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CHAPTER FOUR BEST PRACTICE - A BASIS FOR LEARNING

Introduction

4.1 The preceding sections of this report have set the context for the formation of URCs in Scotland and have outlined how the existing companies have established themselves in that context. This section of the report draws out what we have termed "best practice" in relation to the steps that have been taken by the Companies to deliver against their aims and objectives.

4.2 It is helpful to see this section of the report as offering advice and guidance to partnerships that are either in the process of establishing a URC or otherwise thinking of doing so. It highlights particular things that work well as well as potential pitfalls that should be avoided.

Company structures

4.3 All of the Scottish URCs are corporate vehicles. That is, each has an established legal structure and is a separate entity from those of their founding members. Among the URCs, four of the five have a body corporate with charitable status and it is likely that the Clyde Gateway will adopt a similar structure. PARC is a company limited by shares. Three out of the five have subsidiary companies set up to hold any land and property assets; again, it is likely that Irvine Bay and Clyde Gateway will follow suit.

4.4 Simply adopting a corporate structure is in our view advantageous. It helps with:

• Prioritisation and focus: setting up a separate company signals a serious intention to tackle the regeneration of a specific area and charges a group of people (board and executive) with the single task of delivering it. Whilst we accept that these attributes can be created without the need for new legal structure, our consultations - especially with the private sector - indicate that the main stakeholders coalesce around a newly established legal structure and the seriousness of their intent is reinforced.
• Use of company law: this requires every Director of the Company to take decisions in a way that he / she feels best represents the interests of the Company ¹¹. In effect therefore, the priorities and aspirations of the public and private organisations from which these Directors come should therefore be subordinated to those of the Company. Company 'best interest' is, in effect, the delivery/realisation of the overriding vision/masterplan - as reflected in the Objects Clause in the Memorandum of Association.
• Concentrated focus and private sector credibility: one of the great strengths of the creation of the new Company is its perceived independence amongst the investment community and private sector. On balance, this research has concluded that representatives of the private sector in particular do see the URCs as independent from the local authority and that independence is seen as being especially beneficial because it creates a concentrated focus and indeed a much clearer line of accountability between the vision / plan and the organisation responsible for its delivery.

4.5 The analysis suggests that these benefits are much greater where there is absolute clarity in respect of the separation between the local authority stakeholder and the URC. In the case of PARC, there is little perceived separation between the URC and EDI (which is a wholly owned subsidiary of Edinburgh City Council) and therefore the local authority. Because of this the views of many consulted during the research was that the company itself cannot be said to have a fully developed identity of its own.

4.6 The specific type of legal structure also carries various advantages. Indeed, ensuring that the legal structure adopted remains 'fit for purpose' is arguably as, if not more, important than the URC brand itself. Some points that the study team found worthy of highlighting include:

• The adoption of a Charitable Status model ¹² (as in the cases of Clydebank re-built, Raploch, Riverside Inverclyde and Irvine Bay) allows the Company to receive a number of primarily tax related benefits. Typically, special advantageous reliefs and schemes concerning Income Tax, Corporation Tax, Council Tax/Rates and others are available to recognised charities. Whilst charities do pay VAT there are exemptions available for various activities. In the case of Clydebank, Raploch and Riverside Inverclyde a trading subsidiary company has been established which can - and should - allow the URC to share directly in the realisation of profit from joint developments with the private sector. These profits (or an agreed proportion of them) can be granted to the Charitable Parent Company in the form of Gift Aid which limits the payment of Corporation Tax.
• The benefits of adopting a Company Limited by Share structure (as is the case with PARC) is that it a) obviously limits the liabilities of the shareholders (as is the case with any Limited Company); and b) that level of liability is limited to the amount of capital originally invested by the shareholders ( i.e. the nominal value of the share capital). The primary benefit - in the context of the URCs at least - of a Company Limited by Share as opposed to one Limited by Guarantee is that it is a more flexible legal structure for accessing private finance.

Engagement of the private sector

4.7 The private sector can engage with URCs in number of ways:

• At a Board level
• Via the provision of finance
• Via legal / equity participation in subsidiary companies or JVCs
• Because they are a business located within the URC's area

Private Sector Board Representation

4.8 Raploch is the only URC with no private sector representation. Raploch has deliberately configured and appointed its Board in such a way as to ensure all representation is from public sector stakeholders and representatives of the local community. The intention here was to ensure that the Board mirrored the configuration of the organisations who would sit central to the delivery of the plan. Whilst the private sector clearly plays a role, it does so under a contract relationship and not therefore at a strategic level.

4.9 Strictly speaking, PARC has no external private sector representation on its Board. While EDI on the face of it appears very much like a commercial developer, it is a wholly owned subsidiary of the local authority. Again, the absence of any external private sector representation reflects the nature of the parties and their roles in the delivery of the PARC plan.

