Local Government and Communities Committee, 17 Jun 2009

Meeting date: Wednesday, June 17, 2009

Official Report 165KB pdf

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Town Centre Regeneration Fund

Good morning and welcome to the 19th meeting in 2009 of the Local Government and Communities Committee. I remind members and the public to turn off all mobile phones and BlackBerrys.

Item 1 on the agenda is oral evidence on the town centre regeneration fund from the Minister for Housing and Communities and Scottish Government officials. I welcome Alex Neil, the Minister for Housing and Communities; Laura McIvor, who is the head of the regeneration branch; Ian Davison Porter, who is the project director; James Gilmour, who is a senior policy officer—all are from the local government division—and Ian Black, who is a senior planner.

I invite the minister to make opening remarks.

Thank you. I will keep my remarks brief because I want to give the committee the maximum time for questions.

As members know, the town centre regeneration fund was agreed in the budget earlier this year, and a budget of £60 million of capital spend was agreed, to be spent during the current financial year. We issued invitations for bids, which closed on 5 June for the first round of £40 million. The second tranche will be £20 million—the closing date for that is 21 August. We encouraged a range of organisations to apply, including local authorities, community planning partnerships, chambers of commerce, business improvement districts, town regeneration companies and the private sector.

We have had a range of applications for the first £40 million. Obviously, it would be inappropriate for me to go into detail on any particular application, but I can give you the general picture. We have received 133 applications, covering just over 150 town centres and the total amount of the bids for the £40 million is £125 million.

All the bids will be scored on the basis of six main criteria. The first of those is additionality, which is based not just on whether the project would go ahead without the money, but on time additionality—whether our money would bring the project forward—and scale additionality, by which I mean whether the project will be done on a bigger scale if the bid is successful.

The second criterion is leverage—whether the project can get matched funding or additional funding from other public or private sector bodies, which would be an advantage. The third criterion is partnership: we want to see evidence of partnership working in our town centres. The other three main criteria relate to impact on the local economy, impact on social indicators, such as contributing towards our equality aims, and environmental impact.

There will be a scoring process, which we are doing jointly with the Convention of Scottish Local Authorities. Because of the popularity of the fund, 23 officials are working full time on the scoring exercise. The advisory committee will meet for the first time on 24 June, and it is hoped that we will be in a position to announce the outcome of the first round of bids by the end of July or, at the latest, the beginning of August, before we move to the second tranche.

The only local authority area of Scotland from which we have not received a bid for the first tranche is the Orkney Islands; however, we anticipate that the Orkney Islands will probably put in a bid for some of the second tranche of money. As members probably know, the area is already heavily involved in town centre regeneration, particularly in Stromness and Kirkwall, which is the subject of a business improvement district application.

That is the broad overview. The advisory committee has been appointed. The chair of the committee is Alan Wilson, who is a former chief executive of the Scottish Council for Development and Industry. Representing the private sector is Liz Cameron, who is the chief executive of the Scottish Chambers of Commerce. Local government is represented by Rory Mair, who is chief executive of COSLA. It is a powerful advisory committee.

Once the scoring is done, the committee's remit will be to ensure that, in the awards that are made, there is a reasonable spread geographically throughout Scotland and between different sizes of towns. Clearly, it would be unfair if all the big towns—or all the small towns—got the money. We want to ensure that, based on the scoring process, we make as much impact as we can, and that there is a reasonably fair distribution of the resource throughout Scotland.

I am happy to answer questions.

It is encouraging to hear that so many towns have applied. I seek reassurance on the definition of the term "town centres". The definition that is set out in Scottish planning policy is:

"city, town and district centres, irrespective of size, that provide a diverse and sustainable mix of activities and land uses which create an identity that signals their function and wider role."

I think I know what that means, but reassurance would be welcome.

That is exactly the right quotation from Scottish planning policy 8. The timescale for setting up the programme has been very tight because we must spend the money this year—we have had to move quickly. We therefore decided that we would, rather than reinvent the wheel, use the planning definition of towns and town centres. That would have included cities, but we have excluded them, as agreed by Parliament, because they are the recipients of the £173 million of city growth funding, which is now mainstreamed into the local government settlement. It was clearly in line with the wishes of the Parliament that we did not allocate the money to city centres. However, that does not rule out town centres within cities. Some committee members represent town centres within cities that are the subject of an application.

Without talking about individual towns, will you say more about the criteria that are used in assessing the applications? Are you considering town centres in which there has been a particular historical failure in respect of development?

The approach is very much bottom up. It is the responsibility of the appropriate organisations to make applications. When we receive an application, we score it, based primarily on the six criteria that I mentioned—additionality, leverage, partnership, economic impact, social impact and environmental impact. For example, on economic impact, the kind of features that we are looking for relate to the creation of new jobs and the safeguarding of existing ones, and to the level of investment in a town centre. Of course, a prerequisite to providing money is that we must abide by Treasury rules. For example, the body that makes the application and to which the money is paid must be legally constituted and we must be absolutely sure that it is fit for, and capable of, managing the level of funding that it is awarded. We must also ensure, as far as possible, that the proposals in each place are reasonably in line with, and certainly not contradictory to, the local plan or other relevant strategies for the area. At the end of the day, we want to ensure that the programme has an identifiable impact at national level.

