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An uncertain future

Regeneration & Renewal – 23 November 2009

Wales' regeneration funding is being targeted at six areas, but what about the rest of the country? What future is there for places that aren't on the Wag's priority list? Mark Smulian reports

Some 71 million has been set aside by the Welsh Assembly Government between 2009 and 2011 in the six strategic regeneration areas.

The question on the minds of those concerned with regeneration in Wales is: what about the rest? The Welsh Assembly Government's (Wag's) move to channel the bulk of its resources and efforts into six strategic regeneration areas (SRAs) has led to concerns that areas not covered by the initiative will face a struggle to find funding.

Some 71 million has been set aside by the Wag between 2009 and 2011 in the six SRAs. These areas (see below) are modelled on the Heads of the Valleys regeneration initiative, which has been brought within the programme. Each is run by the Wag, and coordinated with local councils. According to Wales' deputy regeneration minister Leighton Andrews, the SRAs represent a move towards focusing resources on areas seen as having deep-seated problems. He adds that the move to concentrate resources in six dedicated areas will get more out of the Wag's relatively small regeneration budget. He told Regeneration & Renewal: "I could have kept on dividing up (the money) so everyone got a small part of a small budget, but opted instead to spend money where there was most need but also the opportunities to do more."

Regeneration money will go to the SRAs, to other places "where there is continuing commitment, either legal or moral" and elsewhere "if there is something strategic we can do for Wales, for example to keep jobs in Welsh language communities so Welsh speakers can stay there", according to Andrews. He adds that extra support will also go to Newport, home to Wales' only urban regeneration company and, he says, "a bit like a seventh SRA". He also intends to develop the SRA programme so that other areas could join.

Cathy McLean, director of the Royal Institution of Chartered Surveyors Wales, thinks most SRAs are geographically large enough to include most areas in greatest need. But she worries about how they are run. "Heads of the Valleys is still in the early stages and there is a lot of politics there ... everybody wants to get money for their project, and the big projects swallow up the money."

Perhaps more importantly, doubts remain about how much money will be available for regeneration in parts of Wales outside the SRAs. Some Welsh local authorities are unhappy with Andrews' approach. They do not dispute the need for regeneration in the SRAs, but are concerned about both the potential lack of funding for places left outside and the way the areas were chosen.

Tim Peppin, director of regeneration and sustainable development at the Welsh Local Government Association, says: "The issue in (non-SRA) parts of Wales is that we want it to be clear that there will still be money for projects." Peppin argues that, while the statistics used by the Wag to choose their SRAs were public - for example the Index of Multiple Deprivation - their interpretation of these figures was not.

He says: "There is concern about how areas have been chosen as the process has not been totally transparent." He adds: "We are trying to get local authorities engaged at a higher level in policy-making so we do not just have designations handed down by the Wag. We want 'co-production' of regeneration policy. We want to be involved fully."

Andrews, however, dismisses this complaint, saying: "The criteria for choosing SRAs have been set out by me in the Assembly and in a cabinet committee paper." One source of renewal funding outside the SRAs will be the Regeneration Investment Fund for Wales (RIFW), a Wales-wide fund created using the European Union's Joint European Support for Sustainable Investment in City Areas (Jessica) funding mechanism. This, however, gives loans, not grants, and is aimed primarily at large projects with a substantial commercial content. A report in July by Andrews to the Wag cabinet committee on regeneration, skills and economic inactivity said the RIFW would be in operation by autumn 2010, and would use 25 million of European funding, matched by a similar sum from the Wag, and a further 50 million from the private sector. Once started, loans will be recycled through it to finance future projects.

The fund would be "complementary and supplementary" to other regeneration objectives, the report said. It will provide equity, loans or loan guarantees, but will not directly manage projects. Andrews' report said the RIFW would be best suited to "larger scale projects where there is a mix of commercial uses (retail, residential, employment, leisure) (that) may be able to take a higher level of risk than commercial lenders."

Funding for the six SRAs is not confirmed beyond 2011 - the end of the current spending review period - but the Wag says its commitment to the areas is likely to go beyond that point. "All the programmes extend beyond 2011," a spokeswoman says.

Areas outside the six SRAs will therefore be keeping a close eye on developments in Europe. Wales' entitlement to European Convergence funds is likely to end in 2013, and fears are growing of a looming funding gap outside the SRAs. Swansea City Council leader Chris Holley, the regeneration spokesman for the Welsh Local Government Association, hopes that at least some transitional EU funding will be forthcoming to help cope with the end of European funding.

