so far include:

       A local ‘Neighbourhood Pride Residents Team’. Meets monthly with
        a strong youth contingent and invites service providers to their
        meetings to ensure residents’ views influence the way services are
        delivered in the pilot area.
       A weekly multi-agency walkabout to ensure responsive action is
        taken on issues which affect local people’s quality of life.
       Neighbourhood Pride Surgery – held fortnightly for residents with
        ward members and the police, amongst others.
       Neighbourhood Pride Newsletter delivered to all households to keep
        residents informed.

And these measures have had a real impact:

   Reduction in recorded crime by 50% across the pilot area since the pilot
    started in September 2007.
   70% reduction in ASB across the pilot area and a significant increase in
    referrals to support agencies such as parenting programmes and

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   Significant increase in the reporting of incidents to street pride as a
    result of better relations with the community and visibility of Street Pride

58. This framework proposes that partners should use existing planning
    processes to:

          Identify target neighbourhoods and sub-regions
          Develop a clear strategy and roles for different partners
          Plan effective delivery
          Ensure that programmes are evaluated effectively

How should we determine priority locations?

59. Although regeneration activity will in part be driven by the availability of
    sites and private sector led projects, this section outlines a more strategic
    approach to identifying priority locations to give partners long-term

60. These locations must reflect local and regional priorities, and not be
    imposed from the centre. Priority locations should be determined through
    Sustainable Communities Strategies, Local Development Frameworks,
    and regional strategies. Government will support these locations by
    prioritising investment in these areas.

61. Government expects that every local authority should plan for the
    regeneration of Lower Super Output Areas (LSOAs) – equivalent to
    approximately 1,500 people – in the bottom 10% of most deprived
    areas, through the Local Development Framework and Sustainable
    Communities Strategy.

62. These should inform, and be informed by, the regional strategy as
    proposed in the SNR. Each regional strategy should identify the major
    sub-regional regeneration challenges and geographies, particularly those
    of regional significance. Each regional strategy should set clear
    regeneration priorities for the region and include a Regional
    Regeneration Priorities Map which identifies agreed priority geographical
    areas for regeneration investment.

63. Obviously, not all deprived areas are the same and different places will
    need different scales and types of investment. Geographies will also vary,

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   meaning that investment to regenerate a neighbourhood will not always
   take place within the neighbourhood itself. It is important to understand
   these differences when determining priority locations. This framework
   proposes criteria which local authorities; sub-regional partnerships (where
   appropriate); Regional Development Agencies and the Homes and
   Communities Agency could use in future to analyse the nature of the
   regeneration challenge in a particular area.

64. The criteria, which can be applied at different spatial levels, are based on
   existing good practice and have been designed to be used in consultation
   with the local community. They do not propose hard and fast measures for
   identifying neighbourhoods under each criterion, in recognition of the fact
   that challenges will vary, and will need to be explored through discussion
   with residents of deprived neighbourhoods. The criteria are:

          the scale of deprivation in absolute terms, as measured by the IMD;
          the movement of people through the area and its economic and social
          the dynamics of the area and how it is changing over time;
          the strength of the wider sub-regional economy.


65. While the starting point for regeneration are those areas in the bottom 10%
    of most deprived, the scale of the regeneration challenge varies quite
    significantly across the country.

66. In some areas, small pockets of deprivation may exist; in others,
    deprivation may be more widespread. For example, four local authorities
    (Hackney, Liverpool, Manchester and Tower Hamlets) have over half of
    their population living in the 10% most deprived areas in the country.

67. Deprivation will also vary in intensity – which will also determine the scale
    of the challenge. For example, over half of Local Authorities have one
    Lower Super Output Area (LSOA) – equivalent to approximately 1,500
    people – in the bottom 10% of most deprived areas. However, when
    looking at the bottom 1% of most deprived areas, then this is reduced to
    only 17% of Local Authorities.

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68. The graph below shows how the nature of the challenge varies across
    local authorities. The x-axis measures the extent of deprivation (a higher
    value indicates widespread deprivation); the y-axis illustrates intensity (a
    higher value indicates more severe deprivation).

69. Where deprivation is intense and widespread, the scale of the challenge is
    likely to be greatest. These areas are highlighted by the red circle in the
    graph below.


70. Emerging evidence from the National Strategy for Neighbourhood
    Renewal47 emphasises the different roles that deprived areas play. It is

     DN check what we can reference here

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   therefore important to analyse the movement of people into or out of an
   area as well as looking at the area overall. For example, an area may not
   look like it is changing over time but in fact there could be a high degree of
   population churn through the area, with people moving in from more
   deprived areas and moving out to less deprived areas. Similarly,
   gentrifying a deprived area may just displace the deprivation to another
   part of the sub-region (see Annex XX).

71. Understanding the role of the deprived area will be crucial in not only
    determining where the greatest need is for regeneration but also in
    designing an effective regeneration strategy for the area. It would then be
    possible to differentiate between areas which although deprived are
    providing a launchpad for residents who move on to better things (which
    should be encouraged), and those areas that are isolated from

72. Therefore, the third criterion should differentiate between deprived
    neighbourhoods with high population churn, where people are moving
    through the area, often moving onto better areas; neighbourhoods with low
    population churn, where the majority of people are remaining in the
    deprived conditions; and specifically those isolated neighbourhoods where
    people may be moving through but only to and from other equally deprived


73. The criteria proposed so far give a good snapshot for deciding where and
    how to prioritise regeneration. However, they don’t capture the importance
    of how places are changing over time and the variety of cultural social and
    demographic differences between communities and places. Both the type
    and intensity of regeneration activity required will change depending upon
    whether the area is improving or getting worse.

74. Analysing the dynamics of an area will require some trend analysis. This
    should primarily be based upon analysing how deprivation has changed
    within the area, including: employment rates; education performance;
    population changes; business start-ups; derelict land, house prices, health,
    and crime statistics.

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75. The final criterion should therefore be a combination of these indicators
    which will give an indication of the direction of travel of the deprived area,
    illustrating both how the area is performing and how attractive the area is
    in attracting people and business. Areas that are improving rapidly may
    not require as intensive action as those that are in decline.


76. To understand the needs and opportunities for regeneration, we need to
    look at the context of a deprived neighbourhood. Deprived areas within
    otherwise successful local or sub-regional economies will require a very
    different approach to regeneration than those in an underperforming
    economy. Therefore, the second criterion for deciding on how and where
    to prioritise regeneration should balance the strength of the wider sub-
    regional economic base with that of the region as a whole.

77. A detailed analysis of the strength of the economic base in a sub-region
    will require an assessment of the headline indicators of economic
    performance and an analysis of the underlying drivers – economic output,
    productivity, employment, skills, enterprise, private investment in the area,
    the state of the housing market, innovation and infrastructure. This
    analysis of the strength of the sub-regional economy should also reflect
    the degree to which the opportunities that do exist are accessible to those
    living in the most deprived neighbourhoods, both in terms of skills match
    and good transport connections.

78. In some sub-regions, there will already be accessible employment hubs,
    and the challenge may be to encourage deprived neighbourhoods to
    benefit from these – through transport connections or improving skills. In
    others, where the wider economic base is weak, there may be a need to
    create new hubs. In either case, however, the type of jobs available (as
    well as their location) will be a key determinant of whether deprived
    neighbourhoods benefit.

79. Subject to new legislation, the proposed new local authority economic
    assessment duty (see below) will assist with this stage of the process.

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Local Economic Assessments

The Sub-National Review of Economic Development and Regeneration (the
SNR) highlighted the need for local authorities to play a central role in leading
economic development and regeneration. We have recently consulted on a
new economic assessment duty for local authorities. This will require upper
tier and unitary authorities to carry out an assessment of the strengths and
weaknesses of their local economy. In two tier areas, the upper tier authorities
will be expected to work closely with district councils. Sub-regional working
will be particularly welcome.

Working through the local strategic partnership, the local authority will
establish a clear vision for the local economy. This will provide the basis for
setting clear investment priorities to take advantage of economic opportunities
and tackle the barriers to growth. Local authorities that are collaborating
closely on economic development, such as those groups of local authorities
working towards Multi Area Agreements will be able to work towards a joint
economic assessment. Also, as part of this consultation, we have sought
views on whether and how to best take forward the new duty in London.

The new economic assessment will give Local Authorities a better
understanding of the nature of economic challenges and opportunities, the
linkages with the wider economy and how local policy and delivery can best
support economic development and regeneration. This should lead to more
effective prioritisation of economic and regeneration interventions and provide
the basis for setting clear investment priorities to take advantage of economic
opportunities and tackle the barriers to growth.

This is the new starting point for the Government’s approach to regeneration.
It will be the key to stronger relationships between local authorities and
established businesses in a community. It will be the foundation for concerted
efforts to attract more private investment in regeneration. It should also lead to
more effective partnerships between local authorities, private developers,
investors, and the wider business community.

Building a more highly skilled workforce, and reducing worklessness, are
central to the future prosperity of every community. Therefore, in performing
this duty, it will be particularly important that local authorities work closely with
the Learning and Skills Council, local colleges and other learning providers,
and Jobcentre Plus.

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Developing a clear strategy

80. Using each of the criteria above in isolation will only tell part of the story.
    Combining the criteria together will provide a clear picture of the varying
    scale of the regeneration challenge across different deprived areas and
    give an indication of the types of regeneration activity needed in these

81. Adopting this approach would mean Local Strategic Partnerships, RDAs,
    and the Homes and Communities Agency adopt a consistent approach to
    both the areas most in need of regeneration as well as opportunities for
    achieving regeneration. Relevant policies will be incorporated in
    Sustainable Community Strategies and in Local Development Framework
    Core Strategies at local level. Similarly at regional level, relevant policy will
    be incorporated in regional strategy.