4.10 We do not question the logic and rationale behind the decisions not to elect external private sector representative onto the Boards of Raploch and Craigmillar. These decisions reflect the uniqueness of the two areas and also the distinctiveness of the existing delivery arrangements that the URCs have actively built on ( e.g. the existence and track record of success within EDI). However, a number of our interviewees did question whether or not the strong public sector bias was in fact in the true spirit of the URC "brand".

4.11 This is obviously a matter open to interpretation but we would however like to highlight that in both cases the two URCs have created creative structures to secure significant amounts of capital finance from private investors / developers (see 4.10, below) and in those terms have, without doubt, fulfilled their duty to engage the private sector.

4.12 Thus amongst the first round of URCs, only Clydebank has external private sector Board representation. Two places are filled by private sector individuals - and these individuals represent the development and finance sectors. Specific comments about the effectiveness of these arrangements are highlighted in 4.5 below. Within the two newer URCs (Irvine Bay and Riverside Inverclyde) both have private sector Board members, making up a 50:50, public:private ratio on the Board. The Chair in both instances is drawn from the private sector. These approximate more closely to the English URC model, where guidance issued from the then ODPM suggested there should be no overall public sector majority on the Board and, ideally, an independent Chair.

4.13 It is the view of the consultant team that private sector representation on the Board of the URC should be seen as a positive thing and a step that should be encouraged. Through our discussions with the URCs and through our own work with numerous English URCs we are of the view that private sector representation can be a powerful tool. Specifically, it can, at times, act as a counterbalance to the political pressures that URCs can - and often do - face. Moreover, depending on the strength and quality of the individuals concerned, a private sector led board can be particularly helpful in keeping the Companies focused on tasks and outcomes, bringing particular skills and expertise from business or other backgrounds. In some cases, independent external representation on the Board might be as effective as private sector representation - the key issue is the calibre of the individual board members.

Private sector finance - some general principles

4.14 A key test of the URCs is their ability to create conditions that are conducive to attracting large scale capital finance from the private sector. The enormity of the challenges faced by the areas within which the URCs operate and the scale of the projects they are intending to support are both such that there is little possibility of the agreed outcomes being achieved without substantial private investment. The emphasis - in both policy and practical terms - is then on creating the conditions within which the private sector will be both motivated and willing to invest.

4.15 All of the URCs are each addressing this challenge in different ways. However, a common theme throughout is a degree of front-loading of investment to create development platforms that are at a point where the level of risk to the private sector becomes acceptable. In practical terms, this has meant:

• Investing the time, resources and organisational reputations in the preparation of a vision / plan. The plan brings with it a challenging vision for the designated area, which sets out a clear view of what the place will look like and what its functional role will be at some future date. The plan also acts as a strategic framework that specifies outputs and outcomes. It is one of the first - and most essential - building blocks of securing interest from the private sector and raising awareness of the scale of the investment opportunity.
• Front-loading capital investment in the infrastructure and environmental conditions necessary to create development opportunities that have an acceptable risk / return profile. This includes acquiring and treating contaminated land, the provision of transport infrastructure, public realm improvements and facilitating / bringing renewed emphasis to investments in broader public services ( e.g. schools).
• Creating new legal structures for sharing risk with the private sector. This has included the creation of joint venture companies, in which investment by the URC (and its founding members) is balanced with cash investment from the private sector.
• Creating a strong policy framework that drives quality standards into the development process. This has included the production of design standards and guidance to the private sector about the type and quality of development that will be acceptable within the designated area. In one instance this is manifest in the publication of design guidance that has become enshrined in planning policy as Supplementary Planning Guidance.

Raising private finance - some good practice examples

4.16 Whilst the URCs in Scotland are obviously considerably younger than their counterparts in England, the progress that they have - and continue - to make in the area of private finance is strong. Some of this strong progress is attributable to the flexibility that has been enshrined into the Companies since their establishment. Future companies should seek to take advantage of that flexibility and build on the successes of some of the current models. For example, the freedom given to the companies has enabled them to create innovative new legal structures for engaging either large scale institutional / bank finance or to enter into specific large scale / long term contract relationships with developers / builders. Specifically:

• The private loan finance link with EDI (under the PARC Model) provides access to a large institution and potentially significant sums of private finance (which is currently debt structured). CR is also discussing accessing bank loan finance to develop subsequent phases of office space at Queen's Quay. This differs massively from English URCs where there a few examples of a Company actually raising private finance (both itself or via legal participation in a JVC).
• The Raploch experience demonstrates a good example of transferring risk to a private sector consortium without having to transfer either the assets or the opportunity to share in the profits created by the programme.

