Financing regeneration: call for government action

Published: 2010-07-09 15:07:02

SocInvest has sent the following open letter to Grant Shapps, minister for housing and local government at the Department for Communities and Local Government:
 
"We should like to draw the Minister's attention to an important set of recommendations proposed by leading members of the regeneration community.
 
For the nation to continue to reap the economic benefits from regenerating urban communities, there needs to be a radical new approach to the way in which local authorities finance redevelopment projects.
 
According to an exclusive study undertaken for SocInvest 2010, June 16, London, the UK's premier regeneration finance and funding event attended by 170 senior executives, an overwhelming majority believe that new ways have to be found to finance regeneration programmes and that changes in government policy will be key to enabling this to happen.
 
•96% believe that regeneration depends entirely or partially on new approaches to raising finance.
 
•95% say that new government policies are key to enabling these new finance approaches.

This can be achieved in a variety of ways, but the most common recommendations were for changes to legislation in a number of specific areas:

• Over 85% of respondents believe that local government should be given greater freedom to raise finance.
• 69% believe that local authorities should be able to issue bonds to support regeneration programmes.
• 60% say that tax increment financing – or accelerated development zones - should be introduced in 2010 to enable authorities to raise finance against anticipated future rate growth.

Delegates urge the government to consider legislative changes that would allow these finance methods to be adopted. In addition, other measures to increase local authorities' scope for raising finance include:

• Borrowing against rental income.
• Retention and use of all RTB receipts.
• Reintroduction of a taper relief system to reward shareholder risk taking.
• Retaining the increased rates that flow from regeneration.
• Tax increment financing.

Many of the changes that are recommended do not involve additional calls on government funding. By giving local authorities greater freedom to raise finance from non-government sources against projected tax and revenue growth, regeneration programmes could be sustained with benefit to both local and national economies.

The SocInvest study also revealed a determination to sustain regeneration activity despite the difficult economic conditions. Local authorities and private partners are supporting ways of developing joint venture and partnership models to sustain their plans including the use of:

• Public/private development partnerships.
• More efficient use of local authority assets in joint venture projects.
• Social enterprise.
• Bank and financial institution finance.

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