82. Sustainable Community Strategies and Local Development Frameworks
    will also need to reflect the findings of the proposed local economic
    assessment (see above). The core strategy should include the key
    strategic spatial proposals to achieve economic development. Together,
    these forward plans for communities should identify the regeneration
    challenges – and the specific locations - where regeneration investments
    should be focused. Where appropriate, local authorities should work
    together, in city region or sub-regional partnerships to identify the main
    regeneration challenges facing their areas. These priority locations for
    regeneration should also feature in the regional strategy and any regional
    implementation/delivery plans.

83. As proposed in the SNR, each Region will prepare a single regional
    strategy, setting the long-term vision for the region. Each regional strategy
    would identify the major regional challenges and the priority areas for
    regeneration activity. An accompanying delivery plan would then prioritise
    investment accordingly.

84. Each regional strategy should set clear regeneration priorities for the
    region and include a Regional Regeneration Priorities Map which
    identifies agreed priority geographical areas for regeneration investment.

85. In developing regeneration strategies it is important not only to identify the
    area in need of regeneration, but also the type of regeneration required so
    that different agencies can understand the contribution they can make to
    the regeneration of the area. These activities should build on an

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   understanding of the area, and be developed in partnership with residents
   of the community.

86. A successful regeneration strategy will often include a number of elements
    covering people, places and markets, based on an understanding of the
    spatial level that activity should be focused on. The three groups are:

       A) Improving the physical environment – these activities are largely
       focused in local areas and neighbourhoods and involve a process of
       upgrading the infrastructure and character of an area in order to retain
       and attract people and businesses that have a choice about where to
       locate (sometimes described as physical regeneration)

       B) Improving the prospects for people – this needs to be a very
       targeted process, aimed at people specifically within deprived
       neighbourhoods, building the skills, capacities and aspirations of
       residents to enable them to take advantage of wider opportunities
       (sometimes described as community regeneration). These types of
       activity will need to support physical improvements to ensure that
       regeneration is effective.

       C) Improving the wider economy – this activity tends to have a wider
       sub-regional focus, recognising how labour and housing markets
       operate, and is a process of economic adaptation through new
       investment and improved business performance in order to boost local
       employment and incomes (sometimes described as economic

87. These types of regeneration activity are explored in more detail in Annex
    XX, with a greater description of these activities and the relationship with
    the regeneration challenges that exist in different areas. Within each of
    these groups there is a range of types of activity that can be undertaken.
    Depending upon the nature of the regeneration challenge these activities
    will be more or less appropriate. Often, especially in areas where there
    are the biggest challenges, it may need a combination of all three
    approaches, and it is in these areas where there is most need for co-
    ordination between the various partners to achieve the overall
    transformative changes needed.

88. In future, however, these activities should be undertaken with a clear
    understanding of how they will deliver the outcomes proposed in Chapter

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89. This typology of regeneration activity can be used in combination with the
    criteria to help devise an effective regeneration strategy. Annex XX
    provides an example of how this might be done.

Effective Delivery

90. It is important that local and regional strategies specify accountabilities for
    the delivery of regeneration priorities. In most cases, the HCA will work
    with local authorities to deliver environmental and people-focused
    regeneration (types A and B in the table above), with the RDAs taking the
    lead in delivering regeneration that is focused on improving the wider
    economy (type C). Of course, these will often need to be done as a
    package and it will therefore be important to get the sequencing right.

91. The sequencing of activities is not straightforward and will be dependent
    upon the circumstances of the area. It will therefore be vital that
    regeneration programmes have a thorough economic appraisal that not
    only ensures the activities demonstrate good value for money, but also
    ensures that the estimated benefits are offering true additionality and
    recognises the contingencies and time horizons involved.

92. The Homes and Communities Agency will work side by side with the local
    authorities to implement their regeneration priorities. The performance of
    the HCA will, in part, be measured with reference to whether it is
    implementing pre-agreed city region/sub-regional programmes and the
    regional strategy.

Special Delivery Organisations [dn this section needs trimming or

93. Today, many dedicated special delivery organisations vehicles (SDOs)
    such as economic development companies, urban regeneration
    companies, urban development corporations, housing companies and
    housing market renewal partnerships etc) exist to drive regeneration
    projects. It should not be presumed that it is necessary to establish an
    SDO for each regeneration priority in an area.

94. Indeed, CLG will be asking the HCA to review whether to support each
    SDO which exists when the HCA is established, on the basis of this
    framework. With the exception of urban development corporations,
    Government and the HCA will presume that most of the operating costs of

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   a SDO will be met by local authorities and their RDAs and that they have
   established an SDO because it is the most cost effective mechanism for
   driving the delivery of regeneration projects.

95. Many SDOs such as economic development companies (EDCs), urban
    regeneration companies (URCs), urban development corporations,
    housing companies and housing market renewal pathfinders exist to drive
    regeneration projects. It is not necessary to establish an SDO for each
    area where regeneration is taking place. Indeed, CLG will be asking the
    HCA to review its support for each existing SDO on the basis of this

96. Since 2000 the URC programme has been very successful in addressing
    difficult and challenging physical regeneration programmes in 22 urban
    areas. Where local authorities and their delivery partners wish to tackle
    issues such as those identified in groups B (improving prospects for
    people) and C (and improving the wider economy ) in para 63, they may
    wish to consider the option of establishing an EDC. This could include
    situations where an URC has completed its physical regeneration
    programme or wishes to take on wider functions. EDCs have already
    been set up in Sheffield, Liverpool and Hull and Plymouth.

Evolution from URC to EDC

Sheffield Creative Sheffield City Development Company was launched in
January 2008 and was the first EDC in England. It merged Sheffield One
URC and Sheffield First for Investment (Sheffield’s inward investment
agency). Key functions of Creative Sheffield include the attraction of quality
inward investment into the city; developing the city’s physical infrastructure to
internationally competitive standards; developing initiatives that will promote
the growth of the city’s scientific, creative and cultural knowledge base; and
marketing the city to achieving a positive shift in perceptions of Sheffield’s
image and reputation. Creative Sheffield will also work within the city’s overall
strategy to ensure that there are close connections with other programmes
addressing skills, worklessness and social equity.

Hull Hull Forward EDC is jointly owned and funded by Hull City Council,
Yorkshire Forward and English Partnerships. It replaces the URC, Hull
Citybuild and has a city wide remit. Key areas being taken forward are:
building on the three key economic sectors in Hull; Ports & Value Added
Logistics, Healthcare Technologies and Renewable Energy; establishing new
relationships to secure investment into the city and growing relationships with

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existing businesses to enable their expansion and to ensure all opportunities
are maximised; transforming Hull city centre into a thriving destination with
world class business, visitor and leisure facilities, quality homes and public
amenities; creating a hub for international trade and investment, putting Hull
on the global stage. The EDC will also take forward several of the major
regeneration projects still to be completed from Hull Citybuild.

Liverpool Liverpool City Council has created a single economic
development company, created through the merging of three existing
companies - Liverpool Vision URC, the Liverpool Land Development
Company and Business Liverpool. It is jointly owned by Liverpool City
Council, English Partnerships, and the North West Development Agency. The
new company called Liverpool Vision was established in April 2008 and will
concentrate on four pillars of development - quality of place, skilled workforce,
investment and enterprise. It aims to drive business growth, deliver high
quality infrastructure, attract more private investment and influence
employment growth and productivity in the city.

97. EDCs allow for greater local flexibilities than URCs and can operate over a
    much wider spatial scale. They can include local physical regeneration
    projects while ensuring they tie into the worklessness and economic
    development needs of both the local area and the wider the sub region.

Special Purpose Vehicles

98. Many local authorities own very considerable equity in both operational
    and non-operational property assets and hold land suitable for
    development. Some authorities are now exploring whether to use the
    equity in these assets for re-investment in regeneration projects. They are
    considering whether to set up “local asset based delivery vehicles” in
    partnership with private investors and developers. The principles
    underlying these vehicles have already been successfully tested at a
    regional level (for example, Blueprint and Buildings for Business).

Example: Igloo Regeneration Fund

Igloo regeneration fund is a £200m limited partnership fund with initial equity
provided by Morley Fund Managers on behalf of Norwich Union Funds. It is
the first regeneration fund for financial institutions. Igloo has a clear

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development focus on mixed use, environmentally sustainable, urban
renaissance projects in the top twenty cities in the UK. There is a policy of
retaining regeneration investments over the longer term to maximise return.

Example: English Cities Fund

The English Cities Fund (ECF) provides an example of a potential institutional
funding route in locations with assisted area status with risk reduction through
a partnership structure supported by EU funding. Current projects include
Clayton Brook (Manchester), Merchant Gate (Wakefield), Chapel Street
(Salford), and Canning Town (Newham). It is a partnership involving Legal &
General on the equity site, AMEC on the construction/development side and
English Partnerships.

99. Government welcomes these initiatives. The HCA will support local
    authorities, and groups of local authorities, seeking to use their property
    assets to promote regeneration in this way.