4.17 These models are both clearly different to each other and to a degree involve circumstances that are peculiar to each area. Yet there are some elements of the approach which are transferable. These include:

• The ability of the URCs to effectively leverage relationships with organisations that have an asset base against which debt finance can be secured ( e.g.EDI). There are similar vehicles within other local authorities across Scotland that could, in the right circumstances, play an equivalent role.
• A clear acknowledgement that private finance was central to the delivery approach and should therefore be factored into the legal model ultimately adopted for the Company.

Private sector partnering - some models to build on

4.18 URCs will - at some point during their lifetime - be required to procure development partners. Where these development partners are using assets that are in public ownership, the procurement process will, of course, have to remain within the current European procurement framework. Procurement will either be on an area wide basis or on a site by site basis, depending on the delivery strategy in place.

4.19 Without doubt, the principle of including EDI within the PARC structure is a helpful one. EDI is an established development organisation and, partly because of their inclusion within the structure, the procurement of development partners for PARC is clearly less of an issue than with others.

4.20 We understand that the City Of Edinburgh considered other options such as a joint venture with a private house builder/developer and the Craigmillar Partnership was consulted on this issue. The critical factors in the choice of EDI appear to have been the pre-existence of an organisation set up specifically to facilitate development while recycling profits for the public good rather than for private shareholders.

4.21 Under the model, EDI manages the development process for PARC as a company, through a management contract agreed by the two shareholders and the Company, leveraging funding from investment sources. Currently, PARC is acting as developer for the early housing projects. The point in time at which it will start selling land to others to develop has not yet been established.

4.22 In Raploch, the procurement process involved the selection of a private sector partner to deliver the vision / masterplan. The process began at the end of 2004 with the publication of an OJEU notice asking for expressions of interest from bidders. Interestingly all tendering was managed via the internet, which was believed to be a first for a project of this scale and complexity in Scotland.

4.23 The procurement process adopted has been described to us as being intensive and at times drawn out. However, there were additional benefits secured as an integral part of that process - most notably through the insertion of the community benefit clause into the legal contract with the developer. They include:

• First, the inclusion of community representatives from the Raploch Community Partnership in the process. Individuals were selected on to each assessment panel and their capacity built through mentoring.
• Second, it has set up job and training opportunities aimed at the local labour market.
• Third, it has helped to create a programme of support to assist small businesses to benefit from contracts emerging from the development process.
• Fourth, it has helped to bolster the sustainability of a local community enterprise via knowledge transfer, mentoring, supporting the development of ideas and the award of contracts.
• Fifth, it has helped to create a new and innovative business which will maintain the public realm and produce local community benefits.

4.24 Whilst none of these benefits are unachievable through other means of procurement, the fact that the developer has created a partnership with the URC has helped to focus the attention of the single private partner on creating these benefits. It has thus helped the URC to maximise the "public good" that can accrue under the programme and create a portfolio of benefits that may otherwise be far harder to achieve under circumstances where there were several private sector partners.

4.25 In addition, the process has enabled Raploch to benefit from the capacity, expertise and investment of a private sector consortium without transferring control and the value of the land being regenerated to that partner. Under the terms of the agreement, all land remains under ownership of the public sector and the consortium effectively acts as a development contractor, incentivised by a profit share. In these terms the model has also helped to transfer risk to the private sector.

4.26 While the model may have been protracted and at times particularly complicated to create, it has helped to produce beneficial outcomes. The transferability of the model is however potentially limited to areas with similar physical characteristics and challenges as Raploch - i.e. a single housing estate under the entire ownership of the local authority. Also, the impact of the scheme and its planned benefits and the use of a single development partner on the mix and diversity of the redeveloped community is yet to be proven.

4.27 Clydebank Rebuilt has acted as a developer in a number of instances and has already delivered new business premises. The approach has involved the use of public sector funding to procure contractor partners against specifications agreed by the URC board. The focus of the organisation in terms of other development is generally one of facilitation - as opposed to direct procurement. Here the URC works closely with public and private partners to bring sites forward for development.

Funding arrangements

Access to capital early in the programme is key

4.28 From the start the URCs need revenue funding to cover costs of company establishment, master-and-business planning, and the recruitment of staff. Start-up funding and other up front revenue commitments have generally been provided by local partners. In the case of the newer URCs, the Executive has provided start-up funding in advance of business plan approval. Because of the relatively early availability of revenue funding, progress has been generally good, especially in terms of the establishment and recruitment of staff to the URCs and the development and agreement of the vision / plan.

