When rioters took to London's streets over several nights in early August, looting shops, starting fires and causing millions of pounds of damage, it was shocking to see how quickly homes and businesses could be destroyed. In Tottenham, where the disorder began, MP David Lammy said the area had had its "heart ripped out" and that the events were a wake-up call for the need for regeneration.
The riots have certainly sharpened the focus on the worst-affected areas, such as Tottenham and Croydon, prompting London mayor Boris Johnson to pledge £20 million of public money to help regenerate these two boroughs. The extra cash is on top of a £50 million fund he has set up to help make long-term improvements to areas damaged in the disturbances.
While this - along with the £40 million left in the mayor's Outer London Fund aimed at supporting suburban high streets - shows that there is still a certain amount of public money around, London boroughs are having to establish a raft of new funding models in the face of spending cuts.
Following on from a number of Scottish councils, London authorities are also looking to use the Tax Increment Financing (TIF) tool to support regeneration projects by borrowing against future business rates to raise cash for infrastructure. The mechanism would require legislation before it could be introduced in England, something the government has pledged to do. However, boroughs such as Barnet, Wandsworth and Croydon are already examining how TIF could help drive development.
The London Borough of Barnet wants to use the tool to back its planned 20-year scheme to redevelop 150 hectares in Brent Cross and Cricklewood. Developers Hammerson and Standard Life have committed £1 billion for infrastructure to the scheme through a section 106 planning gain agreement, the council says. But as the project is so large, it wants to use TIF to fund some of the early infrastructure to speed up the delivery of later phases.
Wandsworth believes that TIF could be the answer to the question of how to fund a Northern Line tube extension to the Vauxhall-Nine-Elms-Battersea opportunity area, which is earmarked for new homes and jobs. Steve Diamond, the borough's deputy economic development officer, says the council can generate a reasonable amount from the section 106 deal and Battersea Power Station developer Treasury Holdings is putting in £200 million, but there will still be a financing gap as the extension needs to be built during the early stages of development.
"TIF is one way of bridging that," Diamond says. Talks are ongoing about how to share the risk with the government, the London Borough of Lambeth, which also has a stake in the Vauxhall-Nine-Elms-Battersea regeneration area, and partners such as Transport for London, he says.
If the government goes ahead with TIF or simply allows councils to borrow more freely against future business rates income it may be necessary to pool funds, says Ben Harrison, director of regeneration network Future of London. "Areas that generate the most business rates may not have the biggest infrastructure or regeneration need," he says.
While other councils wait to see the outcome of the TIF proposals, the London Borough of Newham received a boost in March after the government selected the Royal Docks as an enterprise zone (Planning, 29 March, p6). The partly derelict 125-hectare site, which is home to the ExCeL exhibition centre, will aim to attract firms through tax breaks, relaxed planning rules and superfast broadband.
Newham's head of regeneration Clive Dutton says the size of the site will enable it to provide a quality of economic development that will make it Europe's Silicon Valley. "We want to see university research hubs, hi-tech firms and maximise ExCeL's potential as a global exhibition centre," he says.
Some may feel that Newham already has the capacity to attract investors, due to the scale of regeneration taking place ahead of the 2012 Olympics. But Dutton says the Royal Docks has huge additional regeneration potential because it is so well connected with the Docklands Light Railway, City Airport and the forthcoming Crossrail project.
Business rates collected from firms in the enterprise zone will be retained by the new London-wide local enterprise partnership (LEP) to create a fund designed to promote economic development in the city, says Fiona Fletcher Smith, the mayor's executive director of development and environment. She says the LEP will also be able to borrow against this income. The public-private partnership, which is now finalising its board, will be responsible for setting the strategic direction for growth in London.
But proposed enterprise zones for sites in Croydon and the Upper Lee Valley including Tottenham were not selected by the government in a second bidding round. In any case, Fletcher Smith says the riots have led to a change in tactics since those plans were drawn up: "In discussion with government, we concluded that having some immediate cash was more important than setting up an enterprise zone," she says. "Together with the boroughs, we will be looking at improvements that may include some of what would have come with a zone anyway, such as business rate discounts. This money will really kick-start some big growth in those areas."
Another way that councils are looking to maximise regeneration opportunities is to make use of their assets. The London Borough of Croydon set up the UK's first local asset-backed vehicle with developer John Laing in 2009. The partnership aims to provide a new headquarters for the council, almost 2,000 square metres of retail space and around 1,250 homes between 2012 and 2017. Deputy leader Tim Pollard believes the partnership could expand to include other councils that would otherwise have insufficient assets to attract private partners.
The Community Infrastructure Levy (CIL) will be another potential source of funding. But in London, boroughs are having to carefully calculate how high to set their proposed levy charges because they will come on top of another CIL the mayor aims to use to raise £300 million to help pay for Crossrail.
Many councils have protested over the mayor's proposal, which is due to go to examination at the end of the year, arguing that the levy could hit regeneration. Faraz Baber, executive director for planning and development at business lobby group London First, says: "When you add on the mayor's levy to what the boroughs want to raise, it will be expensive. We need to work out how divide the CIL pot and make sure it still enables development."
Another change to the delivery of regeneration is in governance, with the mayor set to gain further powers through the Localism Bill. This includes the planned transfer of the London part of regeneration quango the Homes & Communities Agency and the functions of the London Development Agency (LDA) into a new housing and regeneration unit in the Greater London Authority (GLA) by next April.
The move will give the GLA a portfolio of land and assets. It has already taken over the LDA's responsibility for managing London's European Structural Fund programmes, which were awarded more than £1 billion for 2007-13. Fletcher Smith says: "It is a fantastic opportunity to bring regeneration and housing in London together for the first time. The mayor is finally able to take a real strategic lead."
The Localism Bill as it stands will also allow the GLA to establish mayoral development corporations (MDCs) intended to focus regeneration where it is most needed. Modelled on existing urban development corporations, they would have planning and business rate relief powers and be accountable directly to Londoners through the mayor's office. The first of these is due to be set up to continue the work of the Olympic Park Legacy Company (OPLC).
Duncan Innes, the OPLC's executive director for real estate, says: "The practical benefit of the MDC will be its ability to focus on a particular area using a potent combination of land ownership and planning powers. It will cover a slightly wider area than the Olympic Park to make sure that the legacy development is connected to its surroundings."
While the MDC will require government and mayoral financial support, Innes says that income will also come from rent from the venues, sponsorship and ticket sales.
Meanwhile, the OPLC continues to work on the legacy plans, which centre on creating up to 11,000 homes in five neighbourhoods. For these to succeed, Innes says it is vital to get social infrastructure such as schools, open spaces and services for families right and to ensure that plans to create up to 10,000 jobs reach fruition. As Planning went to press, the OPLC was due to go to tender for developers to turn the media centre into an employment hub as one of the first projects in the legacy proposals. The outline legacy planning application was also submitted this week.
Dutton believes the 10,000 jobs - 2,000 of which are earmarked for local long-term unemployed people - due to be created by Westfield's Stratford City scheme, which opened last month, are even more crucial than the Olympics. "To truly regenerate east London is to get people into work," he says. "Newham has been hammered by the cuts, but in terms of regeneration we are maximising the opportunities that emerge for job creation and infrastructure."
From new ways to attract and fund regeneration to the streamlining of public agencies and potential creation of new development corporations, London is seeing real change in how regeneration is delivered. But change is essential. Pollard says: "We need to be more imaginative in how to stimulate regeneration than ever before."