There is a range of applications for funding from the regeneration fund. At the lowest end of the scale, we have an application for £16,500 and, at the other end, we have an application for £5.6 million. That is an indication of the wide scope of the applications. Given the range of sizes of towns that we are covering, we did not want to be overly prescriptive. As I mentioned, there have been 133 applications covering more than 150 towns, so some of the applications cover more than one town. Some of the applications have a theme, such as streetscaping or doing up shopfronts. There is a range of themes. The applications involve whatever local people think is relevant for their town. We are not in the job of telling them what they need—it is very much a bottom-up approach.

Other members might pick up the theme of my next question. One issue that has crossed my mind in the context of townscapes and shops is that of gap sites, possible vested interests and land banks. The ownership of land in town centres is a controversial issue that is increasingly being talked about in Scotland's towns. Has it been highlighted in the process, or has it come to your attention?

We are sussing through all the applications in terms of the detail. Some of the applications from the area that I represent are aimed at tackling the problem of vacant and derelict land. In some cases, they mention derelict buildings, particularly ones with a conservation status that people want to bring back into economic use. All those things are covered in the wide range of applications that we have received.

Alasdair Allan mentioned vested interests. We will be carrying out due diligence before we award any money. We will do that in conjunction with our colleagues in John Swinney's department in order to ensure that all due processes are followed. We will not hand cheques out to people who have not been checked out.

I am not questioning your side of things; I am just wondering whether that theme has been raised. A lot of town communities complain that they have to deal with landowners who are less than co-operative when the idea to release land for commercial purposes is put to them.

Because of the tightness of the timescale for the project—the money must be spent in the current financial year—we will award money only when we are convinced that a project that has been applied for is deliverable within a reasonable timeframe. We accept that, although our money must be spent this year, some projects may not be completed until after the current financial year. Therefore, we have secured agreement from John Swinney that there will be flexibility to allow us to spend our money in the current financial year—if we do not do so, we could lose it—while allowing some local authorities to put some of their share of the cash into projects in the following financial year. We will be reasonably flexible provided that we receive guarantees that the money will be forthcoming and that the project will be completed. However, we will not fund any project that we believe cannot be delivered.

I do not have a registered interest in the matter, as such, but like others round the table, I have an interest in so far as part of my constituency will be the subject of at least one bid and, perhaps, another in the later tranche. In that context, I am grateful to the minister for the advice and help that he has given, which has made a difference to the bids that are going ahead for my constituency.

When the applications are considered against the criteria, will some of those criteria carry more weight than others? Has any thought been given to that? If so, can the minister share that information with us today?

There will be a scoring system. I will ask Laura MacIvor to explain the detail of the scoring system. This is a very open process and I am more than happy to share the detail of how applications will be scored. There are obviously some prerequisites, such as deliverability and additionality. If there were no additionality and our money would not make any difference to the project's going ahead, there would be no point in putting public money into it.

Laura McIvor is the overall project manager for the Government. She will take you through the scoring process.

There are four stages to the assessment process. The first of those, which we are going through at the moment, is sifting of applications on the ground of eligibility. We assess whether the applicant is a legally constituted body, whether the project would involve capital spend and whether it is for a town centre.

At the second stage, which the minister has mentioned, a large team of officials will score applications against the criteria that we have said we want to be met. We will look at the economic benefit that is offered by a project—and, within that, leverage rates and additionality will be key—such as the jobs that would be created and possible future investment. We will look for evidence of all those things in each application. In terms of social benefit, we will look for the extent to which a project would support existing local plans and strategic plans and the extent to which it has the support of the local community and wider local partners. In environmental benefit, we will look for things such as the remediation of land and wider environmental benefits, including benefits to the built environment as well as to the natural environment.

On deliverability, as the minister says, it is critical to determine at what stage the work will happen, and at what stage funds will be spent. On sustainability, we are considering the extent to which applications support local plans. We assess whether on-going revenue costs have been identified and are committed to be met, and whether other costs within the project have been identified. We consider whether there is commitment to delivery, so that we know that we are not paying funds when the rest of the funding is missing; if we are investing in capital, we do not want there to be nothing to maintain it in future years.

A score between zero and 5 will be awarded for each category. We will then weight the applications to produce an idea of the quality of the bids against the criteria. As far as that weighting is concerned—although we would need to double-check this with COSLA and the minister—we would expect there to be more emphasis on economic benefit, for example, because, as the minister has highlighted, additionality, leverage and job creation are quite important.