4.29 Obviously one of the main principles behind the establishment of the URCs is that the company should be given the financial wherewithal to both initiate and then drive forward the capital programme. Noting the points made earlier about reducing risk to private investors and the requirement to front load certain works, much of the early capital funding made available to the Companies has been allocated on the basis that it will fund such enabling / preparatory works - and not the broader overall programme, which should be delivered by the private sector. The main source of this early capital funding has been the Scottish Executive, with contributions from other sources. To date, something in the order of £66 million has been allocated across the URC Programme, including the 3 newer URCs designated as part of the Regeneration Policy Statement. This covers the period 2004-08. At the time of writing this report, future amounts of funding for the URC Programme will be dependent on the outcome of the Spending Review scheduled later in 2007.

4.30 The funding made available by the Scottish Executive has been matched in most instances by funding from other public sector sources. Some of these are discretionary ( e.g. European grants), but in the main, the most significant sources of other public sector match funding has been made up on contributions from the local authority (through a mix of cash and in kind, typically land based contributions) and Scottish Enterprise.

4.31 Generally, we are of the view that the pound for pound investment made by the Scottish Executive is producing a strong rate of public sector leverage. In all five of the URCs, the Executive's investment is or will be more than matched by those of the local authority and Scottish Enterprise combined (when in-kind land contributions are factored in).

4.32 These initial cash and land contributions - which are significant in their own right - have helped to build the credibility of the Companies and give confidence to the market and other stakeholders that there is both a commitment and a financial capacity to deliver the vision. They have also helped also to bolster the strength of the Companies in both leveraging private finance and in negotiating their way through initial strategic site acquisitions and so on ( i.e. vis a vis other potential purchasers and with land owners themselves).

Streamlined and integrated funding appraisal is a model of good practice

4.33 In terms of the practical governance and decision making processes for the management and expenditure of public sector funding, there is, as we understand, no one single model being applied across the Companies. Instead, the management and governance of public sector funding is generally subjected to the due processes that were already in place within the existing partner funding organisations prior to the establishment of the Company. For example, the use of European money has followed the standard procedures in place for that money. Similarly the use of monies from the Scottish Enterprise network has been subject to what have been described to us as the very demanding detailed project appraisal procedures.

4.34 To some extent this could - and in some cases has - placed a significant burden on the companies. However, there are practical examples of how these burdens can be minimised. They include:

• The provision of support from expert officers within Scottish Enterprise to oversee the technical processes of resource procurement and programme appraisal (as was the case with Clydebank Rebuilt).
• The agreement of a three year business plan, with annual sign off / approval, as opposed to approvals being made on a project by project basis (as is currently being explored for Riverside Inverclyde).

Relations with Stakeholders

4.35 Stakeholders must want the URC and the attributes it brings. They must be willing to cede authority to it, and to support it. The support of the local authority is particularly important, but other stakeholders, particularly Scottish Enterprise and Communities Scotland are also important. The nature of the support required will vary, but may include:

• transfer of land assets at market or reduced value
• funding for projects
• the use of development control powers to secure the implementation of the masterplan and the design objectives of the URC
• Section 75 negotiations to secure infrastructure provision or other benefits - including land transfer

Company decision-making

The Company Board

4.36 The board meeting that the consultant team was able to attend (Clydebank Rebuilt) demonstrated how an appropriate corporate structure can bring together a range of external and specialist knowledge to the benefit of the company. Although the Board is large and had a number of new members, it was well chaired, well planned, and we felt that local members and local residents were fully engaged. It was helpful that the mix of papers and presentations were interesting and engaging.

4.37 We felt that the Board and its various structures did not just 'rubber stamp' decisions and that there was an element of constructive challenge for what is undoubtedly a strong executive team. In a structure of this type, it is much less easy for unresolved issues between the public sector agencies to remain unresolved and to block progress.

4.38 The presence of external private sector representatives was, we felt, valuable, because even if not heavily involved, they serve as a witness to the progress and effectiveness of the organisation. How much the representatives contribute over and above that will depend very much on their individual abilities and knowledge - Clydebank clearly benefits from having some particularly able board members, who bring a wider perspective and skills.

4.39 The relative strength of board and executive will vary, in part because the board and executive composition and calibre will always vary. The strength of the team will also vary. Clearly in the case study described above, we were impressed by the calibre and contributions of the people represented.

4.40 Interviews with Board Members in Craigmillar and Raploch indicated a broad consensus that the URC Boards were generally effective decision making bodies where different views were aired and taken into consideration.

Decision Making

4.41 Several URCs have stressed the importance of consensus building, in the form of meetings and consultations prior to formal meetings to ensure that valuable Board time is not taken up with issues which had the potential to be resolved prior to the Board. Pre- meetings play a key role in ensuring that there are no surprises and that the Board meeting uses its time well.

4.42 A key issue mentioned by several of the companies was the importance of board members acting as board members - i.e. putting the interests of the company first - rather than acting as representatives of their organisation.