100. The Government’s policy on procurement is driven by the need to
   secure value for money for the taxpayer. Procurement is an important
   element in the delivery of cost effective and efficient services. Sustainable
   procurement48 has the potential to realise social and economic – as well
   as environmental – benefits for communities. Regeneration partnerships
   can thus work together through procurement to help create cohesive
   communities, improving long term outcomes for socially excluded groups
   and supporting a sustainable physical environment.

101. The Local Government Sustainable Procurement Strategy (November
   2007) is the sector’s response to the recommendations of the Sustainable
   Procurement Task Force (June 2006). This Strategy sets out intentions
   for local authorities to harness the sustainability potential of their
   procurement spend to supplement the social, economic and environmental
   well-being objectives of their sustainable community strategies, including
   the development and implementation of Local Area Agreements (LAAs).

   Sustainable procurement is a process whereby organisations meet their needs for goods,
services, works and utilities in a way that achieves value for money on a whole life cost basis
in terms of generating benefits not only to the organisation, but also to society and the
economy, while minimising damage to the environment.
Procuring the Future (Sustainable Procurement Task Force, June 2006).

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102. Nexus is one example of a group that aims to transform
   neighbourhoods through the provision of high-quality affordable housing
   and access to training, education and employment for residents, using
   procurement as a key lever. The box below gives an example of how this
   might be achieved.

Nexus - social transformation in action

Nexus was launched three years ago by Olmec. From the start it was a very
different approach to corporate social responsibility (CSR). Anyone tendering
for work with Olmec’s parent organisation, the Presentation Group, was asked
to include a statement explaining how they would contribute to the
communities the Group serves. The companies were given options to suit
them – firstly to choose which of four social investment themes most
interested them (training and employment, financial inclusion, health and
sports and the environment) and secondly whether they would like to
contribute their professional expertise, pro bono support, volunteering
opportunities or cash. Nexus would then match their offer to the needs of the
communities the Group serves.

All the suppliers in the procurement chain were enthusiastic about being given
a managed way into CSR. Very soon Presentation was able to make it a
requirement that anyone who wants its business must sign-up to Nexus. And,
from a Group offering contracts running into the tens of thousands of pounds,
a lot of new resources started to flow.

Take for example Wates Living Space – a building contractor working with
Presentation and a Nexus signatory. In November 2007 Nexus connected
them to make:good, which supports excluded young people in Lambeth,
south London. The make:good project needed to renovate their youth centre,
which Wates was happy to help with. But Nexus always asks for that little bit
more and Wates engaged the teenagers in the design and construction
process to give them work experience and then helped them through
accredited training. Wates invested more than £10,000 through Nexus,
through the renovation of the centre and the training opportunities they

Nexus and the contractors have contributed some £600,000 of new resources
into the community. Individuals and community groups have had training,
employment support, work experience, professional advice and much more.
Olmec has found the organisations ever more willing to engage, ever more

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enthusiastic about the programme. The underserved communities Nexus
works with are also delighted – they see the difference it makes.

Appraisal and Evaluation

103. In order to achieve value for money in regeneration it is important that
   the delivery of regeneration is underpinned by strong economic
   appraisal49. This should establish the benefits from the regeneration
   scheme, both the direct impacts and how in the longer term this will feed
   through to achieving the overall outcomes established in Chapter 2.

104. When analysing the benefits, it is important that the net additional
   benefit of the regeneration activity is determined. This will require the
   appraisal to take account of the following factors:

        Leakage effects: the proportion of benefits that benefit those outside
         of the regeneration project’s target area;
        Displacement: the proportion of project benefits accounted for by
         reduced outputs elsewhere in the target area;
        Substitution effects: where a firm substitutes one activity for a similar
         one to take advantage of public sector assistance;
        Multiplier effects: further economic activity in the area associated with
         additional local income and longer term development needs (i.e.
         complementary services).

105. Any economic appraisal should also reflect the temporal impacts of the
   regeneration scheme, to not only reflect the long-term nature of
   regeneration and hence the need to discount benefits but also a reflection
   of the deadweight costs associated with not intervening in the area.
   Account should also be given to the distributional impact.

 This should draw on the relevant guidance including: HM Treasury’s Green Book; ODPM’s

Assessing the impacts of spatial interventions: The “3Rs guidance” and English Partnerships
Additionality Guide.

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 Distributional weighting

 HM Treasury’s Green Book describes the need when analysing the costs and
 benefits of a proposal to account for the spread across different socio-
 economic groups. The guidance suggests that benefits that accrue to those
 in the bottom quintile of the income distribution should be valued at 4 times
 those that accrue to people in the top quintile. This will be of particular
 importance in regeneration schemes, which are focussed on the most
 deprived areas.

106. Equally as important is the need to build in an evaluation of the activity.
   This will allow for an assessment of whether the regeneration has met its
   aims, whether it has delivered value for money and whether there were
   any unintended consequences.

107. Good evaluation will also provide the basis for developing future
   regeneration strategies by providing a transferable assessment of what
   works and allowing for best practice to be spread to other areas.

108. HM Treasury will work closely with other Government Departments,
   including Communities and Local Government to join up the appraisal and
   evaluation of regeneration activities.


This framework proposes that partners should use this framework to inform:

          Identify target neighbourhoods and sub-regions
          Develop a clear strategy and roles for different partners
          Plan effective delivery
          Evaluate the impact

Consultation Questions

To include national map idea

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109. This document has proposed new priority outcomes for regeneration
   investment and set out a proposed common process to determine how
   and where to target regeneration investment at different spatial levels.

110.   Taken together, we expect these changes to:

          put communities at the heart of regeneration, equipping
           residents of the most deprived areas to shape the future of their
           communities and the nature of the regeneration investment made in
           their estates

          develop a stronger sense of common purpose for regeneration,
           across the public; private; and third sector in tackling inequality

          improve the co-ordination of national, regional, and local decisions
           on investment in mainstream public services – health; education;
           housing; and policing, ensuring it takes account of the additional
           and complex needs of service users in deprived areas;

          improve the integration and efficiency of regeneration activities at
           different spatial levels

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What this means for each agency

National Government

Communities and Local Government will:

       Monitor the key outcomes in deprived areas, based on:

           improving economic performance in deprived areas;

           increasing economic independence in deprived areas; and

           creating places where people want to live and work from
            deprived areas

       Promote a joint approach to regeneration at all levels by:

            o working with the Treasury and other departments to integrate
              investment appraisals that impact on regeneration, ensuring
              those appraisals effectively measure wider community and
              economic benefits from investment
            o compiling a map of regeneration priority areas (based on
              regional strategies) to help steer capital investment decisions
              across the public sector and in the private sector.
            o continuing to unringfence money to enable local partners to
              tackle joined up problems collectively and with as little
              bureaucracy as possible
            o encouraging partnerships across functional economic areas,
              including through the MAA process
            o merging funding streams where departmental objectives overlap
              (eg WNF)

       Prioritise decent homes funding on those areas where there is a
        wider strategy for economic inclusion

The Homes and Communities Agency

The HCA will:

   Base their approach to regeneration on this framework including reporting

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    on the impact their regeneration investment has on the success
    criteria in this framework

   Develop a range of integrated training and regeneration programmes in
    partnership with local areas – aimed at tackling deprivation through the
    provision of physical improvements and infrastructure to support
    economic development and connect homes to job opportunities and
    provide support to help residents take up those opportunities in the
    most isolated estates

   Prioritise regeneration investment in line with the geographic priorities
    outlined in regional strategies and implementation/delivery plans; local
    development frameworks and sustainable communities strategies

   Locate new social housing in areas where there is good access to jobs,
    and in taking forward estate transformation, ensure that partners
    have a strategy in place to tackle worklessness

   Set regional funding allocations in line with those priorities identified in
    the regional strategy and LAA priorities

   Provide support to local agencies to put communities at the heart of the
    design and delivery of regeneration, through the Academy for
    Sustainable Communities and the administration of the New Communities

   review whether to support each Special Delivery Organisation which
    exists when the HCA is established, on the basis of this framework, and
    ensure that government is sending consistent messages on the purpose
    and governance of these;

   Support RSLs to provide advice, guidance and support, and work with
    partners to tackle worklessness’

The Regional Tier

RDAs will:

   Help to build the capacity of local authorities and sub regional
    partnerships, to deliver sustainable economic development and
    regeneration activity, consistent with the Government’s objectives of

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     creating economic opportunities for all and tackling spatial concentrations
     of deprivation

    Identify regeneration priority areas within the region as part of the
     integrated regional strategy, based on an assessment of deprivation and
     economic strength and in consultation with local authorities, businesses
     and the third sector. Where appropriate structures and capacity exist in the
     identified priority areas, RDA regeneration expenditure should be
     delegated to sub-regional and local delivery partnerships. In the period
     prior to the introduction of the regional strategy, it will be important to
     ensure that momentum is maintained. We will be asking Regional
     Development Agencies to produce indicative maps of priority locations
     by the end of 2008.

    Develop employment hubs, support skills development, and
     contribute to ‘place’ development – particularly in weak sub-regional
     economies, where such an approach is consistent with the economic
     opportunities identified in the single regional strategy

    Promote and support the use of special purpose vehicles (with the
     Homes and Communities Agency and government), Regional
     Infrastructure Funds, Regional Funding Allocation Advice and the
     European Regional Development Fund to promote regeneration.