That is helpful. I was also wondering whether projects that are unsuccessful in the first tranche may be considered for subsequent applications in the second tranche. Would the sponsors—for lack of a better word—of the original project be given any kind of feedback on why their project was not successful in the first tranche?

The answer to both those questions is yes. We will explain why a bid was unsuccessful. We would like to ensure that there is an outcome, perhaps in lessons having been learned for future reference. We are making it clear that if a first-round bid is not successful, that does not exclude the applicant from resubmitting the bid in the second round. There will obviously be questions about why the application did not make it in the first round. We will share that information with the first-round bidders: we will be perfectly open and straightforward with people whose applications do not make it.

In some cases, it will not just be a yes or no answer to the bid. Let us take the example of a £5.6 million application. We might say to the bidder, "We can't give you £5.6 million"—although we might; I am not prejudicing such a bid—"but there is £3 million of the application that we can support. You can resubmit for the other £2.6 million in the second bid if you do the following," and we would clarify what they should do.

We have learned a lot from the bidding process for the council house money—the initial £25 million. The process is very similar.

That is very helpful. I do not like talking about a particular bid that happens to be for many millions of pounds, and I am sure that the minister does not like doing so either, but I presume that if you went back to that particular bidder and told them that you could help them with part, but not all, of the bid, it would be on the basis that not all its aspects met the criteria strongly enough, rather than its simply being too big a bid.

Absolutely. We have said right from the beginning that we have not placed a minimum or maximum amount on bids—it would be very unfair to rule out a bid on the basis that it was too high or too low. We will not do that. If bids such as the £5.6 million bid—there are other multimillion-pound bids—stack up, get through the scoring process and come out at the top, they will get the money.

That is helpful.

I appreciate the openness and transparency of the approach, and it would be a shame to put to waste the methodology that has been explained. Perhaps having funding next year would be very helpful, especially now that you have the appropriate mechanisms available to you. In that spirit of openness, will the recommendations of the independent advisers be made public so that they, too, may be scrutinised?

The recommendations would be subject to the Freedom of Information (Scotland) Act 2002, and my view is that we should make them public. However, when we do so might be an issue: for obvious reasons, it might not be advisable to make them public before the second tranche of bids is completed. I do not see any reason in principle why they would not be made public. In fact, I would welcome that, because one reason why we set up the advisory committee was so that it could act as a buffer between the official scoring and the decisions that will be taken by ministers so that we would not be open to any charges of favouring a particular area. Therefore, I would be happy to make publicly available at the right time the advisory committee's advice, although, as I have said, it would not be advisable to do that before we complete the whole process and before both tranches of bids have been made.

I would like to touch on a different type of BID—business improvement districts. Will you clarify how a bid from a group, or more than one group, involved in a business improvement district is likely to sway consideration of their application one way or the other?

That will not make a difference one way or the other. I have said that we will consider bids to ensure that they are consistent with other plans in the area. Obviously, local plans are a good example, but there are also local plans that relate to the application of the fairer Scotland fund, and there are strategic housing plans for each local authority. Some bids may include a housing element. Obviously, the BID process comes into that consideration, as well. We will be satisfied as long as a bid is consistent with other work and strategies in the area. As Jim Tolson knows, quite a number of BID applications are at different stages. However, that of itself will not add to or subtract from the scoring exercise, other than in the general need for applications to be consistent with overall strategies for their areas before we award money.

That is helpful, thank you.

Will you expand on how you see COSLA's role in stages 1 and 2 of the bid process?

We have involved COSLA heavily at every stage—the design of the scheme, the application form and the scoring system. As Jim Tolson knows, it is also represented on the advisory committee. It requested that the community planning partnerships make decisions on applications. We regarded that as problematic for a number of reasons, but we agreed that we would be happy to seek comments from the community planning partnerships on all the bids so that they are happy that bids are consistent in terms of what they intend to do. Community planning partnerships bring in all the key partners—health boards and all the rest—in the local authority areas. We have made it clear that we will share the information on bids with CPPs. If a CPP thinks that it needs to comment, or if it wishes to make a recommendation, that will be taken into account. However, at the end of the day, decisions will be made by ministers on the basis of scoring and the advisory committee's recommendations.

You have been clear that the fund that has been established is for capital spend, but it is obvious that any bid will have ancillary costs, whether those are management costs or on-going revenue costs, to which Ms McIvor referred. How do you see that money coming forward? Who will provide it?

We will not provide that through the fund. It is up to the applicant to make clear to us from where the revenue support for any project will come. We will need to be satisfied before we invest capital in the project that if revenue funding is required, it is in place to support the capital project. There is no point in our spending taxpayers' good money on a capital project that ends up as a white elephant because revenue support funding does not exist to support it. That is a key issue. We will not supply revenue support funding: it is entirely up to the applicant to persuade us that the sources exist for that funding.

Do you expect that that money will come mainly from local authorities?