Procurement

4.43 The matter of procurement sits central to the operation of all URCs - be it in terms of procuring advisors and specialist support, or be it in terms of procuring delivery partners / developers and / or investment partners. The framework that surrounds the Companies is broadly determined by the existing European and UK public sector procurement legislation and practices and is in these terms fixed. The interpretation and application of these processes is then the main focal point of our analysis here.

4.44 The OJEU process is a legislative requirement designed to demonstrate that a clear, consistent and competitive process has been undertaken in awarding high value contracts.

4.45 All procurement in the public sector is subject to EC Treaty principles of non-discrimination, equal treatment and transparency. In accordance with European legislation, the majority of supply and service procurements with an estimated value of €200,000 (currently around £140k), and works contracts with an estimated value of €5,278,000 (currently around £3.5m) must be advertised in the Official Journal of the European Union ( OJEU). The EC Public Procurement Directives require contracting authorities to provide details of procurements in a prescribed format, which are then published in the OJEU.

4.46 All companies replying to an OJEU advertisement have an equal opportunity to express interest in being considered for tendering. Those companies selected to tender receive the same information on which to make their bid.

4.47 Advertisements must appear in the OJEU before being repeated in any other publication. OJEU advertisements are published daily in Tenders Electronic Daily ( TED), the on-line version of the Supplement S to the OJEU containing calls for tenders, contract awards and pre-information notices.

4.48 With regard to letting tenders, there were contrasting and conflicting views on the constraints associated with procurement through OJEU. PARC found it slow and limiting - and questioned why as a 'private sector' delivery body it should be required of them. Conversely, Clydebank Rebuilt found the fast track procedure reasonable and manageable, using consultants to manage the process.

4.49 Irrespective of these differing views, the ability of the URCs to put in place procurement processes that are quicker than those which would be in place under an 'in house' purely public sector model ( i.e. as part of their overall mission of accelerating the delivery process) is actually very limited - the processes are fixed and must, irrespective of the organisational structure, be adhered to.

4.50 One way in which the URCs have managed to accelerate this process, whilst remaining within the legislative framework is to establish 'panels' of advisors which enable the Company to access advice and support as and when they need it. However, for a small organisation, the process of selecting contractors for a panel is very time consuming. The numbers of applicants to be assessed and the perceived need to assess bidders in a very rigorous way in order to avoid legal challenge can lead to very heavy demands.

4.51 In one case, an embryo organisation with only three staff had 220 applications to assess for three fixed term contracts and four framework contracts, with over 30 applicants for one of the professional areas. This impacted adversely on the speed of procurement of consultants / advisors, and created some degree of frustration on behalf of both those bidding for contracts and the URC itself.

4.52 The main good practice lesson is that OJEU should only be used where necessary - where the contract clearly will be above £140k. It might be argued that there is a case for a common framework panel for the URC sector, perhaps as part of the Scottish Enterprise framework contract. In England for example, many URCs use the existing English Partnerships Panel for procuring support and advice. However, earlier experiences with common framework panels in Scotland have not been wholly positive and have led to concerns that such panels can be extremely burdensome to assess and unduly restrictive of competition, particularly where they are closed to new entrants for several years. A common framework panel would require careful design.

4.53 The situation described here differs slightly to that in place in England. URCs are currently empowered to procure advisors via existing framework panels that are in place within either English Partnerships and the RDAs. This can serve to remove the burden of having to procure individual panels, whilst still satisfying all value for money considerations. It obviously loses the potential for flexibility and sometimes the use of smaller, often locally based service providers.

Management processes and systems

4.54 The Pathfinder URCs have established financial monitoring and management systems to ensure accountability and financial propriety, as well as monitoring key milestones. Reports setting out performance against key milestones, reviewing project progress and financial indicators are now reported to each of the Pathfinder URC boards.

4.55 Again, there appears to be no single structure or common process in place across the Companies and currently the three earlier URCs differ in that:

• Clydebank re-built is monitored both internally and externally. The Finance sub-group and partner agencies meet quarterly and two projects have been externally audited. Monitoring is conducted on a project by project basis and includes output and impact indicators along with social justice measures and regeneration measures.
• PARC has commissioned a Monitoring and Evaluation Framework ( MEF), which has defined parameters to evaluate itself as a delivery vehicle for the regeneration process and how it can be measured against targets.
• Raploch collects information via a dedicated monitoring and evaluation officer who reports to the URC Chief Executive and works via a monitoring and evaluation steering group that generally includes public sector representatives.

4.56 The Pathfinder URCs are subject to audits by the Company's external auditors. The Chief Executives of the Pathfinder URCs are generally the Accounting Officer for all of the Company's expenditures.

