The All Party Urban Development Group has launched an inquiry into the funding of regeneration in a recession.

The inquiry, called ‘Regeneration and the recession: unlocking the money’ will be the group’s sixth inquiry and will be chaired by Clive Betts MP. It will analyse conditions in the regeneration industry, assess the viability of existing regeneration financing models and examine the challenges involved in introducing alternative financing arrangements, such as Accelerated Development Zones which could be adapted from the US Tax Increment Financing (TIF) model.

It said that private sector development money has flooded into UK cities over the past 10 to 15 years, playing a major role in the regeneration of cities like Manchester, Liverpool and Sheffield. However, the financial crisis has brought much of this kind of investment to an ‘abrupt halt’.

‘There are also concerns that the flow of investment into cities will be much weaker in the longer term due to greater caution on the part of the development industry and more limited public sector regeneration budgets,’ it said. ‘Continued progress on the physical regeneration of the UK’s cities is dependent on public and private sector partners coming up with workable financing models for development projects.’

It said there was still ‘considerable uncertainty about the viability of existing financing models, such as Public Private Partnerships, and Local Asset Backed Vehicles, and alternative proposals, such as Accelerated Development Zones and Regional Infrastructure Funds'.

‘This inquiry will respond to the demand for analysis and advice on next steps in UK regeneration by gathering together the latest evidence, submissions from interested parties and the testimony of expert witnesses. The final report will then set out a range of solutions, which could be used to help jump start regeneration and development,’ it said.

The inquiry session will be split into three sessions, and will take evidence from property developers, business occupiers, and key public sector players, such as local authorities, Regional Development Agencies and the Homes and Communities Agency.

The key questions to be examined include:

1. How has the regeneration financing environment been affected by the financial crisis? Which investments are still going ahead? Under what conditions?

2. What practical steps can the public sector take to keep momentum going on regeneration during the recession and to take advantage of the upturn when it eventually comes?

3. What might be the long term impact of the financial crisis on the development industry? How might the private sector’s approach to regeneration differ in the years ahead?

4. To what extent are existing regeneration models, such as Public Private Partnerships and Local Asset Backed Vehicles, still feasible? How might these financing models be adapted to fit the new circumstances?

5. What alternative financing models, such as Accelerated Development Zones and Regional Infrastructure Funds, could be introduced to keep regeneration going through the recession and beyond? How might these models work in practice? What might be the costs and benefits of using these tools?

6. What kinds of legal and policy changes might be necessary to trial new financing tools like ADZs?

7. Is there appetite in the private sector market to fund ADZ/TIF models? If not, what is needed to get private sector interested in investing in these models?

Written evidence must be received no later than 14 May 2009.