I anticipate that it will. Even with 23 people working full time on the applications, we still have a fair amount of work to do on them because they are fairly sophisticated and involve a lot of information. Typically, the applicants have not only filled in the application form but given us substantial supporting documentation, some of which is extremely professional. Obviously, a fair bit of money has been spent, usually by the local authority, on that supporting documentation.

We have not analysed where the support revenue is coming from, but we will do that and will be happy to share the analysis with the committee at the right time. We are making it clear that our commitment is to the £60 million-worth of capital spend, full stop.

If you cast your mind back to the budget process, you will remember that the decision to establish the fund was taken fairly late. Not so long after that, local authorities had to set their budgets. Have local authorities made representations to the effect that the process did not give them a great deal of time to prepare for finding necessary additional revenue?

Comment has been made about the tight timescale, which is one of the reasons why we decided to have two tranches. The second tranche provides more time for people who need it to put together a bid. We have made the closing date for that 21 August. We are cognisant that the timescale is very tight: bids must be in by 21 August, we must turn them round by the end of September at the very latest, and the successful applicants must get the go-ahead and spend our share of the money by the end of the financial year. However, a significant number of authorities had people working on their ideas long before Parliament formally agreed to the budget. A number of them have almost off-the-shelf projects that were ready for such funding becoming available. That has been beneficial for those areas. We are conscious of the tight timeframe but, as we all know, it was unavoidable.

You stressed that the bids will be assessed and that you will seek to give priority to those you consider to be the best. You also said that there needs to be a geographic and size spread. How do you balance those?

That is one of the reasons why we appointed the advisory committee and why we will have a second tranche of applications. A clear remit for the advisory committee is to try to ensure that there is a reasonable spread throughout Scotland. That is not to say that we are dividing Scotland into 31 local authority areas—all except Orkney Islands Council—and saying that each gets one thirty-first of the funding. That would be absurd.

We want to ensure that the funding does not all go to the central belt, Grampian or the Highlands. We want to ensure that there is a reasonable spread not only throughout the country but between towns. There are some small towns, for example in the Borders, and at the other end of the scale are large towns such as Paisley, Kilmarnock, Ayr, Motherwell, Airdrie, Linlithgow and Livingston. We made a commitment up front that we would ensure as far as possible that the different sizes of town would share in the money. If, once we have seen the awards for the first tranche, the advisory committee feels that a part of the country has not had a fair deal and there are supportable applications from it—we are not going to dish the money out simply for the sake of geographic spread: they have to be good projects—that will be taken into account in the second tranche.

I am pleased to hear that you will not deal just with the geographic spread, but with the quality of the application. That is important.

Quality is the number 1 consideration. We want £60 million-worth of really good projects.

I am puzzled, minister. Will every local authority receive a share—of whatever size—of the money?

No. It—

So I can fully expect that the matrix, rather than the local authority share, will be the dominant consideration and that, because of the open and transparent process, the committee will see local councils losing out.

I am quite sure that some council areas will lose out—either because the quality of the bid was not good enough, or because a bid was not submitted in the first place, as has happened in one case. Our approach will not be one of spreading money like confetti across 32 local authorities. We will consider the projects and support the good-quality ones.

When I talk about a geographic spread, it is more because I would like the various regions of the country—the Borders, South of Scotland, the central belt, North East Scotland, the Highlands—to be covered as far as possible. That will be determined by whether the bids are of good quality and supportable, but as far as possible we want to ensure that the various corners of Scotland can benefit. However, it might not be possible to achieve that ideal. If we do not receive good-quality bids from a particular area, we will not be able to fund them.

Because of the number of applications, and because £125 million-worth of bids have been made for a sum of £40 million, there will be winners but there will also be losers.

So, the people in COSLA and in local government circles who are talking openly about each local authority receiving a share of the money should be disabused of that idea. You are sending out a warning today that, unless the bids are good, no local authority in Scotland has an automatic right to a share of the money.

That has always been the case. We have made it absolutely clear that nobody has a right to any of the money. The only people who will get any money will be the people who put in high-quality bids that we can support.

What about the remit of the independent panel and the guidance that you have given it? What discussions have taken place? Does the panel fully understand the point that you have just made and others? Is there any written guidance? Has there been correspondence between you and the panel about the remit and how the money should be handed out? Will that correspondence be made available to the committee?

When appointments were agreed, I issued each member of the advisory committee with a letter outlining the remit. We will be happy to supply that letter to the committee. No problem.

What further discussions have taken place, to build on that initial letter? What further guidelines have been issued?

We have furnished the members of the advisory committee with all the background papers, copies of application forms, and copies of all our consultations and discussions—both with COSLA and internally—on the management of the process. We will have a fairly lengthy meeting with them on 24 June, at which we will go through all these matters. We will give the members a brief overview of the applications that have come in, and we will ensure that they fully understand the scoring that we do. They have already been briefed on all that, and they have copies of all the relevant paperwork. By the time that they start to consider feedback from the officials who have done the scoring, they will be more than very familiar with every aspect of the programme.

