The old model of regeneration funding that supported investment in many of our cities before the start of the recession is no longer viable. Private sector banks and other investors have a much weaker appetite for risk, while the public policy goal to reduce the deficit means that there is much less money for state-led regeneration. This means that other models are required to support investment in our cities.
Urban Development Funds (UDFs) have the potential to be one of these models. Nine of these funds already exist in the UK, currently underpinned by JESSICA monies from the European Regional Development Fund (ERDF). Yet, their impact has not been maximised because of three overarching issues; inflexibility created by the design of current regulatory framework; a lack of investment-ready projects; and a lack of coverage across UK cities.
The change in the economic development landscape in England presents an opportunity to build upon and refine how UDFs work in the UK to increase the amount of investment in our cities. This report calls for the creation of a ‘Fund of Funds’ model at a national level which would oversee a number of sub-national UDFs serving individual or groups of cities. Such a set up would allow more cities to access UDF finance to support the growth of their economies.