Over the past four and a half years the Conservative/Liberal Democrat coalition has introduced a raft of measures designed to stimulate development around the country.
These include the Growing Place Fund, the Regional Development Fund, local enterprise partnerships, enterprise zones, tax increment financing and city deals.
With less than six months until the General Election, the British Property Federation has given its verdict on the schemes. Its Growth Initiative Report, released next week, analyses the performance of these policies. Here Estates Gazette examines the BPF’s findings and gives each policy an end-of-term grading.
Growing Places Fund
What does it do?
Allocates small parcels of funding to LEPs in order to unlock infrastructure projects
When was it introduced?
2011
How has it worked?
The BPF found that 159 schemes have benefitted from the funding. Developers estimated that 47% of the projects could not have started without the help of the GPF. Just over 100 of the projects that benefitted from the funding got under way before their allocation had been received.
EG score: 4/5
Regional Development Fund
What does it do?
A £3.2bn pot that funds projects that will help “areas and communities at risk of being particularly affected by public spending cuts”.
When was it introduced?
2011
How has it worked?
The government has allocated £2.9bn in the first five rounds of funding, with round-six bids currently being assessed. The government claims that rounds 1-5 have supported 430 projects across England that will deliver 573,000 jobs and £16bn of private investment. The BPF found that developers were exasperated by the bureaucratic bidding process involved with the fund and that it was not connected to other growth initiatives, meaning its impact was diluted.
EG score: 2/5
Local enterprise partnerships
What do they do?
Bring together public and private sector stakeholders to set local economic priorities and lead projects to stimulate growth.
When were they introduced?
2011
How have they worked?
Without a clear purpose or any significant funding, LEPs have been underutilised and underwhelming. A lack of long-term certainty has hindered their ability to act on the timescales required for effective regeneration. While the BPF backs the theory, it wants LEPs to be given a say in how government funds designed to stimulate economic growth get awarded.
EG score: 2.5/5
Enterprise zones
What do they do?
Offer financial incentives for development in specified areas.
When were they introduced?
The March 2011 Budget announced the creation of 21 new enterprise zones and a competition for a further 10, which were awarded the following year.
How have they worked?
This time around, EZs have not had much impact as they lack key planning powers. The BPF also found developers felt insufficiently incentivised to build in the zones. However, EZs do have potential if used in conjunction with tax retention powers.
EG score: 2/5
Tax increment financing
What is it?
Designed to fund the infrastructure required to kick-start development by allowing a proportion of income from future business rates to be retained and reinvested.
When was it introduced?
Chancellor George Osborne followed up a commitment from his predecessor to introduce TIF in his October 2010 spending review.
How has it worked?
TIF has worked for the Northern Line extension to Battersea, but the BPF found the government’s use of TIF was too narrow, so it has only been used on a small scale. There are currently two types of TIF: one based on rate retention, which is limited by the 2020 reset of local government income, making long-term rates uncertain; and a second that allows future rate growth to be excluded from the reset but is limited to £150m. The BPF wants the government to allow much greater use of the second option by setting out strict criteria but allowing any scheme meeting the requirements to use it.
EG score: 3/5
City deals
What are they?
Agreements negotiated between central government and cities intended to give local decision-makers new powers, freedoms and funding channels.
When were they introduced?
The first eight city deals were signed in July 2012.
How have they worked?
The BPF found that while some government departments were great advocates of decentralising power to cities, others were much more reluctant, limiting the impact of some deals. It also noted that with local authority budgets shrinking, the initiative has come at the wrong time. Developers have criticised the inconsistency the deals have introduced between regions, with massive variations in both capability and commitment.
EG score: 2.5
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