There are time constraints on the processing of the 133 bids and there are 23 officials working on the programme, but the members of the independent panel still do not know the detail of the scoring. They have not had a discussion about your exact requirements, the detail of the scoring and how the bids will—

No, no. They have that detail. They know about the scoring.

Have you met the panel?

I have not met them myself, but I am meeting them towards the end of the month.

The meeting will take place at the end of the month.

Yes. I will be careful to talk in general terms about the fund, because one of the purposes of the advisory committee is to ensure that ministers do not get involved in the early stages of the decision-making process or try in any way to influence the committee's scoring or recommendations.

You will spend £60 million at a time when unemployment is rising and not tell the panel that we want that money to produce real economic benefit and a significant number of jobs.

I have already told the panel that we want good value for money. However, I will not tell it that all the money should go to Airdrie or Ayr—that is an issue for the scoring process and the advisory committee.

How many jobs do you expect to create with the £60 million?

It depends on the bids. We have made job creation and economic benefit a key part of the criteria, but we have not set targets for the number of jobs or the cost per job. Once we have seen the bids that have got through the process and have eventually been approved, we will be able to estimate the impact in jobs of the £60 million.

How will you ensure that job creation is a key criterion when, as we heard earlier, the weighting system does not make that a priority and you have not told the independent panel that it is?

The independent panel has been told clearly that job creation is a key priority. We have explained to members of the advisory committee the criteria that have been laid down, how the scoring works and so on. They are clear about the process, the outcomes that we seek and the way in which they are due to influence the matter.

In light of the answers that you have just given, is job creation a top priority to be achieved in the spending of the £60 million?

Absolutely.

Is it made absolutely clear in the written guidance that is included in the letter to the independent panel that the top priority is to ensure the creation of jobs?

The letter was about the advisory committee's remit and is a letter of appointment. It is not about the outcomes that we seek, which are set out in supporting documentation that all panel members have. They are clear about the outcomes that we seek, including jobs, from the £60 million.

I have no reason to dispute the fact that you believe that they are clear about the point—I am trying to establish how it has been made clear to them. You have not told them and have not indicated to them in writing that the top priority in spending the £60 million is to create jobs. How have you communicated that to the panel?

We have communicated with the panel in two ways, the first of which is communication in writing. I sent panel members a letter of appointment, and they have received all the supporting documentation—

Did the letter mention that the top priority is job creation?

I have just explained that it is a letter of appointment that outlines the advisory committee's remit. Members have all the supporting documentation, which makes clear what the outcomes, priorities and processes are. That has been provided primarily by officials, which is the normal process in such situations. I spoke to each member of the panel on a bilateral basis prior to their appointment to find out, apart from anything else, whether they would do the job—they were all enthusiastic about that. They have been supported, and they have a copy of anything that we have a copy of.

I accept that you have complete faith in your officials and the independent panel and believe that panel members recognise job creation as a top priority, but earlier we heard that the scoring system places no weighting on the issue. Your officials are here. Are they able to confirm that, in their discussions with the panel, they have made clear verbally or in writing that the creation of jobs is a top priority in spending £60 million of public money?

Absolutely. You said that there is no weighting, but I think that you misheard Laura McIvor.

We heard in earlier evidence that there was no weighting.

I think that you misheard her.

We will check the record.

I hope that the record gets it right.

Excuse me, minister?

I hope that the record gets it right. Laura McIvor said that there will be weighting of the criteria and that jobs will be a high priority.

Top priority or a high priority?

Well, top priority.

Good morning, minister. There have been discussions about the quality of the bids. We can get good-quality bids on paper—in fact, they can look fantastic on paper—but decisions have to be made on the basis of a desktop exercise. When bids have been successful, the money has been awarded and the process has driven into action, does the Government intend to carry out post-process scrutiny of the successful bids? To what extent will the winners' claims for additionality and so on be monitored and evaluated when the cash has been given out and the projects have been delivered?

First, I confirm absolutely that we will monitor and evaluate the projects, as we do with all Government projects. We will monitor the fund so that we can see clearly what impact it has had. Secondly, the application form asks the applicant to tell us what monitoring and evaluation they will put in place to ensure that the project is properly assessed.

When the bidding process has finished for both tranches of bids, can we expect some data to come back quickly on the additional cash leverage and the social benefits? Will there be a detailed outcomes-based approach so that the committee can come back with post-bid scrutiny?

I envisage that two things will happen. Once we have completed the second tranche and all the money has been awarded, I anticipate that we will report via the committee to the Parliament the anticipated number of jobs, the anticipated environmental and social impacts, and the additionality and leverage measures in relation to what we and the applicants signed up to. I hope to be able to give the committee that information fairly soon after the second tranche of awards is completed.

At a later stage, probably about this time next year, a proper, more comprehensive evaluation exercise will be done to find out what has happened on the ground. Obviously, we will compare that with what we were told would happen in the applications.

