Urban regeneration - the issue explained

The collapse of Britain's industrial and manufacturing economy has left many inner city areas blighted by unemployment, riddled with poor housing and socially excluded from more prosperous districts.

Urban regeneration is the attempt to reverse that decline by both improving the physical structure, and, more importantly and elusively, the economy of those areas. In all regeneration programmes, public money is used as an attempt to pump prime private investment into an area.

Over the past 20 years a bewildering array of government programmes have been launched, usually as the result of a ministerial walkabout in an inner city area. Some years later programmes have tended to be quietly dropped or replaced. Because regeneration schemes often take years to complete, by the time they have finished the government programme that initially funded them has usually been replaced. This means that current programmes are often confused with past projects. Estate action, city challenge, the estate's renewal challenge fund and the single regeneration budget (SRB) have all come and gone in the last few years.

One important trend has emerged over the years: the earlier projects tended to focus on physical regeneration, usually housing, whereas later programmes have attempted to stimulate social and economic regeneration. More recently, much of the responsibility for regeneration initiatives, especially economic regeneration, has switched to the new regional development agencies. The RDAs have been given more cash and flexibility to spend on regional priorities, including the money that had been earmarked for the sixth and final round of the SRB.

There are currently two main regeneration funds: the new deal for communities and the neighbourhood renewal fund. But there are also a raft of other funding streams focused on specific activities that used to help regeneration initiatives. These include: lottery funding, cash for the education, employment and health action zones; and the Housing Corporation cash for new social housing, 60% of which has to support regeneration schemes.

The new deal for communities is the Labour government's flagship regeneration scheme. It was launched in 1998 and so far 39 projects have been formed across the country. Over the next three years £1.2bn has been committed to the scheme.

The main goal of the programme is to reduce disadvantages in the poorest areas by focusing on four issues: unemployment, poor health, crime and education. Other issues such as improvement to the physical environment are secondary to these main priorities.

The £800m neighbourhood renewal fund, which starts in 2001-02, will be targeted at the most deprived areas, on the basis of need, as extra help to meet government targets for reducing inequality.

In addition to cash, the government has also introduced a number of tax incentives to help regeneration. These include tax breaks for urban regeneration companies that have been set up to coordinate regeneration in three cities, with another 12 planned. But on tax breaks the government has not gone as far as the recommendations made by the urban task force, a group chaired by architect Lord Rogers.

A number of perennial questions remain about the effectiveness of regeneration schemes. How can top-down government programmes gain the backing and involvement of local people that is usually crucial to their success? Can public cash really stimulate local economies and create jobs? How can regeneration schemes prevent displacing problems from one area to another?

The number of separate regeneration funding packages that have been launched and then dropped shows that these questions have still not been satisfactorily answered.