    Work closely with the Homes and Communities Agency to meet the
     needs for low carbon housing growth, whilst promoting effective
     regeneration in changing economic conditions

Local Government

Local Authorities in their role as place-shapers50 will:

    Develop appropriate structures and processes to put communities at the
     heart of the design and delivery of regeneration

    Lead economic development and regeneration in their areas,
     marshalling the input of all partners within the priorities set out in this
     framework, and shaping and playing a role in delivering the regional

    Prioritise housing growth funding on areas where there are, or are
     plans for, links to employment opportunities

  Place-shaping is the responsibility of local government and all the local partners in the
public, voluntary and the business sectors. It is about creating attractive, prosperous, vibrant,
safe and strong communities where people want to live, work and do business.

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LSPs will:

   Prioritise regeneration funding explicitly within the local area, both
    geographically and thematically (based on typology of approaches), within
    the context of the LDF and SCS

What the private sector can expect

The approach proposed in this document aims to help to give the private
sector confidence in the longer term regeneration goals of Government and
encourage sustained investment. The proposed regional regeneration
priorities map will specifically identify those locations where Government is
committed to promoting regeneration. These are the locations where
Government wishes to share the risks of promoting regeneration with private
developers and investors. Central government will draw these maps together
to develop a national map which, as well as giving clarity to the private
sector, will also help Government departments to align their capital investment
strategies with regeneration priority areas.

What does this approach mean for housing policy?

[Dn – awaiting housing update]

111. Leadership of the housing issues in an area will continue to rest with
   local authorities. The Homes and Communities Agency will need to work
   with local authorities to prioritise housing investment taking account of
   local information and the capacity to deliver.

112. Concentrations of social housing that reflect past rather than present
   patterns of economic activity can reinforce physical and social isolation
   from economic activity for disadvantaged groups. Since 1991, the
   proportion of the social housing stock located in the more deprived
   neighbourhoods has risen and the proportion in the less deprived
   neighbourhoods has fallen. Over one million social homes are now in the
   most deprived tenth of neighbourhoods – which also contain a third of all
   benefit claimants - and typically have poor access to services and
   employment opportunities.

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113. Local Authorities should work in partnership with the Homes and
   Communities Agency to develop housing-led regeneration strategies that:

      empower tenants and residents to get involved in the decisions about
       the future of housing estates through appraising options for change
      prioritise deprived areas that are isolated from job opportunities
      use vacant land within or near to housing estates in order to bring in
       new stock and bring in other uses to improve employment and access
       to amenities and services
      involve large-scale remodelling and rebuilding – to reconnect estates to
       economic opportunity
      are clearly linked to job creation activities identified through the
       regional strategy, sustainable communities strategy and local
       development framework
      ensure good management with empowered tenants

Supporting excellence

114. In seeking to devolve more power – and responsibility – to local
   authorities to drive regeneration, the SNR highlights the importance of
   strengthening the capacity of local government. Central and local
   government have committed to developing a new joint approach to
   supporting excellent performance which is owned and driven forward by
   local authorities and their partners. Through the National Improvement
   and Efficiency Strategy, Government will agree priorities for
   improvement in local authorities and local partnerships and then focus
   central and local resources on those priorities. Regional Improvement and
   Efficiency Partnerships will be at the heart of local arrangements for
   supporting local partners.

115. The national Academy for Sustainable Communities is currently the
   lead national organisation to promote to build regeneration skills; this will
   be integrated into the new Homes and Communities Agency. More
   generally, CLG and the LGA are now considering the scale of the capacity
   building challenge in regeneration and economic development.

116. Local government monitoring arrangements will require the collection
   and exchange of a wide range of types of information - the Information
   Management Programme will put in place the arrangements for
   effectively collecting and exchanging that information.

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Reporting on LAAs

A new system has been put in place to manage the collection, exchange and
use of indicators and LAA reporting information – the Data Interchange Hub.
This Hub, launched on 8 April 2008, seeks to deliver some key benefits

   reduced burdens on authorities by embodying the Collect Once Use
    Numerous Times (COUNT) principle, leading to better data sharing
    between LAs, LA partners, Central Government Departments, ONS and
    the Audit Commission.

   Data stored in the repository can be imported into a data analysis tools,
    such as the Floor Targets Interactive public website (part of the wider CLG
    Places Database), allowing comparative analysis to be conducted by LSPs
    or anyone with an interest in the national indicator set.

   Creating the opportunity for easier data exchange from system to system
    through agreed XML schemas.

   For the purposes of LAA monitoring, GOs will have real time access to LA
    performance data, enhancing the ability of GOs to effectively monitor the
    performance of LAAs.

   A standard LAA monitoring report will be produced, in line with CLG
    guidance, generated from the repository for GOs to fulfil their monitoring
    role through LAA Annual Reviews.

We are working with LSPs to develop analytical capacity and to Automated
generation of a number of briefing reports, using performance data from the
repository for Partnership Director/Locality Manager Briefing.


[dn – need to revisit to build in stronger reference to MAA/LAA Whitehall

117. This framework is ambitious. It will need to be implemented in a co-
   ordinated way over the long term. We propose:

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       A cross Whitehall steering committee to ensure a consistent
        approach across central government;
       A more explicit remit for RDAs to lead regional regeneration work in
        partnership with the Homes and Communities Agency and ensure it
        fits with this framework, building on their existing strategic objectives;
       Communities and Local Government will work with other government
        departments to co-ordinate regeneration investment, and provide
        greater flexibility to deliver regional and local regeneration priorities –
        for example through MAAs and statutory arrangements for sub-
        regions collaboration;
       A clear responsibility for LSPs to lead and prioritise local
        regeneration, with an emphasis on local area agreements

When will we see an impact?

118. We expect this framework to begin to change approaches now. It will
   influence the tasking framework for the HCA and help to shape the
   approach RDAs and local authorities take to their regeneration and
   economic development strategies.

119. The framework will also impact on decisions made in the next spending

Consultation Questions

11th June 2008

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                                                                        ANNEX A


Consultation criteria

The Government has adopted a code of practice on consultations. The criteria
below apply to all UK national public consultations consisting of a document in
electronic or printed form:

     1.    Consult widely throughout the process, allowing a minimum of 12
           weeks for written consultation at least once during the development
           of the policy.
     2.    Be clear about what your proposals are, who may be affected, what
           questions are being asked and the timescale for responses.
     3.    Ensure that your consultation is clear, concise and widely
     4.    Give feedback regarding the responses received and how the
           consultation process influenced the policy.
     5.    Monitor your department's effectiveness at consultation, including
           through the use of a designated consultation co-ordinator.
     6.    Ensure your consultation follows better regulation best practice,
           including carrying out an impact assessment if appropriate.

The code does not have legal force but is regarded as binding on UK
departments and their agencies unless Ministers conclude that exceptional
circumstances require a departure from it.

Consultation Questions

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                                                                                         ANNEX B


1. Global trends have continued to impact on our cities, towns and
   neighbourhoods and have shaped and reshaped the roles that they play
   locally, regionally, and nationally. Regeneration has, and will continue to,
   help places adapt to find new roles in the global economy, and provide
   residents with new opportunities to benefit from and contribute to
   economic growth. However, the scale of the regeneration challenge is
   increasing due to the demands faced by communities as a result of trends
   such as demographic and socio-economic change, changing patterns of
   comparative advantage, and increasing pressures on our natural
   resources and global climate.

Demographic and Socio-economic Change

2.      The next ten years will see further increases in the UK population,
        (which is projected to be 64 million by 2017), especially in the south of
        England, increasing pressure on public services and housing demand.
        The numbers and proportion of those over 65 will rise, leading to
        increased dependency rates and vulnerable adults.

3.      The UK has become more ethnically diverse, driven by migration
        patterns in the second half of the 20th century. During the 1950s and
        1960s, labour shortages in Britain saw mass immigration from the New
        Commonwealth countries, in particular India, Pakistan and the
        Caribbean. Migration from Bangladesh, Hong Kong and Africa
        followed. Throughout the period there was steady migration from old
        commonwealth countries. Greater economic integration and labour
        mobility have led to increasing migration within the EU, and more
        recently there has been an increase in migration from Eastern
        European countries. By 1991 Britain’s ethnic minority population had
        reached 3.1 million and this increased to 4.6 million in 2001,
        representing 8.1 per cent of the population.51 Migrants have brought
        economic benefits together with considerable linguistic, religious and
        cultural diversity to the UK.52 However, this has not impacted on all

  Social Trends 36, Office for National Statistics, February 2006.
  Migrants have a positive impact on the economy and a positive fiscal impact, contributing more in
taxes and social insurance than they consume in benefits and other public services. For example, see
The Migrant Population in the UK: Fiscal effects, Home Office, 2002.

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        areas equally, as shown in the map below.53 This has brought new
        challenges for local areas seeking to assimilate new groups, and the
        scale of the challenge varies significantly between areas. In some local
        authorities, ethnic minorities make up nearly 40% of the resident
        population; in others less than 2%54.

4.      As Britain’s socio-economic structure adapts, there will be underlying
        pressures on relative incomes, and socio-economic changes will bring
        challenges for social cohesion. But these challenges will impact
        differently on different places.

   Ethnic minority populations and the labour market: an analysis of the 1991 and 2001 Census
Department for Work and Pensions Research Report No 333, 2006 (L. Simpson, K. Purdam, A. Tajar,
E. Fieldhouse, V. Gavalas, M. Tranmer, J. Pritchard and D. Dorling)
   KS06 Ethnic group, Census 2001: Key Statistics for the rural and urban area classification 2004,
Office for National Statistics, 2004

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Changing Patterns of Comparative Advantage

5.         The international mobility of capital, technology, and skilled labour
           requires that our cities, towns and rural communities are attractive
           places to live, work, and invest. Global trends are accelerating the shift
           in the UK’s comparative advantage towards higher value knowledge
           and innovation intensive sectors, raising the demand for skilled labour
           and further distancing those without skills from the labour market.
           However, whilst all areas have restructured to some extent to meet the
           changing needs of the global economy, there are considerable
           differences in the extent to which areas have benefited. The chart
           below shows how areas have responded differently to changing
           comparative advantage55.

