Past lessons for the present downturn

Bob Lane, Regeneration & Renewal, 8 August 2008

The UK is in the midst of a serious economic downturn. The chancellor recently acknowledged that the unprecedented "twin shocks" of the credit crunch and high oil prices are being felt by consumers and businesses. But what does this mean for regeneration professionals?

Unfortunately, there is no easy way to keep up the momentum of regeneration in this situation. But all is not lost. From my experience working in Liverpool during the recession in the early 1990s, I can offer suggestions for keeping regeneration on track when the economy is struggling.

During the recession, I was at the Merseyside Development Corporation, when we were attempting to promote a wide range of regeneration projects. Although Merseyside was emerging from a period of political and economic turmoil, no-one knew when its economy would fully recover. But local regeneration agencies recognised that progress would only come from coherent economic, social and physical programmes, and that key projects could succeed even in that tough environment. Given the uncertainty on Merseyside at the time, some of the lessons from then are relevant to today's national context. Here are five tips for regenerators.

1. Maintain optimism

Things will improve. While it is impossible to predict when this will happen, in terms of housing, the evidence points to the market picking up in the mid- to long-term.

The National Housing and Planning Advice Unit, the independent government adviser on housing affordability and on whose board I sit, made a recommendation for housing supply to Government in June this year. Based on modelling, the unit advised that about three to three-and-a-half million homes should be built in England by 2020 to stabilise long-term housing affordability. The Department for Communities and Local Government has since called on its regional partners to consider the advice when developing housing targets for the next round of regional spatial strategies. There were two main reasons for the unit's advice:

- The housing market will recover. Affordability Still Matters, published by the unit last month, shows that house prices have risen over the past 30 years by an average of 2.8 per cent a year, and there is little evidence this will change in the mid- to long-term.

- All those involved in housebuilding, including the regeneration sector, must be ready for the inevitable market upturn, whenever it comes.

2. Focus on delivery

It is essential to keep key projects progressing. Regeneration professionals should apply the old management adage: concentrate on what you can do, rather than worry about what is out of your control. Professionals in the sector must ignore the distractions of national and international news and concentrate on delivering individual regeneration projects. Many communities have waited a long time for help with their regeneration plans, and will quickly become disillusioned if their public and private sector partners fail to deliver.

3. Use public assets

Public bodies should mitigate the impact of the current crisis by developing key assets such as land and buildings in partnership with the private sector. Councils may be able to restructure proposals to reduce the immediate cash flow pressures on private sector partners, while also offering the public sector a fair share of the profit if a scheme succeeds in a recovering economy. Public bodies must use their planning powers and land to provide their private sector partners with as much certainty as possible.

4. Work with new partners

Public bodies should be prepared to deal with new bodies. In a recession, larger developers and funders are often less inclined to take risks on long-term regeneration projects because of a short-term hit to their balance sheets and shareholders' demands. So every economic cycle affords an opportunity for new (often local) entrepreneurs to emerge.

In Liverpool in the 1990s, developers such as UK Land & Property, Urban Splash, Neptune Developments, Downing Developments and the Beetham Organization helped to get regeneration moving. Some became national players in the process.

But new developers are in a chicken and egg situation. They lack the track record or asset base to reassure public sector clients. But their dynamism, local knowledge and self confidence can enable them to act quickly and make schemes work.

5. Be realistic

It is important to devote energy to smaller, local schemes and emphasise quality. But in a downturn, a balance sometimes must be struck between maintaining momentum and only proceeding with perfect solutions. In the early 1990s, urban development corporations such as the Merseyside Development Corporation succeeded in carrying out physical regeneration, but questions about quality could have been asked about some projects. Decisions must sometimes be taken to proceed with imperfect projects to get regeneration moving. This is a hard judgement to make, so it needs to be made with local involvement and support.

Conclusion

However depressing newspaper headlines are, there is lots to work on. Even if there is little national growth over the next couple of years, there will still be opportunities for local projects to succeed. Although no-one can predict when happier times will come, hard work and optimism are required to ensure the regeneration sector, and the areas it focuses on, are already ahead when the upturn arrives.

- Bob Lane, board member of the National Housing and Planning Advice Unit.