The main stumbling block for Welsh regeneration is that European Convergence funds are only available for areas whose gross domestic product is 75 per cent or less of the EU average. When the calculations are done for the next funding round in 2013, Wales is likely to lose out. According to Holley, some parts of Wales have ceased to be eligible because of economic success, but in most cases will become ineligible simply because regions in eastern Europe are in worse economic shape than Wales, and the funds are consequently heading there.

Options the Wag and local authorities are examining with the possibility of putting them to the European Commission include allowing council areas that have a GDP slightly higher than the 75 per cent mark to remain eligible for European funding for a limited period, and the introduction of tiers of funding that areas could move through as they became more or less prosperous.

Nothing is yet agreed, but Holley is optimistic about progress. He says: "We know we are pushing at an open door in Brussels, but it has to be something acceptable to the Treasury and the (Wag). There is a feeling in Brussels that something is needed to allow that funding to taper off rather than just end."

The areas chosen as SRAs have welcomed their status. For those outside, there is anxiety about resources, an anxiety that will only worsen if 2013 arrives without an alternative source of EU money firmly in place.

Wales' main designated regeneration areas: the six strategic regeneration areas (SRAs)

Mon a Menai

This takes in the Isle of Anglesey and parts of Gwynedd along the Menai Strait. It was allocated 15 million over three years from 2008. The island faces economic problems arising from the decommissioning of the Wylfa nuclear power station, although a new reactor could be built there.

Projects planned include the development of Holyhead's port, environmental improvements to Bangor's city centre and the development of the tourism and outdoor leisure economy, worth some 140 million a year to the area. The Wag will work with the RAF Valley air base to create new jobs and commercial opportunities arising from the relocation there of the headquarters of the RAF's search and rescue service.

North Wales Coastal

This SRA stretches from Prestatyn to Mochdre and has a population of 100,000, mostly in the towns of Rhyl and Colwyn Bay. It has a 12.1 million budget for 2009/11. The SRA's priorities are to improve the quality of housing, create jobs, improve the area's skill base and update its image.

The area was once a major seaside tourism destination, but the decline of this sector has left a legacy of derelict former bed and breakfasts, hotels and boarding houses that became multiple-occupancy houses. Some towns in the area are among the most deprived in the country, Wales' 2008 Index of Multiple Deprivation shows.

Aberystwyth

Aberystwyth was designated an SRA in October. It has a 6.8 million budget for 2009/11. The cash will fund five projects in the town that will focus on housing, employment and business growth, economic inactivity and sustainable travel. Ceredigion County Council leader Keith Evans says the authority had lobbied for SRA status because it felt the town had an important role in supporting the mid-Wales economy.

Swansea

This SRA covers only the centre of the city. It was designated in September and has a 3.6 million budget for 2009/11.

Council leader Chris Holley says: "The reason for choosing the city centre, rather than the whole city, is that we need to regenerate it to create jobs and the greatest generator is retail, but the centre has been devastated by out-of-town shopping over the past few years.

"We've reinvented the centre as not just a place to shop but where one goes to socialise and for entertainment as well."

Swansea gained 38 million of Convergence funding in September for its city centre and waterfront, which includes cash for a new boulevard linking the two, public realm works and gap funding for the construction and refurbishment of offices.

Western Valleys

With a population of 136,000, this SRA crosses five local authority boundaries and has a 7.7 million budget for 2009/11. The area includes the towns of Ammanford, Neath and Maesteg, but is mainly semi-rural and was once dependent on coal and metalworks.

Deputy regeneration minister Leighton Andrews says the area needs "a completely coordinated and concentrated thrust to bring about change", as it faces problems related to access to services, an ageing population, the departure of young people, economic inactivity and low income levels.

Heads of the Valleys

This 15-year, 140 million programme predates the SRAs but is now one of them. Its budget for 2009/11 is 29.6 million. Its aims are to tackle economic inactivity and improve the environment of areas scarred by mining. The area cuts east-west across five local authorities, all of which lie north-south.

The area is also home to other Wag initiatives. More than 3,000 people in the area had been helped back to work between 2004 and 2007 through JobMatch, an initiative where training is linked to job opportunities. A low carbon programme aims to reduce the area's CO2 emissions, and Aberdare has been designated Wales' first low carbon town.