Regeneration doesn't work

Bradford needs regeneration. But this starts with the City’s economy not with politically-convenient funding that just pays developer profits without changing the economic fundamentals.

Bradford has, for a host of reasons, been blighted. What was once, as my boss put it, “the richest city in the richest county in the richest country in the world” is now a sorry place where the city centre, those parts of it that aren’t empty and boarded up, provides a shopping offer suited to the poor, old, tired and ill that you see walking that centre’s streets. The council and other bodies have, over the last thirty years or so, poured huge amounts of public money into seeking to turn round the City’s fortunes. Any visitor to the City would be forgiven for assuming that no investment has taken place over those years.

Bradford isn’t alone in demonstrating that regeneration - the use of public funds to transform, turn round or level up a place - doesn’t work. If you wander into town and city centres, council estates, seaside resorts and former mining communities across England the sense of decay and decline, even despair is palpable. Yet in each of these places we can catalogue the efforts to regenerate. We can point to the shiny buildings and splendid squares built with the aid of regeneration funding. At best a couple of half-nice buildings sat among poverty, decline and a spreading wasteland of dereliction.

Regeneration doesn’t work. We should have worked this out by now but, instead, the pundits and regeneration experts gather to proclaim that it will all be different this time, that they have a new and radical approach to transforming northern cities, coastal towns and old industrial places. A new and radical approach that involves using public money to bring forward exciting schemes that foster such things as ‘inclusive growth’, ‘diversity’ and ‘community’. And that public money will, as with every regeneration programme since Michael Heseltine first visited Liverpool and proclaimed the faith, be spent on making property development happen where private investors and the market have ‘failed’ to deliver.

The belief is that if we use public money to pay the profit margins of developers this will allow them to build and will ‘lever in’ further private investment. There will be excited talk about city centre living all accompanied by illustrations of clean boulevards where sleek, smart and well-heeled people promenade. All engaged, we assume, in high value tasks made possible by giving money (often via some sort of ‘special purpose’ company) to developers with opaque balance sheets and offices in Dubai, Shanghai or various Caribbean tax shelters.

Some councils, and Bradford is one, have pulled away from this model. Not for ethical or ideological reasons but because the supply of developers willing to invest silly sums in declining English towns has dried up. So councils have turned to a do-it-yourself model of regeneration. Instead of using private funders as the source of investment (underwritten by regeneration cash), councils borrowed money from the Public Works Loan Board (PWLB) under an investment approach known as ‘prudential funding’. Bradford has two big schemes funded this way,the Bradford Live refurbishment of the old Odeon across the square from City Hall, and a new building for the city’s municipal markets on Darley Street, as well as some ‘strategic’ property purchases (none of which look good value for money).

In a city where land values are positive and there is evidence of economic growth the use of public borrowing to fund development by the council might make some sort of sense. But where land values are negative and economic growth something of distant memory, the strategy is bound to fail.The two schemes referred to above have required over £80m in investment, both have lost their private sector operating partner and neither is yet open. This is not a peculiarly Bradford problem but a feature of council-led developments described as ‘change-making’ or ‘transformational’. Yet councils and Whitehall persist with the view that public-sector led regeneration results in positive outcomes despite 40 years of evidence that it doesn’t (except for the property developers who get their development risk funded by the state).

The extent to which nothing has changed is illustrated by the most recent regeneration programme, levelling up:

“That is why we are now making the biggest changes to the way we support local economic growth in a decade, in order to regenerate our town centres and high streets, support individuals into employment, improve local transport links and invest in local culture, while giving communities a stronger voice to take over cherished local assets that might otherwise be lost.

This will involve the UK government decentralising power and working more directly with local partners and communities across England, Wales, Scotland and Northern Ireland, who are best placed to understand the needs of their local areas and more closely aligned to the local economic geographies to deliver quickly on the ground.”

Let’s note firstly that this isn’t a big change at all but simply the same tired old approach to regeneration - set up a national fund or funds and get local communities to bid for these funds. This approach is central to the Heseltine regeneration model that began in Liverpool back in the early 1980s:

“All my experience confirms that competitive funding is key to unleashing the entrepreneurial spirit in local areas. It injects a surge of excitement and incentivises communities to seek a wider and much more ambitious vision to anything they had thought of before. A healthy rivalry between areas comes into play. It drives collaboration, creativity, commitment and ambition. I therefore believe that the single pot of central government funds for economic development should be made available to local areas on a competitive basis.”

Of course the results of the bidding process are usually (and levelling up was no exception) political rather than anything to do with surges of excitement, entrepreneurial spirit or ambitious vision. Money goes where the ministers deem their party (or their friends) will most benefit. And local politicians promote schemes that play to local opinion rather than to any sense of economic priority (see Bradford Live mentioned above). But even if these two things coincide, the results still seldom result in any sustainable economic change. It looks great having, and politicians will point to, a skyline with cranes but this is most commonly a false dawn. When the cranes go nothing has changed about the underlying economy.

Regeneration doesn’t work because the reasons for the decline of places like Bradford lie in the wider economy not in the lack of public investment. Spending millions on new cobbled streets in the city centre, as Bradford is doing, is welcome and improves the look of the place a little. But the poor, old and tired people who we see in Bradford don’t have their lives transformed, they just have nicer pavements on which to be tired, old and poor. What is needed is the entrepreneurial spirit Michael Heseltine is so keen on, but directed to actual enterprise rather than writing bids for government funding. Perhaps, instead of regeneration cash, we should give councils the flexibility to liberalise planning, cut business taxes and remove anti-growth regulations? Maybe there’d be more interest in Bradford or Hull if these places offered real cash incentives to start up businesses and investors - not by grants but by having lower taxes, smoother regulations, a liberalised labour market and a freeport approach to tariffs?

Regeneration doesn’t work because, as well as not facing up to the reasons for economic decline, local councils do not have the resources to provide the levels and standards of visible services they’d like (and local residents would like). It isn’t about the fragmentation of responsibility across different authorities but that central government has directed and constrained councils into spending most of their money on adult social care, looking after children and funding shortfalls in public sector pensions (to which we must now add paying back those PWLB loans). It is no use giving councils regeneration funding to create gorgeous urban environments, parks and buildings when they don’t have enough revenue available to do the necessary care and maintenance. And throwing out intermittent grants for potholes, parks and public toilets merely makes councils focus on begging for grants without fixing the actual funding problem.

England’s problem is that it has too little economic growth to allow the genuine transformation of places like Bradford. To make matters worse England’s central government only supports devolution on its terms, a sort of faux-devolution based on giving councils or elected mayors control over decisions about funding provided by that central government. But not how much funding or what it could be spent on. The result of this is that regional mayors and combined authorities revert to the old model of grant funding for regeneration schemes - Bradford gets a new office block across from City Hall into which PWC moves some workers, mostly from elsewhere in Bradford and Leeds. The cost is £2m in public subsidy for the private developers and precisely zero improvement to the local or regional economy.

If we want regeneration to have a chance of working, we need to begin by allowing local authorities flexibility over planning and business regulations, control over their revenues and the chance to reward investors and entrepreneurs who choose to work in that area. We need to get councils focused on their local economies rather than the necessary but expensive task of looking after the old, infirm and vulnerable. And we need central government to stop second guessing what places need and to put an end to MPs seeing regeneration money as a slush fund to support their re-election. Plus maybe that national government doing something about the barriers to economic growth - net zero policies, the planning system, high taxes on investors and a failing health system.

Bradford needs regeneration. But this starts with the City’s economy not with politically-convenient funding that just pays developer profits without changing the economic fundamentals.