6.         High skilled occupations such as management, professional
           occupations, and technical jobs will experience the largest expansion in
           demand over the coming years. These are mainly located in the South,
           Leeds, and Manchester, which will be attractive places for further

Increasing Pressures on our Natural Resources and Global Climate

7.         Action is required by governments, businesses, and individuals to
           maintain prosperity and improve environmental care, and regeneration
           strategies will need to be part of a low-carbon future. HM Treasury’s
     State of the English Cities, ODPM, 2006

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        2006 publication Long term opportunities and challenges for the UK
        explores these trends in more detail.56

8.      These powerful drivers of change will affect different places in different
        ways as each adapts to play a different role in the global economy, and
        will increase the need for regeneration to be responsive to the unique
        challenges and opportunities faced by local areas as they arise. Cities,
        towns and neighbourhoods will be affected in different ways according
        to their indigenous assets, and will need to be flexible to identify
        opportunities for growth that are unique to their area.

  “Long term opportunities and challenges for the UK: analysis for the 2007 Comprehensive Spending
Review”, HM Treasury, November 2006

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                                                                      ANNEX C


120.   The rationale for government intervention is based on:

          Raising efficiency: regeneration initiatives have a role in correcting
           market failures where markets do not operate efficiently to provide
           outcomes that are best for society;

          Improving equity: where there are unacceptable disparities in
           economic and/or social outcomes between individuals or groups,
           there is a role for government to intervene to achieve a more
           equitable allocation of resources;

          Reducing costs to the taxpayer: areas of economic, social and
           physical decline place a disproportionate burden on the taxpayer,
           due to higher associated costs in addressing worklessness, crime,
           and health outcomes.

121. This annex explores the rationale for government intervention in
   regeneration, and the extent of the expenditure committed to regeneration
   activity. It also explains the need for place-specific regeneration
   approaches to augment mainstream provision through national policies.

Raising Efficiency

122. The Government’s overall economic objectives are to raise the rate of
   sustainable growth and achieve rising prosperity and a better quality of life,
   with economic and employment opportunities for all. Government’s
   preferred approach for achieving this objective is to support well-
   functioning markets that allocate resources effectively where possible -
   where markets do not function well, the Government’s approach is to
   pursue policies that correct the market failures.

123. Regional and local approaches to place-based economic development
   are no different. Supporting market-based growth in all local areas and
   regions is an essential element of meeting national economic objectives
   and ensuring the UK performs to its full potential.

124. Economic theory suggests that where markets function well, the
   welfare of people with similar characteristics will tend to converge across

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     places. This would be achieved through market adjustment, which would
     see people and firms move and prices adjust to changes within the

125. Even in such a world, we would not expect economic measures to
   converge spatially – there will always be disparities in performance. This is
   due to:

           Price variations: prices vary in different places, so in real terms
            economic outcomes may not be as unequal as they appear. For
            example, 2004 ONS figures showed that London prices were 9.4%
            higher than the UK average, indicating that in real terms London is
            not as far ahead of the rest of the UK as it may appear;

           Sector composition: different areas have different indigenous
            assets, which will lead to different economic structures. This can
            make comparison between areas misleading – as high-skilled
            sectors will tend to generate higher returns per head than
            low/medium-skilled industries irrespective of place. One study found
            that differences in occupations accounted for at least one third of
            regional variations in wages57;

           Resident preferences: some people will value living in a particular
            place more than the higher income/better employment prospects
            they may receive elsewhere.

126. Government intervention should not seek to tackle disparities in
   economic outcomes where these are part of a market response and do not
   negatively impact on the welfare of residents.

127. However, in practice markets do not always function well: there are
   failures in the market that prohibit adjustment, not all people and firms are
   mobile and these may interact with spatial market failures – so different
   local areas may have different markets with distinct failures that contribute
   to disparities between places and deprivation. Specific failures that may
   exist in an area include58:

           Externalities – where the actions of individuals or firms have
            spillover effects on others, which are not accounted for by the

 Spatial determinants of productivity: analysis for the UK regions, Venables and Rice (2004)
 Consult Communities and Local Government Economics Paper 1: A Framework for Intervention for
more detail on the types of market failure and the rationale for intervention.

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               market. For example, investment that reduces dereliction, decay
               and contamination in an area is likely to benefit local residents as
               well as the institution undertaking the work (through asset uplift and
               potential operational returns). As a result, businesses will invest
               less in an area than may be socially optimal given the value to
               residents and other businesses.

              Public goods – these are goods or services that are non-
               excludable (cannot exclude anyone from benefiting from it) and
               non-rivalrous (one’s consumption does not reduce availability for
               others) . These goods are likely to be undersupplied by the market
               as it would be difficult to restrict consumption of the good to those
               who pay for its provision. For example, private developers are
               normally reluctant to build large parks, provide public squares which
               will be available to all who live or visit a community – not just those
               who live in the new development. Yet these enhancements of the
               public realm may be important to rebuilding confidence in a
               declining area.

              Information failures – these tend to occur where one party is less
               well informed than another and so will not necessarily make a
               decision that is beneficial to themselves or to society. For example,
               certain neighbourhoods may suffer from discrimination by
               employers based on incomplete information,59 or people within an
               area may be unaware of opportunities that exist elsewhere60.

              Coordination failures – where there are a large number of people
               or firms act independently and as such may fail to reach the best
               solution through cooperating. For example, firms will rarely co-
               operate in the provision of shared infrastructure, or site assembly
               that may be essential for firms to locate in an area. In these cases,
               no firm is likely to want to be the first to invest in an area, limiting
               inward investment.

128. Market failures are not uniform across the country or over spatial
   scales. Some market failures will only occur in a few places. The severity
   of market failures varies across different places and there are place
   specific factors that can combine with market failures to accentuate
   problems within places and prohibit firms from taking advantage of the
   natural assets of places to develop a competitive advantage.
     Reimer, 2003; Atkinson and Kintrea, 2001
     Houston, 2001; Shuttleworth, 2003

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129. For example, as well as directly impacting on standards of living from
   the amenity value of quality of place and on social indictors, such as crime
   and health,61 the legacy of economic history on the physical environment
   could mean that market failures which led to too little private investment in
   public spaces are bigger in areas with a history of under-investment. They
   particularly suffer from problems of negative perception and co-ordination
   failures – as the lack of existing firm activity can limit the expected return
   on investment for the first mover to that area.


130. A regeneration intervention can also be justified for equity reasons
   where there are unacceptable differences in outcomes as a result of
   market forces that need to be addressed. The acute and persistent
   disparities in outcomes between residents of deprived areas and the
   national average outlined in the previous section is unacceptable, and, in
   recognition of this, the Government set a target in 2001 that no one should
   be seriously disadvantaged by where they live62.

131. Improved efficiency and equity are not mutually exclusive. Indeed
   there are a number of circumstances where the two are complementary;
   intervening to improve efficiency in a more deprived area can also result in
   a more equitable outcome. The economic performance of cities, regions
   and even the nation can be held back (or promoted) by the extent to which
   all individuals have the opportunity to contribute. Growth and opportunities
   need to be shared with the hardest-to-reach groups, both because of the
   scale of under-used resources and the costs incurred in remedying

Costs to the taxpayer

132. As discussed in chapter two, tackling and reversing decline in areas
   could significantly reduce the burden on the economy. Over 40% of
   people claiming Incapacity Benefit or Job Seekers Allowance live in the
   20% most deprived areas in England.

   Evidence from pathfinder areas suggests that improvements in the physical environment are linked
with improved local perceptions of crime levels.
   A New Commitment to Neighbourhood Renewal: National Strategy Action Plan, Social Exclusion Unit,

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The need for place-specific regeneration approaches

133. To tackle these issues, place-specific approaches are needed
   alongside policies which are focused on the needs of disadvantaged
   individuals, regardless of where they live. A Strategy Unit report63 provides
   four reasons for intervening through area-based initiatives, which can be
   summarised as:

            Area effects – Concentrated poverty may have cumulative impacts
             and these ‘area effects’ can combine to increase the level of
             disadvantage. These can be social (low aspirations and cultural
             expectations; constraining social networks; stigmatisation of
             residents through the poor reputation of a neighbourhood; and a
             high burden on local service provision) or physical (poor-quality
             and/or absence of private services; lower standards of public
             service provision; features of the built environment; and high levels
             of environmental pollution’).64 These effects are difficult to quantify,
             and are likely to vary in magnitude between areas.

            Targeting – Where deprivation is highly concentrated, focussing
             resources on particular areas may be more efficient in tackling
             problems than an unbounded people based approach.

            Effective delivery – Delivery at a lower spatial level enables the
             tailoring of services to meet specific needs.

            Synergies – Tackling policy problems may require co-ordination
             across a number of policies. Policy coherence may be hard to
             achieve when decisions are taken at different spatial levels,
             creating a need for policies to be "joined-up" across government
             levels. An area based focus may help to ensure coordination
             between organisations and approaches, which is essential for
             tackling deprivation.

