Selected urban policy instruments - Business Environment

The Urban Program
Historically the Urban Program, which was designed to help combat the economic, social and environmental problems of urban areas, was the main mechanism for allocating funds to those inner-city areas facing the greatest need.Of the 57 designated local authority areas which fell into this category, 9 were ‘partnership authorities’, where the government formed a close partnership with local authority agencies to tackle the problem of urban decay (e.g. Hackney, Liverpool, Manchester, Salford). The remaining 48 ‘program authorities’ (including Barnsley, Bolton, Sandwell, Wrekin) had no such partnership, but were eligible for government assistance for projects which contributed to the economic development of the inner area. In both cases, requests for funds had to be submitted from or via the local authorities which assessed the application and paid the grant for projects receiving official approval.With the advent of the Single Regeneration Budget, the Urban Program has gradually been phased out and in future all cities, towns and rural areas will be brought within the remit of government regeneration policy. Since the new regime is designed to be competitive, towns and cities within an area will inevitably be competing for funding against each other.
Urban Development Corporations (UDCs)
Urban Development Corporations were independent development agencies, established by central government to oversee inner-city development within designated areas. The first two such areas were London Docklands and Mersey side which gained UDCs in 1980. Subsequently, UDCs were established in Trafford Park(Manchester), the Black Country (Birmingham and surrounding districts), Tees side, Tyne and Wear, Cardiff Bay, Central Manchester, Leeds, Sheffield and Bristol. These ten agencies whose powers of development within their designated areas superseded those of the local authorities in their area ceased operations in 1998.
Using funds mainly provided by central government and employing around 500 permanent staff in total, the UDCs had the following objectives:

  1. To bring land and buildings into effective use.
  2. To encourage the development of industry and commerce.
  3. To ensure housing and other social facilities are available in order to encourage people to live and work in the designated area.

To achieve these aims, corporations were given wide powers to acquire, reclaim, assemble, develop, sell or lease land and to provide the necessary infrastructure. In addition they had powers to build houses for rent or sale and to renovate and reuse existing buildings. In short, they were the development control authorities for their areas.

A fundamental aspect of the UDC’s role as an agency for urban regeneration was its ability to act as a catalyst for encouraging private sector investment. Using public money to bring about environmental improvement and infrastructural development, corporations sought to attract private investors by removing some of the abnormal costs of development such as land clearance and servicing. This ‘pump-priming’ role cost the taxpayer over £500 million in the early 1990s, with the lion’s share of the funds going to the London Docklands Development Corporation (LDDC), whose fortunes were considerably affected by the collapse in property prices in the late 1980s and early 1990s.

Enterprise Zones (EZs)
Like UDCs, Enterprise Zones were first established in the early 1980s, with the first batch of 11 EZs being designated in 1981 with a planned lifespan of 10 years. By the late 1980s the number of EZs had risen to 27, though the number has fluctuated over time as some of the original EZs (e.g. Corby) were wound up and new ones announced in the wake of the closure of a large number of pits in the United Kingdom coal industry.

In essence, Enterprise Zones were small areas of territory within a locality where the government was seeking to encourage industrial and commercial activity by the removal of certain tax burdens and other impediments to enterprise (e.g. bureaucratic procedures). Among the principal benefits for firms located or locating in an EZ were:

  • Exemption from rates on industrial and commercial property.
  • Allowances of 100 per cent for corporation and income tax purposes on all capital expenditure related to industrial and commercial development.
  • A greatly simplified planning regime.

In addition, businesses normally faced fewer requests from public bodies for statistical information and were often exempt from other administrative procedures.

Whether EZs were successful in attracting enterprise and in creating significant numbers of jobs in inner-urban areas is open to dispute. Some evidence exists to suggest that the net job-creation effect has been relatively small and that many of the ‘new’ jobs are simply relocations by local businesses moving to take advantage of the benefits offered to firms within an EZ. However, according to an evaluation of EZs in the later 1990s it is estimated that the experiment helped to create over50000 net new jobs at a cost in the region of £1700 per year, per job.

City Action Teams (CATs)
City Action Teams were designed to bring together government departments, local authorities, local community groups, voluntary organisations and businesses working in inner-city areas. In addition to providing information and advice to any business working in or moving to an inner-city area, a CAT could help with funding for schemes which safeguarded or created jobs, improved the environment, provided training places or encouraged enterprise and the growth of business. It also funded feasibility studies and assisted with consultancy fees for local projects.
With the recent change in emphasis of government regeneration policy, funding for CATs has steadily fallen and was a mere £1 million by 1995/6. Like UDCs, City Action Teams have been phased out.
City Challenge
City Challenge was designed to concentrate resources on key areas in the 1990s.Under the initiative, local authorities in partnership with the private sector, local organisations and the local community were asked to draw up detailed plans for solving the problems of their area and special government funds were allocated to acceptable projects. The first eleven partnerships completed their five-year program to bring self-sustaining economic regeneration in deprived areas byMarch 1997. Nineteen Round 2 partnerships finished their program the following year.
City Grant

City Grant is the descendant of the Urban Development Grant an idea copied from the United States after the Toxteth and Brixton riots in the early 1980s. The aim of the grant is to support private sector capital projects which benefit local areas (e.g. bringing derelict land and buildings into use) by bridging any adverse gap between the estimated costs of a project and its expected market value, thus allowing a developer to make a reasonable profit on the venture. Large-scale projects that give rise to new jobs or housing and which improve the environment have been the focus of the grant aid, and priority generally has been given to schemes within City Challenge areas before those from the 57 local authorities that are part of the old Urban Program. In recent years, City Grant has been administered by English Partnerships.

Inner-City Task Forces

Task Forces were composed of small teams of civil servants from various government departments and people on secondment from the private sector who worked directly with local authorities and local businesses to stimulate economic development in inner-city areas. Their role was to co-ordinate and monitor the whole range of government initiatives within the designated area. The Task Force program ceased on 31 March 1998.


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