Do you expect that, this time next year, there will still be a short-term element to the scrutiny? The impact of some bids might not be known until 2011-12, especially if we get in due course the upturn that we hope for in the Scottish and United Kingdom economies.

There has been a lot of talk about whether the town centre regeneration fund will become a common feature of Government budgets. Some people have asked me whether the funding will happen again next year and I have reminded them that it is next year's expenditure that we are making this year. If there are to be future town centre regeneration fund initiatives, I would like to ensure that we have close monitoring and scrutiny of the current £60 million to ensure that we get the best bang for the buck, as the minister is known to say from time to time. Can you reassure us about that?

Absolutely. As I say, the fund will be monitored in three or four ways. First, we have made it a condition of the funding that the recipient monitors the situation, evaluates the project properly and reports back to us. Secondly, we will monitor and evaluate the project ourselves. Thirdly, I take your point that in three or four years' time, there will perhaps be impacts that we do not anticipate at present or which could not be measured until then. One purpose of the evaluation that will take place in mid-2010 is to identify any additional monitoring and evaluation that should be done. We will make a decision on that when we have seen the initial proper evaluation.

You asked about the future of the fund. That is a matter for decision when we consider the budget for 2010-11. As you know, Mr Swinney, as the finance minister, will announce his budget proposals in September in the normal way.

Given the speed with which the programme has had to be rolled out across Scotland, with criteria drawn up and staff put in place to get the cash out in the current financial year, if there were to be a signposting of the Scottish Government's intention to do the same again—I am talking not about next year, but about 2011-12 or 2012-13—would there be an onus on local authorities to ensure that good community engagement with locals on what they would like to see in their town centres would be a key part of any future bids? That would ensure that we got not just local authorities telling us what they thought communities wanted, but communities telling us, in a bottom-up approach, how they felt their communities should be developed.

That is one of the reasons why we opened up the bidding process to other grass-roots, non-local authority organisations. Although no community council has led on a proposal, a number of the proposals that we have received are supported explicitly by community councils. I have already mentioned our willingness to share the information on the applications with the community planning partnerships, which, I would hope, are local representative organisations.

Nevertheless, I take your point. If we had more time and could announce the programme on a longer-term basis, we might be able to engage local organisations more than we have had time to do this year. If we decide to repeat the programme or to run a programme of this type again, I hope that local organisations will be encouraged to participate and to feed in their views.

I welcome the resources that the Government is devoting to the fund and its disbursement. As a strong supporter of the fund, I am pleased to see that the Government has picked up the ball and is running swiftly with it. That is the nice thing that I will say to you, minister.

I suppose that I should say thank you.

You could.

You said that, in the assessment process, an applicant will be checked to see whether it is a legally constituted body. For the purpose of the fund, does a legally constituted body have to have a corporate legal personality?

Essentially, yes.

You said in response to questions from Bob Doris that there had not been an application from a community council. Is that because community councils are not bodies with a corporate legal personality? Are they disqualified because they are, in constitutional terms, voluntary organisations?

For the purpose of the fund, we would regard a community council as a properly constituted body. I know that there are more legal definitions, but given that community councils are recognised organisations, if a community council submitted an application we would not reject it on the basis that it had come from a community council. I stress that, although no community council has led on an application, community councils have been involved in supporting applications.

The fact that no community council has, so far, led on an application is more to do with the resources of community councils, which are, as you know, voluntary organisations. Putting together a bid would be a substantial challenge for a community council, especially in the timeframe that we are talking about. The community councils that were keen to submit applications for the funding approached their local authority with a view to having their ideas included in the local authority's bid.

So, in effect, the local authority provides the corporate personality for a project that a community council might want to see in its small town. You will appreciate the fact that, in many small towns, there is a community council although, historically, there may have been a burgh council with its own corporate personality, which has now been subsumed within the larger council area. In such towns, the community council is regarded almost as having inherited the status of the previous burgh council.

Yes. We did not ask for the process to be defined in that way; that is just what has happened, perhaps because of the timescale and the fact that most community councils lack the resources. My impression is that, particularly in rural areas, bids have been submitted on behalf of several small towns instead of each town submitting a separate application. As far as we can see, the community councils have consulted the local people, as far as possible, on aspects of those applications.

If I have noted it down correctly, I think that you said in your opening remarks that there were 133 applications. Do you have a breakdown of the applicants that are local authorities, public sector bodies, voluntary or what we might call third sector bodies, and private companies?

We can give you an idea. However, I ask that you do not hold us exactly to the numbers as we are still sifting through the applications and dealing with a number of joint applications. I can tell the committee that apart from Orkney Islands Council every local authority is involved in a bid.

Are some local authorities involved in more than one bid?

The rule was that any organisation was allowed one bid per town centre. Of the local authorities that have put in bids for more than one town, some have submitted separate bids and others have submitted a single bid covering more than one town.

How many towns are covered by the 133 applications?

As I said in my opening remarks, just over 150 towns are covered.