134. In addition, area-based initiatives can be used as a way of rationing
   limited budgets between areas, for piloting schemes and initiatives or for
   building capacity in different areas. However, area-based initiative need to

  Social Exclusion Unit (2004) Breaking the Cycle, para 5.11, Working Paper 99; Berube, A 2005 Mixed
communities in England: A US perspective on Evidence and Policy Prospects, York, JRF; Jobs and
Enterprise in Deprived Areas. SEU 2005

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   be sensitive to the drivers of decline that will be unique to each area, and
   the spatial level at which they operate.

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1. Processes that lead to and perpetuate decline differ between areas, and
   operate at different spatial levels65. However, it is possible to identify three
   distinct phases in the process of decline:

            shock – the underlying cause of decline in an area;

            response – how the market -- and the community -- responds to a
             shock; this is dependent upon the underlying strength of the
             economic base;

            legacy – the consequences of the shock – and response – which
             can lead to long term deprivation; where failures in economic, social
             and property markets interact to reinforce a cycle of decline.

2. Understanding the position of a community in this sequence – and
   identifying opportunities for the community to respond to a shock - is
   essential to design appropriate regeneration programmes. Designing an
   appropriate response will need to take into account the cause of the
   shock, the relative strengths of local and sub-regional assets, and
   dynamics with the wider labour market within which the community exists.

3. The underlying causes of decline usually, though not exclusively, relate to
   a structural economic change within a labour market, which is likely to
   operate over a scale larger than that of a neighbourhood or a local
   authority area. A shock to an economy can occur for a number of
   reasons, including:

            the collapse of a major employer within the area;
            a long-term process of economic decline as changes in
             comparative advantage erodes the traditional industrial base within

  McGregor and McConnachie (1995) Social Exclusion, Urban Regeneration and Economic
Reintegration, Urban Studies, Vol. 32, No. 10, pp.1587-1600; Buck, N. (2001) Identifying
Neighbourhood Effects on Social Exclusion, Urban Studies, Vol. 38, No. 12, pp.2251-2275; Lupton, R.
(2001) Places Apart? The Initial Report of CASE’s Areas Study, Centre for Analysis of Social Exclusion,
London School of Economics.

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          a wider shock to the overall economy, potentially as a consequence
           of greater global interdependence of markets opening up the
           economy to greater risks, that can have impacts on localities;
          a shock to a local economy as a result of either a natural disaster,
           such as flooding, or a security incident; or
          the impact of a sudden and significant inflow or outflow of migrants
           to an area.

4. Most commentators agree that the current pattern of deprivation is
   significantly shaped by the location of primary and manufacturing
   economies, and the impact of economic re-structuring on the spatial
   demand for labour. The distribution of pockets of deprivation reflects this,
   as shown in the maps below – areas in the north and midlands that
   specialised in the now declining primary and manufacturing industries tend
   to harbour lower levels of GVA and higher levels of deprivation.

5. These deprived areas are largely concentrated within wider labour markets
   that have suffered from negative economic shocks in recent history, and
   reflect the economic history of the UK. In the maps below, it can clearly be
   seen that areas of low GVA at the sub-regional level tend to have higher
   levels of deprivation as measured by the IMD.

6. Shocks to local economies are likely to impact on a labour market area
   that operates on a wider scale than that of the neighbourhood though will
   have a direct impact upon the people who live and work there. Negative

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   economic shocks will lead to an immediate fall in employment rates as
   people lose their jobs and incomes will fall as there will be less activity
   within the local economy. Physical and social shocks are also likely to
   have immediate impacts on the local economy and people living there,
   with this impact reflecting the specifics of the circumstance.

7. It is important to emphasise that shocks to local labour markets do not
   necessarily represent a failure of the market. Indeed in some cases
   shocks can be seen as part of a modern dynamic national or regional
   economy that is seeking to become more productive by adjusting to
   changing competitive pressures. What is important is developing an
   understanding of the scale and cause of the shock, and how local
   economies react and respond.

Responses to decline

8. How the local market responds to a shock will be dependent upon the
   strength of the economic base in the area and the quality of the place.
   Areas with a diverse economic base, a skilled labour force and good social
   and physical infrastructure will often see the market respond quickly to
   economic shocks, and restructure to find a new role.

9. Recent analysis commissioned by CLG highlights that some of the most
   deprived neighbourhoods have developed new social and economic roles
   in their communities. In particular, some provide important “transit” areas
   offering accommodation to people moving into a community before they
   settle elsewhere.

10. It is therefore important to not only understand the scale of the
    regeneration challenge but also the dynamics within deprived
    neighbourhoods. In locations with high population churn, that perform a
    vital role as a “gateway” or “transit area,” then market forces are having
    the desired effect, enabling residents to move on to benefit from

11. In other areas, it may take some time for the community to develop a new
    role. One of the primary constraints areas in transition are likely to face is
    in adapting local infrastructure and skills to provide for new opportunities.
    In many areas, local transport, housing, and skills have been developed to
    serve particular industries and ways of life that are no longer applicable.
    The speed with which communities are able to adapt these in response to
    challenges and opportunities is critical: during this transition, some people

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   could be adversely affected by the shock and subsequent adjustment, and
   many areas can be left behind. Regeneration will have a role to play in
   facilitating this transition, and enabling places to find a new role in the
   wider economy.

12. In areas which have a weak and inflexible economic base the market can
    persistently struggle to adjust to a shock to the local economy. Such
    areas may be characterised by:

          A low skills base – areas which have either a low or narrow skills
           base will struggle to adapt to a shock to the local economy;

          High worklessness – areas which currently have high levels of
           worklessness will suffer disproportionately from an economic shock;

          Lack of diversity in economic activity – areas with a narrow
           industrial base can suffer significantly if this sector is affected by a

          Poor transport connections – areas that are on the periphery of a
           labour market may suffer disproportionately to a shock;

          A poor housing offer – areas that have high concentrations of social
           housing and poor quality housing that lead to concentrations of
           vulnerable people and restrict mobility.

13. Regeneration should enable areas to respond effectively and efficiently to
    changing needs and opportunities, and recognise where they can add
    value to local assets.

Legacy of decline

14. When the labour market does not initially respond well to a shock, or
    responds only partially, then market failures can interact with
    characteristics of the place, accentuating economic decline and leading to
    the creation of deprived communities.

15. While most labour markets restructure to some extent, they may do so
    only partially, and while some areas will embrace the new opportunities
    provided by restructuring, others may be left behind, unable to adapt to the
    new environment.

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16. Deprivation is a widespread problem across the country. Only 3% of local
    authorities do not have an area with a level of deprivation above the
    England average66. In terms of high levels of deprivation these can also
    be found scattered around the country, though there are some places
    where there is a high concentration of deprived areas. It is in these places
    where the regeneration challenge is greatest as they contain a greater
    number of people living in deprived areas and they will often be located in
    places where the economic base is weaker and there are more limited
    prospects to connect to wider opportunities.

17. In deprived areas, both pockets of deprivation and wider concentrations of
    deprivation, a localised cycle of decline can occur. A shortage of
    appropriate jobs following a shock can lead to an exodus of skilled labour
    as the more able look to move to opportunities elsewhere. This sorting
    effect, often reinforced through social housing allocations, can lead to the
    concentrations of workless, low skilled and vulnerable people, and cultures
    of low aspirations can develop. In turn, this can lead to poor outcomes
    across a range of other measures, including the degradation of the
    physical environment; overstretch of public services, higher levels of
    crime, and poor education and health outcomes.

18. Figure X illustrates the cycle of decline that can occur in deprived areas
    where a weak economic base is at the heart of deprivation which can lead
    to problems of poor housing and local environment and poor performing
    public services in deprived areas which reinforce deprivation67:

   More precisely there are only 12 of the 354 Local Authorities that do not contain a Lower Super
Output Area (a small statistical boundary that roughly contains 1,500 people and the spatial scale which
the Index of Multiple Deprivation (IMD) is measured at) that has a higher IMD score than the England
   Source: Prime Minister’s Strategy Unit, Improving the prospects of people living in areas of multiple
deprivation in England, January 2005.

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19. Analysis of the 2007 Index of Multiple Deprivation confirms that weak
    economies are at the heart of poor outcomes for communities. The chart
    below shows that there are clear links between economic measures –
    such as employment and income - and social outcomes – such as crime,
    education, and health. Employment is particularly strongly correlated with
    other key indicators.

                                                    Chart 1: Index of Multiple Deprivation 2007 -
                                                   Strength of relationship between the domains
                                              Dom ains: Incom e, Em ploym ent, Health & Disability, Education & Skills,
                                                 Crim e, Barriers to Housing & Services and Living Environm ent

                                                              (1=perfect relationship, 0=no relationship)

      Strength of relationship




                                                         - B nv


                                                        - B er s
                                          ng Liv nv
                                                       Ed ion



                                         pl me ime
                                                           du n

                                                        - B rs





                                                     - E tio
                                                    - E om




                                                   -L gE






                                                En ing




                                                en ar r


                                               ea Inc

                                             en duc

                                               lth uc

                                             rim Bar
                                              m -H



                                             ea Bar
                                             io vin


                                            In h -


                                           rim ivi
                                          rim iv











                                      In me


                                      oy h -

                                    Em co
                                   Em ym

                                    pl me

                                   Ed ent

                                  Em co




                                 Em co













20. At the root of this cycle of decline are place specific or heightened market
    failures that are restricting places adjusting, through finding a new source
    of competitive advantage and reversing the decline. These market failures
    exist within local labour markets; capital and product markets; and housing
    and land markets.