The planning framework

4.57 The interface between the planning system and the URC is a key area. Unless the planning authority cedes some authority to the URC or puts in place streamlined procedures to expedite the URC's proposals, both the direction and speed of delivery will be at risk.

4.58 Unlike UDCs in England, URCs do not have development control powers - i.e. they are not delegated the authority to deal with all planning applications in their area. There are three main areas where the planning system is critically engaged in the delivery of URC strategies:

• Planning Gain and Section 75 Agreements
• Master Plans and Design Frameworks
• Planning Applications

Planning Gain and Section 75 Agreements

4.59 The use of developer contributions to fund infrastructure and to secure other desirable public goods such as affordable housing is potentially a major resource for URCs. To set this in context, however, the process of negotiating Section 75 agreements relating to major development projects in Scotland is often one of substantial delay and uncertainty.

4.60 There is good practice - particularly where authorities have clear policies and dedicated staff with the skills and experience to negotiate with developers - but there are also many examples of major projects in Scotland which are substantially delayed by planning gain negotiations.

4.61 Two of the earlier URCs have experience of planning gain and Section 75 issues. In Clydebank, which has a low level of public ownership of land, the intention was to secure business premises and other benefits from planning gain. The planning authority, West Dunbartonshire Council, negotiated the outright transfer of some 20 of the 100 acres of the Kvaerner site to the URC. The alternative would have been a series of suspensive conditions in the Section 75, requiring the developer to provide business space or a prepared site for the relocating Clydebank College, before the next tranche of land could be sold for housing.

4.62 The solution secured by West Dunbartonshire Council is much more straightforward, addressed one of the URC's key difficulties (little control through land ownership) and allowed the URC to progress on the key waterfront site without being dependent on the pace of development adopted by the main landowners. The arrangement also appears to have been acceptable to the main landowners.

4.63 The only potential disadvantage relates to the issue of whether the land might have been transferred at lower cost in a remediated condition, as part of the wider remediation activity which required to be carried out in any event. However, leaving that aside, there have been substantial advantages to Clydebank Rebuilt in being able to dictate the pace of delivery on their part of the site.

4.64 In Craigmillar, by contrast, the issue of Section 75 agreements has been problematic. The largest single block of housing - the greenfield development at Greendykes - which accounts for some 850 of the 3200 houses proposed, and roughly 50% of those proposed for the earlier years of the URC, is to be subject to a Section 75 agreement of considerable complexity, which has the potential to considerably delay delivery.

4.65 The ability of the URC to influence the outcome has been limited and it might be argued that it is in this type of circumstance that independent private sector representation on the Board may be helpful in providing an external perspective. There has also been some uncertainty as to whether EDI's own housing developments would be subject to planning gain, over and above the provision of amenities which is built in to the business plan. If this is to be the case, it has to be built into the business plan from the start.

Masterplans and Design Framework

4.66 All three URCs have commissioned a masterplan, or, in the case of Craigmillar, an Urban Design Framework. The key issue is however not the preparation of a masterplan, but the extent to which its objectives are delivered. If the masterplan is adopted as supplementary planning guidance, as in Clydebank and Raploch, this gives a strong signal to the market of what the expectation of the URC and its planning authority partner are.

4.67 In Clydebank, the resolve of the planning authority is still to be tested, as no detailed applications have been submitted for housing on the Kvaerner site. The private sector owner (Clydeside Regeneration) suggested that they were fairly happy with the masterplan, although they had initially been displeased that the URC were proposing a masterplan for their site, as they had already commissioned their own masterplanners and designers. However, through the consultation process carried out by Clydebank Rebuilt's master plan team, Page and Park, an outcome which was acceptable to them emerged.

4.68 In Craigmillar, the Urban Design Framework has not been adopted as supplementary design guidance. The Council also requires further detailed masterplans to be prepared for each sub-area within Craigmillar such as Greendykes, in addition to full planning applications.

4.69 In Raploch, the Developer's Brief/Invitation to Negotiate clearly set out the implications for bidders of the Masterplan and Design Guide. (The option of each bidder submitting a variant bid is however allowed for.) Although they do not state what the implications are for the development control process, it must be assumed that a bid which complies with the Masterplan and Design Guide will not raise issues at the planning application stage.

Planning Application Process

4.70 Whilst some of the URCs have reached the stage when detailed planning applications have been submitted, it is generally not yet clear to what extent there will be a streamlined procedure. The issue of streamlined delivery has not in reality been put fully to the test.

4.71 However, there are examples among the pilot URCs of difficulties, including extensive objections from individuals within the community, and the negotiation of Section 75 issues.

Leadership

4.72 The focus and effectiveness of leadership is perhaps the key factor in the success of a URC or indeed any regeneration body. An organisation which is led with energy and clarity of vision is much more likely to succeed. Quality leadership at either executive or board level - and ideally at both - impacts particularly on delivery.