So there have not been all that many multiple applications. Logically, there can have been only a maximum of 17.

Laura McIvor will give you a broad-brush view of the other organisations that have applied.

I do not have an exact breakdown of the numbers by type of organisation, but looking through the information I can say that, in a number of applications, the local authority is the lead applicant on behalf of local partners, including community councils and local trusts and that, in many of those applications, the local authority has applied with the support and on behalf of a number of local organisations and partners, not just one.

Third sector groups that are private companies, trusts and so on have also applied in their own right and, in many of those applications, they have shown that they have the support of other groups. After all, as the minister said in his opening remarks, one of the key things that we want applicants to demonstrate is partnership.

You should also bear in mind that in new towns, such as Glenrothes and Cumbernauld, the bulk of facilities—the core of the town centre, if you like—is owned by a private company.

In how many applications submitted by private companies has the application for funding been ancillary, say, to a commercial development that they are undertaking in a town centre?

We have not yet done that analysis.

But there are applications of that nature.

Yes. It will take us a wee while to complete that analysis, but we will certainly circulate that information to the committee.

Will you be able to publish a list of all the applications that are being considered, who has made the application and what has been applied for before the panel decides or deliberates on them?

To be honest, it was not our intention to publish the applications before the decisions were taken. Such an approach could create its own problems. I would rather wait until the decisions are taken and then publish all the applications and what they were for. It would be highly unusual to publish the list and details of applications; after all, in some cases, there will be some negotiation over approving one part of an application but not another part. Although we would be happy to make that information available, we would prefer to do so after we have approved the projects.

We are happy to give you the number of local authorities, private companies and so on that have applied, the number of local authorities whose applications have been supported by a range of organisations and other such information, but I am quite reluctant to make public names and numbers before the process has been completed.

Was that the same model that applied in the council house building application?

Yes.

Okay. So, no list was ever published of which councils had applied for funds before the allocation was decided.

No, we dealt with each council. As you know, the first £25 million was dealt with in two tranches, the first of which was of about £16.5 million. Most local authorities had an idea of who had applied, but they did not know the amount or nature of the application. The information is commercially confidential until we take our decisions. We have to be careful about when we publish that level of information.

The guidance that you issued gives examples of the type of project to which funding will be allocated if an application is successful. The examples include improving pedestrian access and parking, attracting footfall, diversification of services and amenities, acquisition of gap sites and so on. Has any assessment or research analysis been done of regeneration projects of the type that are given in the guidance? What type of project is more likely to generate results?

A lot of research has been done over the past 30 years on the impact of various regeneration initiatives. That said, those initiatives tended to be area based. The largest such initiative was the Glasgow east end renewal project. A key issue to emerge from the research on that project was that it scored highly in terms of physical impact on the east end of Glasgow, but not so well on long-lasting economic sustainability.

A number of regeneration projects since then have tried to do both. The six urban regeneration companies that we are funding at the moment give as much importance to economic regeneration as they do to physical regeneration. Experience tells us that the two have to go together. There is a lot of published material on the subject. Only two weeks ago, a conference was held at Victoria Quay to look into the impact of various types of regeneration initiatives. I am happy to ask my officials to send details of that—including what makes the greatest impact—to the committee.

That would be very helpful.

The convener asked about the benefits of the spend in the relatively short term. For example, let us say that you approve an application for town centre streetscape improvements—repaving, the addition of benches and sculptures, and so on. We can envisage the workmen coming on to site and doing that work. It is easy to imagine such a project generating jobs and employment relatively quickly, turning things round and making a difference. However, if you approve an application, the focus of which is the acquisition of a gap site or derelict land, you are—in effect—funding an investment. We might not see very much by way of improvement for a considerable period of time thereafter. The difference is made not by the acquisition of the site, but by the substantial investment that has to follow. Land acquisition does not strike me as the type of project that will make much of a difference in the sort of timescale that people are discussing.

I agree. If the application is for only the acquisition of a gap site and no plans are in place to develop it, it will not rate highly in our scoring system. If the acquisition of the gap site is part and parcel of a broader project to develop the site and create economic activity, it will score well on those aspects in the scoring process. If the application is simply acquisition, almost for acquisition's sake, it will score low. It will not generate economic activity or—as the convener said—generate jobs.

I am reassured to hear that.

I would like clarification on a couple of points. First, by what point does a recipient organisation have to have spent the money?

We have said that we will be flexible. We will spend our money only if we have had complete assurances from the recipient that it will spend the money that it says that it will spend. There has to be a legal commitment for it to do so.

We have not made a deadline by which the recipient has to have spent its money, but if the timescale goes into the next financial year, we would envisage that it would be spent during that financial year—and probably in the early part of that year. However, we hope that that would be the exception rather than the rule. After all, the point of the exercise is, as the convener said, to generate jobs and economic activity as soon as possible.