21. Place based failures in the capital, land, property, and labour markets that
    can mean areas in decline can struggle to attract new inward investment
    from the private sector to improve the area and low levels of indigenous

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   investment. The scale, nature, and geography of these market failures will
   vary according to local conditions, but may include:

          Information asymmetries that mean potential investors may
           overestimate the problems within deprived areas due to negative
           perceptions and therefore not realise the potential benefits of
           investing within the area.

          Coordination problems that mean that individual firms will not
           necessarily be the first to locate within a deprived area. Once a hub
           of enterprise is established in an area then it is easier for other
           businesses to enter the local market. However, there is a
           disadvantage on the first firm to locate within a deprived area as
           they will face costs in doing so but not necessarily receive any
           agglomeration benefits from locating near to complementary

          Failures in the land and property market. The land-use patterns
           that were efficient to support traditional industry will not necessarily
           be appropriate for establishing a new competitive role for declining
           places, and can leave behind a legacy of derelict and contaminated
           land. In areas with weaker economic bases the private return on
           regenerating this land is low. Within declining areas, large
           concentrations of derelict land can have negative externalities on
           the wider area, reducing the quality of the local physical
           environment, and there are coordination problems that inhibit the
           private sector assembling appropriate sites viable for

          Labour market failures. Residents of particular areas may become
           distanced from new opportunities because of lack of awareness of
           benefits to employment and development of new skills sets, or a
           lack of broad personal networks may prevent residents of deprived
           areas from finding about job opportunities. And in cases of
           entrenched unemployment, cultures of worklessness may develop
           where individuals systematically undervalue the benefits to
           employment and skills, which can reinforce deprivation within a
           community, sometimes over generations. Such cultural effects will
           vary in nature and intensity between communities, and can only be
           tackled through an ongoing process of active engagement to
           reconnect the community to opportunity.

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22. Where these market failures occur, areas can struggle to respond to
    challenges and identify new opportunities. This can lead to such areas
    being left behind, sometimes over a period of many generations as market
    failures are reinforced and deprivation becomes entrenched.

23. However, the public sector also has a role to play in ensuring that public
    infrastructure and public service provision enables those places to adjust,
    and needs to react quickly to prevent areas from being left behind.
    Housing and transport play a key role in this, and need to be able to
    respond to unlock new opportunities as circumstances change.

24. Where housing and transport provision do not respond quickly,
    communities can quickly become isolated from the wider labour market, as
    provision reflects historic rather than current forms of activity.

25. More people in deprived areas cite poor transport as a barrier to work than
    in non-deprived areas. As a result, a gap may develop between areas
    where people live and areas where jobs are located.68 The chart below
    shows worklessness becomes concentrated in social housing69.

   Improving the prospects of people living in areas of multiple deprivation in England, Prime Minister’s
Strategy Unit, January 2005
   Ends and means: The future roles of social housing in England, CASE report 34 (John Hills),
February 2007

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26. The presence of additional or heightened market failures within deprived
    areas provide a clear rationale for intervention from an efficiency
    perspective, while the fact that some people are disadvantaged by where
    they live provides an equity rationale. However for regeneration to be
    effective there is a need for an understanding of the government’s role in
    regeneration, why decline is occurring, and how this fits into the wider
    economic market.


27. This analysis has identified the kind of economic, social and physical
    factors that lead to decline. Importantly, these factors interact with and
    reinforce one another in different ways, in different places, and at different

28. It is important to recognise that every area is different. Therefore there is
    a need for flexibility in policy responses to decline that reflect these
    differences and tackle the root of the problem. No single area will
    completely fit into the pattern of market failures and decline as described

29. For any area intervention to be effective, it should reflect the:

          Causes of deprivation – the analysis thus far has suggested that
           the underlying cause of deprivation tends to be a result of an
           economic shock. However, this can range from a very localised
           problem where a specific firm closes to a more general impact
           across numerous larger areas as a result of structural change in the

          Area response – different areas will react differently to a shock;
           some areas may respond positively, and either develop a strong
           indigenous economic base, or act to enable individuals to take
           advantage of opportunities elsewhere. Regeneration strategies
           need to facilitate change, and understand the function and
           trajectory of the area.

          Legacy effects – areas that have experienced persistent
           deprivation and have deep rooted market failures will require
           intensive action and an understanding of the barriers to opportunity
           that exist, which may be highly localised.

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30. Employment is a key driver of neighbourhood performance across a range
    of measures, and regeneration strategies need to be focused on reducing
    worklessness as a means of transforming an area and raising resident
    aspirations over the longer term.

31. It should also be recognised that these processes operate at different
    spatial levels that will be specific to each area. Where economic
    restructuring is incomplete, and some areas are left behind, action may be
    required in the wider labour market that extends beyond the boundaries of
    the neighbourhood, and even the local authority surrounding the
    neighbourhood to reinvigorate employment demand and provide
    opportunities for residents. By contrast, supply side failures such as
    cultures of worklessness may be neighbourhood specific, requiring
    intensive outreach programmes with an understanding of local assets and
    values. However, it is critical that these activities are joined up between
    different spatial levels to have maximum impact on the life chances of

32. The starting point for Government’s approach to regeneration, as set out in
    this Framework, is that each local authority must understand the scale,
    nature and causes of deprivation in their area. As discussed in Part Four
    below, each local authority will have a duty to understand the strengths
    and weaknesses of their local economy, and how their area fits in the
    wider regional economy. This provides the foundation for understanding
    the regeneration challenges facing an area and how best to meet these

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                                                                      ANNEX H


Dn – need to relate these examples to the typologies

   1. Regeneration policy is not unique to the UK, but has been on the
      political agenda in many countries for several decades. Long-term
      trends such as globalisation, demographic change and increased inter-
      regional flows of migration have resulted in increased exposure of local
      economies to the risks of shocks. While there are some common
      themes characterising most deprived areas, such as high levels of
      unemployment, social exclusion and urban decay, the cause and the
      scale of decline, as well as the ability of places to respond to decline is
      dependent upon place-specific economic, social, political,
      administrative, geographical and historical factors. Thus, for
      regeneration approaches to be effective, there is a need for them to be
      tailored to an understanding of the underlying causes of decline, as
      well the scale of the problem.

   2. In many countries this has induced a trend towards devolving more
      powers to regional and local levels.

   3. How regeneration policies are implemented in different countries is to a
      certain extent determined by the relationship between central and local
      government, and this differs across countries.

   4. In some countries there is a relatively high degree of local autonomy
      (e.g. federal states, and the Scandinavian countries), and in those
      states most of the powers and responsibilities concerning urban
      policies rest with the regional or local governments.

   5. By contrast, in countries with a strong centralist tradition (e.g. the UK,
      France, and the Netherlands), the national government is relatively
      stronger. In those countries the national level has a strong influence on
      the development and implementation of urban policies.

   6. In most countries, however, there has been a growing recognition of
      the importance of localised solutions, and a tendency towards
      decentralisation and increasing regional powers. Thus, although
      countries differ regarding their institutional structure, the growing

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           convergence towards greater decentralisation means that important
           lessons can still be drawn from international experiences.70

       7. Understanding the cause, the nature and the scale of deprivation is
          important for tailoring the appropriate response. For example, the post-
          1989 transitions left many of the former communist states in economic
          distress. In Elblag, Poland, this resulted in high levels of
          unemployment, social exclusion, and outwards migration of young
          people. In order to address these problems, an integrated urban
          development strategy that built upon the city’s geographical and human
          resource potential was developed.

     Euricur (2004) National Urban Policies in the EU, chapter 2, and 5.

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Case Study: Elblag, Poland

The post-1989 transformation left Elblag with high levels of unemployment,
hovering around 25% for most of the period since 2000. Apart from increasing
levels of social exclusion, the low levels of disposable incomes induced by high
unemployment also had the effect of reducing the demand for goods and services
provided by the local business sector. High unemployment rates also induced
large-scale outwards migration of the local labour force to larger cities such as
Gdansk or Torun, as well as an increasing concentration of social exclusion. Such
pockets of deprivation were mainly inhabited by ex-state collective farm workers,
the majority of them unemployed. Other characteristics of these areas were a low
tendency among young people to continue into higher education, as well as high
crime rates, high levels of drug abuse, and poor quality environment

In order to address those problems, the city’s municipal authorities adopted a
holistic approach, implementing a wide range of different measures, including
human resource development, modernisation of the infrastructure, as well as
measures to counteract high levels of social exclusion. In order to retain more
young people in Elblag, the president of the city worked closely with a number of
partners including both Higher Education Institutions and representatives of local
business. The aim was to make schools and training institutions more responsive
to the needs of the local labour market, as well as supporting the upgrading of
vocational skills. Measures to support the local business sector were also taken,
mainly through the modernisation of the infrastructure and the creation of
favourable conditions for attracting companies and businesses with international
capital, modern technology, and innovative products that could increase the
competitiveness of the city.

Parallel to investments in human resources and infrastructure, Elblag also
implemented a range of short-term measures in order to combat the high levels of
social exclusion. In 2003, a programme aimed at supporting unemployed families
was implemented, covering 100 families. One person from each family was offered
a job and the young people in the families were provided with both financial support
and assistance to find a permanent or temporary job. The city has also
implemented measures to help people to set up their own company. In 2004 this
scheme covered 1,000 people and involved a tax rebate of a total of €25,000. In
2005, 34 newly established companies were offered tax exemption. In September
2006, the unemployment rate for Elblag was down to about 18%.

