Government cuts deep into regeneration
Regeneration schemes are to suffer a “potent cocktail” of spending cuts, says Jackie Sadek, chair of the British Urban Regeneration Association (BURA), after chancellor George Osborne’s (pictured) £6.2bn cuts announcement last Monday.
The three worst-affected departments will be Business, Innovation and Skills; Communities and Local Government; and Transport (see box, opposite). Sadek says this was bad news for the regeneration sector, because it will leave a gaping hole in finance for schemes across the UK. This has increased nervousness in the sector ahead of the forthcoming emergency Budget on 22 June.
More bad news followed. The Homes and Communities Agency (HCA) announced £230m of immediate cuts to its existing projects on 25 May. A further £610m of HCA funding was also put on ice.
The only good news was the announcement that £170m would be reinvested to ensure that 4,000 social-rented homes are built.
Sir Bob Kerslake, HCA chief executive, says the threat from cuts is more severe against mixed-use regeneration than simple housing developments.
“The £610m is money we thought we had, and money we may not get,” Kerslake says.
“It’s a very big chunk of money to be put in doubt.
“All of this will have at least some impact on regeneration, but the schemes that were not committed before the election were principally more regeneration-based, such as Rathbone Market in London and the Berkeley Homes’ private-rented sector initiative projects. These are more complex and the due diligence has taken longer.”
In total, 107 schemes across the UK look uncertain of receiving previously promised funding under the HCA’s Kickstart scheme, including Berkeley Group’s Kidbrooke Phase 1 scheme in Greenwich. Local authority new-build schemes also had £59m of previously approved funding cast in doubt (see below).
Sadek is sceptical about the effectiveness of the HCA as a body, but says cuts to its budget will nonetheless affect regeneration.
“Despite some brilliant efforts in the HCA to lift regeneration up the agenda, pure housing has always been too prominent. Because of national targets, the HCA was having to do volumes of homes without thinking enough about wider regeneration.
“The potent cocktail of cuts to the HCA, as well as the Department for Transport, will have a big effect on regeneration, though,” says Sadek.
THE £6.2bn SPENDING AXE
Savings 2010-2011
- £1.7bn delaying and stopping contracts and projects
- £836m Department for Business, Innovation and Skills budget
- £780m Department for Communities and Local Government (CLG) budget
- £683m Department for Transport budget
- £405m local government funding channelled through CLG
- £840m Homes and Communities Agency’s funding uncertainty for projects
- £600m cuts to quangos, including £270m from ending “lower-value” regional development agency spending
- £170m total central government reduction in property costs
CLG cuts in detail
- £82m cutting waste and inefficiency in the department and its quangos
- £186m targeting less-effective spending in the RDAs
- £150m reduction in last government’s housing pledge
- £362m reduction in grants to local government
HCA cuts in detail
- £100m cut to National Affordable Housing Programme
- £50m cut to Kickstart Round 2
- £30m cut to gypsy and traveller programme
- £50m cut to Housing Market Renewal Pathfinder programme
- £610m “on hold” funding for uncommitted programmes
Don't miss the Public Property Summit - 1-2 November 2010
[...] out. It’s been hit by the downturn, and is one of a number of developers hit by the new coalition government’s plans to slash public spending. (Indeed, Berkeley’s plans to redevelop the old Ferrier Estate in Kidbrooke now look under [...]
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