Impacts of the economic crisis on regeneration
Nevin starts with the (reasonably conservative) prediction that the UK’s annual budget deficit may reach £200bn by 2011, 12% of GDP and the highest in the developed world. The financing of this debt, during a period of recession when government receipts will fall, will be a huge burden on the economy, leading to pressure on “the structure of state expenditure” or, in other words, large cuts in public spending. Could this involve the intervention of the International Monetary Fund, recently re-capitalised with $1.3 trillion by the g20 to support countries struggling in the downturn? In 1976, when the UK government turned to the IMF during a period when it could no longer service it’s debts, a 25 year period of belt-tightening followed. Now, with the IMF at the vanguard of globalised neoliberalism, would the IMF impose the same ‘structural reforms’ on the UK as it has on ‘developing’ nations seeking it’s help over the last twenty years? This could be a trigger for the extension and deepening of the privatisation of UK public services and the capitalisation of the public sphere that has been the main goal of the neoliberal project here since 1979.
So how might this likely squeeze on the public purse effect regeneration policy? Nevin argues that the coming period should see a re-evaluation of the generic finance and property development-led economic regeneration strategies that many of our urban areas have chosen since 1997. As these sectors become less obvious drivers (i.e. funders) of regeneration, government subsidies will need to be re-targeted to other sectors, perhaps producing more local / regional diversity in regeneration policy with more sustainable future outcomes.
Paradoxically, the only way to maintain current levels of spending within regeneration may be to provide a greater role for the private sector in funding projects, at a time when private sector investment is grinding to a halt. To do this will mean promoting more obvious returns on private investment, privatising the benefits of regeneration by increasing the private ownership of new assets and revenue streams and probably by reducing the levy on private sector profits that has recently delivered an income stream for projects without an obvious profit-rationale, such as community facilities and social infrastructure. We can expect to see the value of Section 106 and other ‘developer contributions’ falling as a way of incentivising private sector investment in development. This will reduce the funding available for social infrastructure, while the need for strong social supports continues to increase as this recession bites.
So long as we continue to attempt to shore up existing models of regeneration funding, it is hard to see how the current, historically high, levels of spending on regeneration can continue. The great danger is that in an attempt to carry on regardless, we slip into a more private sector-led mode of development that deepens inequality rather than addresses its causes. New thinking about regeneration funding and policy is needed to avoid reversing the significant improvements made to our declining towns and cities over the last ten years.