   8. In order for regeneration to be efficient, it is also important to identify
      local strengths, weaknesses and opportunities, and develop a strategy
      tailored to the local conditions. In Harlem, New York, retail was
      identified as a key component of the regeneration strategy, as well as
      challenging negative perceptions of the area held by potential

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  Case Study: Harlem, New York

  Harlem, New York, has undergone considerable retail-led regeneration in recent
  years. One of the key ideas was that the area would benefit from retaining a
  greater proportion of retail spending within the local community. Harlem occupies
  about one-third of Manhattan Island yet it was significantly under-served in terms of
  the provision of retail. Retail is also one of the most important industries for
  employment in the US, being the entry point for about 40 per cent of first-time
  workers, and it also has the ability to provide skills and access to the service sector
  through training. Retail was thus identified to be an important component in the
  regeneration strategy.

  One of the major initial barriers to regeneration was to overcome the negative
  perceptions of the area held by potential investors, many of them not supported by
  facts. For example, perceived high levels of crime around tube stations in Harlem
  were shown not to be greater than in the areas around Times Square or Wall
  Street. Also, the perceived lack of significant purchase power of Harlem residents
  was contradicted by figures indicating that 20 per cent of the households had an
  annual income of $50,000. Research also showed that rather than a lack of
  consumers, 70 per cent of the residents were doing their shopping outside the
  area. Challenging such negative perceptions was thus an important part of the
  regeneration strategy.

  The investments generated included the development of a 63,000 ft shopping
  centre, which was the first major property development project in Harlem for 20
  years. The outcome was the creation of 250 permanent jobs. In 2000, Harlem USA
  opened, a 285,000-square-foot retail complex. Further investments have also been
  attracted to Harlem with Harlem Park, a retail, office and hotel development that
  opened in 2006.

   9. For a regeneration strategy to be effective it is also important that it is
      targeted at the appropriate spatial level, and there is a need for
      coherent local and regional policy responses. In Hannover this was
      accomplished partly through administrative reform. The key objectives
      of this process were to reduce bureaucracy, minimise duplication, and
      improve coordination and delivery.

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Case Study: Hannover, Germany

Like many other urban areas across Europe, Hannover saw the emergence of a
set of new problems during the 1990s, caused by structural economic change and
the local economy response to the forces of globalisation, resulting in rising
numbers of disadvantaged individuals and families in need of income support. To
deal with these problems, the city underwent a local government restructuring, and
formed partnerships across regional and local levels.

The City of Hannover and Hannover County have a history of cooperation through
the Hannover Regional Association, mainly on issues regarding planning,
management of public open space and green areas, and public transport. This
framework was however insufficient to cope with the challenges emerging during
the 1990s. The local governance finance system presented legal barriers to the
transfer of funds from wealthier localities, and the three-tier governmental structure
was characterised by duplication of effort and bureaucracy.

In the early 1990s, Hannover faced a shortfall of residential dwellings. Partly in
response to this, a sustainable community (Kronsberg) was developed, in line with
environmental, economic, and social sustainability principles. This project included
the construction of 6,000 new homes accommodating approximately 15,000
residents, with the aim of creating a balanced social mix. Associated with this
project was also the construction of shopping, educational, cultural and health
facilities on a Greenfield site. By 2004, about 3,000 new homes had been created,
as well as approximately 3,000 new jobs.

     10. Another international trend is the growing attention given to the
         importance of regional and local partnerships. The rationale behind this
         development is the disappointing results of policies not sufficiently
         based on local considerations. Some problems persist in deprived
         areas, such as long-term unemployment, social exclusion and poor
         living conditions. A study by the OECD showed that local initiatives for
         dealing high levels of unemployment were more effective when
         agreements were made among various layers of government, the
         private sector and voluntary organisations.71 Experiences from Finland
         and Ireland show that such partnerships have been successful in
         increasing employment and self-employment.

  OECD (1993), Partnerships: the Key to Job Creation, Experiences from OECD Countries, OECD
Publications, Paris, France; OECD (2001) Local Partnerships for better Governance, p 13.

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  Case Study: Finland

  In Finland there are three area-based partnerships established within the
  framework of the Finnish National Action Plan and the regional and local
  employment strategies. The rationale behind establishing these partnerships were
  to develop new methods to reduce unemployment and social exclusion. The main
  objectives are to combat unemployment, especially long-term unemployment, and
  prevent social problems associated with unemployment. Another objective is to
  promote cooperation between the parties responsible for tackling unemployment
  and the problems caused by it.

  The Finnish partnerships have three main functions: to develop and implement
  projects and programmes, to create and maintain cooperation, and to act as an
  intermediary body and give support and guidance for third sector organisations.
  The policy instruments include labour market training, guidance to third sector
  organisation, creation and maintenance of networks, support and capacity building
  for long-term unemployed and disabled jobseekers.

  The partnerships include representatives from local municipalities, labour
  authorities, educational and third sector organisations, companies, Social
  Insurance Institution, and the Employment and Economic Development Centres.

  As part of this framework the project “Partnership+” was implemented, with the
  objectives to activate individuals excluded from the labour market and support the
  development of self-initiative amongst unemployed individuals. The long-term
  unemployed and individuals in danger of exclusion from the labour market were
  identified as in need of individual, need-based and tailored support. The project
  included evaluation of employability and vocational education, improving
  employability and vocational skills, and methods to increase work participation and
  motivation. The target group was long-term unemployed individuals, and out of this
  group 31% of the clients became employed, 5% received work training, 5%
  received rehabilitation, 1% started their own business, 8% received vocational
  training and for 16% of the clients other solutions were found.

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                                                                       ANNEX I


Regeneration strategies at the local level

1. Most regeneration is delivered at the local level. Local authorities have the
   vital role of fostering prosperity in our towns, cities and neighbourhoods
   and they provide the civic leadership which brings together the local
   public, voluntary and community sectors together with private enterprise in
   order to create a vision of how to respond to and address a localities’
   problems, needs and ambitions – and to deliver solutions in a coordinated

2. Each local authority is required to publish a Sustainable Community
   Strategy which sets out the overall strategic direction and vision for the
   economic, social and environmental well being of a local area – and sets
   out the key priorities for the area. Alongside the SCS is the Local
   Development Framework Core Strategy which sets out the spatial
   development vision for a place – in effect the capital investment/
   infrastructure element of the SCS. Together these form the long term (15-
   20 year) vision for places. It is where the Local Strategic Partners, the
   private sector, infrastructure providers, key agencies (eg Homes and
   Communities Agency) and the wider community come together to develop
   a shared vision – including priority places and plans for regeneration and

3. These strategies must be supported by evidence – such as the economic
   assessments and housing needs assessments produced by local
   authorities. They are also only likely to be effective if they have wide
   community support and buy-in. This is why we have recently introduced
   wide ranging ‘duty to involve’ on local authorities. This builds on the
   detailed requirements for informing, consulting and involving communities
   that are already in place through for example the planning system. Both
   these high level strategies can be supported by more detailed plans such
   as Area Action Plans in planning, Neighbourhood Renewal plans, Crime
   and Disorder Strategies, Skills framework etc.

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Regeneration strategies at sub regional and regional level

4. At regional level the Sub National Review proposed the establishment a
   new regional strategy which will bring together the Regional Economic
   Strategy, the Regional Spatial Strategy and others such as the Regional
   Housing Strategy. The Regional Development Agency will work closely
   with local authorities and key stakeholders to put together a strategy which
   sets out the region’s vision for how and where sustainable economic
   growth would be delivered including the need for regeneration. The draft
   strategy will be signed off by local authorities and the government. Local
   Development Frameworks are required to be in general conformity with
   the regional strategy.

5. As at the local level it is important that the strategy is supported by sound
   evidence and has the support and buy-in from communities in the region.
   The process for developing the strategy will thus include extensive
   requirements to consult and involve as well as the opportunity to be heard
   at an independent examination in public of the issues.

6. At the sub-regional level it is vital that local authorities work together on
   issues around economic development, regeneration, housing and
   infrastructure because the real economic geography of places rarely
   follows administrative boundaries. There are many good examples of
   these and we are putting in place proposals that will strengthen sub
   regional working. MAAs will provide a forum where local authorities can
   pool both resources and outcomes on issues like economic development
   and we are consulting on proposals to put sub-regions on a statutory basis
   if there is demand for it. The expectation is that much of the regional
   strategy would be drawn up on a sub-regional basis.


7. To be properly effective strategies at all levels need to be underpinned by
   proactive delivery plans. At the regional level there will be an
   implementation plan that will be refreshed more often than the strategy,
   setting out how the priorities will be delivered, who is responsible and
   importantly how funding streams from central government – both direct
   such as Regional Funding Allocations, and indirect such as higher
   education, local government investment and services and key agencies
   (Regional Development Agencies, Homes and Communities Agency etc)
   will be deployed and aligned to support the strategy.

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8. At the local level the Local Area Agreement also sets out how many of the
   priorities identified in the SCS will be delivered. In addition deliverability of
   the Local Development Framework Core Strategy is a key test of
   soundness when they are examined by the Planning Inspectorate. It is
   important therefore that key delivery agents such as the private sector,
   infrastructure providers, regeneration agencies etc are all engaged in the
   development of the strategy and subsequent delivery through engagement
   in specific projects and programmes.

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