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08 November 2000

£1 BILLION PACKAGE TO REGENERATE BRITAIN'S TOWNS & CITIES

A comprehensive package of measures worth an accumulative £1 billion over five years was announced today in the Pre-Budget Report to help make Britain's towns and cities better places to live and work and so stimulate enterprise and employment.

This package underlines the Government's commitment to creating an urban renaissance.  Enterprise and wealth creation are vital to reviving our towns and cities.

The package represents a substantial response to the recommendations made in Lord Rogers? Urban Task Force Report Towards an Urban Renaissance. It will go a considerable way towards harnessing the potential of derelict and under-used buildings and sites and bring them back into productive use.

The Government's proposals will also help boost enterprise and investment in disadvantaged communities, and respond to recommendations to Ronald Cohen's Social Investment Task Force report Enterprising Communities: Wealth Beyond Welfare.

Welcoming the announcement, the Deputy Prime Minister, John Prescott, said:

?This package of measures is a major step forward in bringing about an urban renaissance.  It demonstrates the Government's commitment and determination to regenerate Britain's towns and cities and, in particular, ensure that our most disadvantaged communities? benefit. 

?It will form an important part of our strategy for supporting the growth and development of towns and cities in England which we will be setting out shortly in our Urban White Paper.?

The Paymaster General, Dawn Primarolo, said:

?These targeted tax cuts complement and build on the measures we have already put in place to revive our most disadvantaged communities.  The benefits of growth and development are shared by all our communities, regenerating our towns and cities whilst managing pressure for development in our rural communities.?

The Government plans to introduce a number of measures in Budget 2001 in response to the Urban Task Force report:

• Stamp duty exemption for disadvantaged communities

Stamp duty will be abolished for all property transactions in Britain's most disadvantaged communities to stimulate the property market and encourage urban renewal.

• Accelerated payable tax credits for cleaning up contaminated land

Giving property investors immediate tax relief for their clean-up costs - instead of having to wait until the land is sold - will make more projects to regenerate derelict sites more viable for the benefit of local residents and businesses, will help address the legacy of the past and reduce the pressure on greenfield sites.

• 100 per cent capital allowances for creating ?flats over shops? for letting

Immediate tax relief to property owners for the costs of converting redundant space over shops into flats for letting, encouraging better use of the vacant and under-utilised space above shops and other commercial premises, and helping to bring more life into commercial districts.

• VAT reform to encourage additional conversion of properties for residential use

A package of VAT measures to encourage the creation of additional homes.  This will involve cutting the VAT rate to 5 per cent for residential conversions and removing the VAT burden on developers renovating and selling houses which have been empty for at least 10 years. These steps will help encourage the redevelopment and re-use of buildings, helping to reduce pressure for greenfield development as well as improving the urban environment for local residents.

The Government will also:

• monitor the development of Urban Regeneration Companies (URCs) and keep under review the case for how a tax relief might help.
• explore with the European Commission the scope for reducing VAT for listed buildings that are places of worship to help restore our national heritage.

In addition, the Government's Modernising Local Government Finance: A Green Paper is consulting on a number of local fiscal measures including:

• rate relief for small businesses which would apply throughout England;
• the introduction of a supplementary business rate as one option for funding Town Improvement Schemes; and
• the introduction of a Local Tax Reinvestment programme allowing local authorities to retain additional council tax and business rate income resulting from successful regeneration.

The Government welcomes Ronald Cohen's report and in response will: 

• work closely with the venture capital industry and others on setting up the first Community Development Venture Fund;
• encourage banks to disclose their individual lending activities to businesses in under-invested areas;
• work with the Charity Commission to encourage the role of charities in community development finance;
• continue to play an active role in support of Community Development Financial Institutions and consider how to take forward the proposal for a ?champion? for community development finance; and
• consult widely on the proposal for a new Community Investment Tax Credit, designed to encourage private investment in both not-for-profit and profit-seeking enterprises in under-invested communities.

The Government will also:

• fund the Regional Development Agencies to develop City Growth Strategies. These will help cities build on their often-overlooked competitive advantages and expand their existing business base; and
• sponsor with the private sector the Inner City 25, which will showcase some of the fastest growing, unquoted companies in our most under-invested inner-city areas.  Like the Inner City 100 in the United States, this will demonstrate in a very powerful way that inner-city locations can offer real opportunities for business growth.

NOTES FOR EDITORS

1. The Urban Task Force, chaired by Lord Rogers, published its report Towards an Urban Renaissance in summer 1999. The Task Force made 105 recommendations aimed at reversing urban decline and attracting people back into cities, towns and urban neighbourhoods.

2. The Pre-Budget Report announcements make significant progress in responding to the recommendations made in the report. A formal response to Lord Rogers? recommendations will be made in the Urban White Paper, which will be published shortly.

3. Several elements of the urban regeneration package will require EU State Aids clearance, and the appropriate applications will be made to the European Commission in due course.

4. The Social Investment Task Force, chaired by Ronald Cohen, published its report Enterprising Communities: Wealth Beyond Welfare, in October 2000.  The report recommended that the Government puts in place a new strategy aimed at stimulating enterprise and wealth creation in under-invested communities, in particular by developing a more robust community development finance sector in the UK.  The report can be found on the internet at the link below:

External links

• Enterprising Communities: Wealth Beyond Welfare

5. Media enquiries should be directed to the Treasury Press Office on 0207 270 4420 or the DETR Press Office on 020 7944 3044.

Internal links

• Pre Budget 2000 Press Notices: Index

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