Skilled staff

4.73 Clearly the recruitment of experienced and high quality staff is essential if the strategy is to be implemented effectively. While the current URCs have found appropriate staff, or have employed appropriate external project management staff, concerns have been expressed about the relatively small pool of such staff within Scotland and the possibility of staff shortages, 'poaching' and salary inflation, should more URCs be designated. A short supply of staff with extensive technical knowledge and experience - particularly in terms of high level property skills, who can negotiate with private sector developers, whilst at the same time negotiating often complex and controversial transactions with local communities - is seen by some as a potential barrier to the growth of the model and an area that continues to warrant investment through such initiatives as the Scottish Centre for Regeneration.

4.74 Many of the consultees have also highlighted the critical roles of the Chief Executive and Chair of the Board in the success of the companies. Both must be able to motivate and influence others, across all sectors and the local community. A number of consultees, in particular from the community, emphasised the need for commitment to the area and its regeneration. In view of the influencing and facilitating role of the URCs, staff must have excellent negotiating and presentational skills. They must also be able to work within a small, multi-disciplinary team.

A framework for community engagement and tackling worklessness

4.75 A particularly refreshing feature of Scottish regeneration policy is its commitment to spreading the benefits of urban renewal - as opposed to simply creating conditions for physical regeneration. Indeed, so strong is this commitment that URCs are each working hard to ensure that their programmes and investments yield more than just bricks and mortar - but also substantial changes in economic profile, opportunity and social and economic inclusion. The adverse views expressed about URCs' engagement with communities found no resonance in this evaluation. ¹³

Community participation

4.76 All of the URCs have devoted substantial resources to community participation. For example, in Raploch, the aspiration was to develop a model of engaging the community which was more effective than that of the English URCs. Raploch tried to learn the lessons from that experience and to deliver what people want.

4.77 In addition to the involvement of individuals on the board and the engagement through existing structures such as the Raploch Regeneration Group, the URC has gone out to the community to seek a wider view. There was a community survey in 2003 and community events were held relating to the Master Plan which subsequently resulted in the creation of the Design Guide.

4.78 The Enhanced Community Support Project funded Community Renewal (with a staff member formerly from the Glasgow Works) to engage the community north of Drip Road. Community animateurs visited every household with 500 of the 800 households actually participating. A Practitioners' Report was produced which profiles the community and highlights their needs. The Report informed the URC's work for the following year. There is also a local project room that locals can drop into.

4.79 The view of the Raploch team was that the Enhanced Community Support Project has been very difficult but ultimately successful. The Fund to encourage community involvement is open to all groups, not limited to constituted groups. 19 projects have been funded.

4.80 The Ochil Road play area came from the community's desire to include a play area. The community commissioned a landscape architect to draw up their ideas and the play area was included in the river walk contract. It was originally not part of the project, but the community wanted it. The Creative Space group was effectively the client as they interviewed the developers. The River Walk includes the Timeline of important events. The launch event was attended by over 500 people, including some well known people with Raploch origins. It was a big boost to the community and gave them confidence in the URC. It was seen by the URC as an early win. Other Fund projects include a Media Group, a Biodiversity Plan, and a Business Plan for Raploch Radio.

4.81 The URC is planning to use Soap Box events and website comments page to enhance community involvement. The URC view is that community involvement is now much more developed than in the earlier Social Inclusion Partnership when one or two representatives attended meetings and did not report back to the community as a whole.

4.82 In summary, there have been extensive consultations with residents, businesses (Back O'Hill, Drip Road) and schools. The URC would like to establish a two year project to engage the business sector, with a dedicated officer in Scottish Enterprise Forth Valley.

4.83 Community engagement in Clydebank has also been exemplary, with a whole series of stakeholders and local residents engaged through a design lead series of events. These design fora have been popular and well attended. While attendees have been largely from older age groups, the URC has also initiated a good deal of imaginative interaction with local schools, in the shape of design competitions and so on. This engagement with schools helps to build a relationship with the URC - not just with school pupils but also with their parents.

4.84 Craigmilllar has been affected by a strand of vocal opinion critical of the programme. However, the community has been consulted at all stages of the process. The community is represented on the board through the Craigmillar Partnership - with both representatives being nominated by the Partnership.

4.85 One of the key issues that requires careful thinking on the part of the URCs is what is meant by 'local community' In Craigmillar's case, there are five or six different communities, each centred on a particular area - Niddrie Mains, Niddrie Marischal, the Hays, Craigmillar Castle, the Thistle Foundation and Greendykes. There is no such single entity as 'the community'.

