Regeneration and the recession: unlocking the money

The recession has brought an end to the long property investment boom that has helped revitalise many city centres and run down urban areas in the UK over the past decade.

The boom was fuelled by cheap credit, a bubble in the property market and large increases in public spending. Property development and regeneration over the next ten years is expected to be very different, and cities will need to step up and play a bigger role in regeneration. In order to do this, greater devolution of decision making and financial powers will be needed so that cities have the flexibility to raise, pool, and decide how to spend resources locally.

This APUDG report highlights the need for cities to have additional financial tools and revenue raising options, and argues that accelerated development zones (ADZs) – a UK variant on tax increment financing (TIF), which funds infrastructure from future increases in tax revenue caused by new development – should be introduced as a key step towards achieving
this objective.

Based on the oral and written evidence submitted to the group’s inquiry, this report recommends that:

• In the next Pre-Budget Report, the government should pilot a significant yet manageable number of TIFs/ADZs.
• The next government should use these pilots to push through a fully national TIF/ADZ scheme from 2011.
• All cities need to adopt a more proactive approach to working with the private sector, and take on more risk.
• The Homes and Communities Agency (HCA) should establish a specialist regeneration funding team to support local authorities with the practical challenges of implementing different funding models in the current climate.