4.86 The voices which currently are represented in the Community Council are only fully representative of one of those areas, and they argue strongly for the status quo in terms of Craigmillar's tenure balance. They oppose many of the URC's key proposals.

4.87 These circumstances point to the desirability of including house to house surveys in the repertoire of consultation techniques, in order to obtaining a fully representative and unbiased sample of the views of local people.

Social inclusion

4.88 Each of the three Pathfinder URCs has taken seriously the need to return their areas to the mainstream - to ensure that residents in these areas have access to the same opportunities as others in wider society. They have put in place plans which, when they reach fruition, will create better opportunities for the residents of these areas.

4.89 These plans include improved education in new schools and colleges, new health care facilities, improved public open space.

Tackling worklessness

4.90 The business plan template for URCs suggests that tackling worklessness is an area of relevance for URCs but not one where they play a lead role. The responsibility for delivering employment support lies primarily with the URC's public sector partners while the URC's role is to act as a catalyst bringing partners together. While one of the Pathfinder URCs (Raploch) has engaged with this issue and with some success, we would suggest that the issue of primary responsibility for addressing worklessness in URC areas is one which needs to be explored within the local context.

4.91 While it is clearly right that URCs should seek to promote sustainable communities with an appropriate range of employment opportunities, it is important to remember that others have been charged with addressing worklessness and supporting workless people into work. These include the mainstream agencies such as Jobcentre Plus as well as the agencies supported through the Community Planning Partnership's Regeneration Outcome Agreement.

4.92 Careful consideration needs to be given to who is best placed to lead on employment linkages and on programmes to address the particular issues which give rise to high rates of worklessness in the URC areas.

4.93 The URC and its partners should take the opportunity to maximise the various funding streams available and use the URC as a vehicle for spreading economic growth. The wider context to this issue is discussed in 2.12.

Summary points

4.94 This section has exemplified the diversity and innovation that the URC movement in Scotland has created. It has similarly identified a range of steps that have been taken by one of more of the five established URCs that can be regarded as "good practice". Amongst the headline issues are:

• The legal structure - and its appropriateness to the aims and objectives of the Company - is arguably more important than the URC badge itself. The structure must be capable of properly reflecting and where necessary integrating with local circumstances and be similarly configured to acknowledge the requirement for accessing private finance. This can be in the form of bank finance (debt or equity) or via the formation of asset trading subsidiaries.
• Early capital funding is nearly always going to be key. It signals confidence to the marketplace and gives the URC the wherewithal to initiate early actions which will be central to the overall programme ( e.g. strategic land acquisitions). Where early capital funding is limited, partners must leverage their land stock ( e.g. via JV agreements or and debt security).
• There should be private sector or independent representation on the URC Board. It provides a counterbalance to political pressure and can similarly help the Company to remain focused on its plan and outputs. Even where the role for the private sector is limited, its representation can provide scrutiny, a different perspective and expertise.
• Where significant amounts of multi-agency public sector funding are required, the processes for programme and project appraisal should be aligned. Ideally programme funding should be committed for a long period (say three years with annual reviews). Where this is not possible, then expert officers (from within member organisations) should offer their expertise to support with project appraisal. The URC should not be distracted.
• In a similar vein, the local authority (or authorities) should look closely at the alignment of their planning system and policies with the objectives and masterplan of the URC. Whilst the Pathfinders have yet to fully test this system, what is already becoming clear is:
  • The need for Section 75 requirements to be stated clearly. Where appropriate, the URC and Planning Authority should work jointly to agree a menu of planning requirements that are important.
  • The need to align processes and procedures to support the URC's focus on quickening the pace of delivery. Where appropriate, URC projects should be ring-fenced and given priority.
  • The value of the URC and local authority working together to produce the masterplan and the quality / design framework that surrounds that plan. Clydebank is a genuine exemplar in this area and its approach can be built upon.
• The focus and effectiveness of leadership is perhaps the key factor in the success of a URC or indeed any regeneration body. An organisation which is led with energy and clarity of vision is much more likely to succeed. Quality leadership at either executive or board level - and ideally at both - impacts particularly on delivery.
• Stakeholders must want the URC and the attributes it brings. They must be willing to cede authority to it, and to support it with their own powers and resources. The support of the local authority is particularly important, but other stakeholders, particularly Scottish Enterprise and Communities Scotland are also important.
• All of the URCs should be thinking more than they are currently in relation to monitoring and evaluation. The newer URCs should actively think about how policies and procedures for this should be built into their plan and structure. In the future as the Executive's evaluation programme commences, the URCs will need to be in a position to demonstrate what they have achieved. Good systems and processes are required now to enable that.
• Community involvement has emerged as a key requirement of success. This is about more than consultation and instead reflects an organisational commitment to working with local people and businesses. Both Raploch and Clydebank can point to models that work well.

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