I am aware of that, minister, but what I am trying to get at is the timescale in which a recipient must spend an allocation of money. You told us that you have had bids totalling £125 million for the first tranche of money and that some of those bids will inevitably lose out because of the funding regime. However, if a recipient does not use its allocation until, say, six months into the new financial year, at what point does the Government step in and say, "That money has not been used for what you said you would use it for; enough's enough"? When might you reallocate the money to a bid that is not successful in the first round?

We are trying to reach a position in which we do not need to step in in that way. We want a watertight situation in which the recipient organisation is legally committed to spending the money and to doing so within an agreed timeframe. We would step in only when an organisation defaulted on the legal commitment. If it said that it would spend the money by, say, the end of June 2010 and it did not do so, and if the reason was not acceptable to us, that would be the point at which we would step in.

You indicated that some of the bids that you have received are off-the-shelf bids—I assume that some of those are the bids that you said were produced and presented to the Government very professionally—

There is not always a strict correlation.

You said that some professional-looking bids have been presented. Some of the bids that come in may have planning implications, such as the redesignation of the existing use of property or land. A bid might be successful at the end of August or beginning of September and be allocated a sum of money from the fund, but it then might have to acquire the property and go through the full planning process. If that process was disputed or challenged at any stage, when would the Government step in and say, "We thought that this bid was all tied up. We granted the fund based on everything being settled, and we expected that the money would be used by June 2010"? What monitoring measures will be in place? You mentioned earlier that you expect the recipients to monitor the process, but how will Government officials ensure that the recipients are carrying out the work in a timescale that is acceptable to the terms under which the grant is funded?

There is a unit—in fact I think that there is more than one unit—in the finance section of the Government that is dedicated to ensuring that Government money is spent as is agreed. One of those units will be keeping a close eye on the process. The Scottish Government will monitor the projects, not just from a financial point of view but to ensure that they do what they said that they would do on the tin.

We will step in as and when there is any default in the timescale, the spending or whatever. As I say, the emphasis is on carrying out procedures up front, so I hope that the number of times that that will need to happen is zilch. Particularly given that we have £125 million-worth of bids chasing £40 million of funding, we want to get the procedures tight and be sure that the people who are awarded the money can deliver and can do so on budget and on time. However, we will step in as and when necessary, and in the worst-case scenario we would have the legal right to take our money back.

You have spoken about flexibility, which is understandable given the timeframe, but is there an absolute deadline by which the money must be spent under Treasury rules? I presume that, if the money is not spent, it goes back not to you but to the Treasury, so there is a legal requirement.

Yes. There is a deadline by which we must spend our money, which is the end of this financial year. John Wilson asked whether, if a recipient wanted to spend some of their share in the new financial year, we would be flexible enough to allow that. The answer is that, in that situation, we would be flexible, provided that we got the right guarantees. There would need to be guarantees.

I am asking about the extent of that flexibility. Is it a month, two months or three weeks beyond the period? You must know what the absolute flexibility is.

We have not set a deadline of, say, one, two or three months, because we have not yet seen the nature of the applications. To an extent, that might be a matter for negotiation with the recipients. We have tried to be as non-prescriptive as possible, but the money must be spent within an acceptable period. I anticipate that, if we approved a project for a local authority and it could not commit all the money in the present financial year, it would commit all of it between the present one and the next one.

So you believe that there is latitude in the Treasury rules to take projects into the next year.

Mr Swinney is on record as saying that he will be flexible to ensure that, in those circumstances, we still get the projects.

I am just trying to establish how flexible we can be. You are suggesting that, if the money is not spent in the present financial year, given proper assurances the spending can stretch into the next year.

Yes, it can, although we would regard that as the exception rather than the rule.

What would be the norm then?

The norm would be that all the money would be spent in this year by all parties. Going into the next financial year would be the exception.

Do we need to ask Mr Swinney the question?

No—that is the agreed position. Any requests by recipients to spend their share or part of it in the next financial year will be agreed on a one-by-one basis between myself and Mr Swinney on the one hand and the recipient on the other. However, we regard that very much as the exception rather than the rule.

I am sorry to return to an earlier point but, following the minister's exchange with the convener, I am slightly less clear about the priority that is to be given to the creation of jobs. To be absolutely sure, are jobs the top priority, a high priority or an important priority among other important priorities?

We have said that we are trying to achieve a number of things. The issue is not only about jobs; it is about when the jobs are created. With some projects, we might be creating the circumstances that allow jobs to be created without knowing exactly how many jobs will be created. For some perfectly justifiable projects, any permanent jobs—leaving aside the construction jobs that arise in the meantime—might arise one or two years down the road, perhaps because a building has to be built or land has to be cleared. That applies particularly in places such as Glasgow, where there are major problems with land contamination.

Ultimately, the programme is about town centre regeneration, and having jobs is a key part of that and a top priority. Housing projects, for example, might not bring jobs directly, but housing people in the town centre might bring more economic activity to the town centre and create jobs indirectly, for example in the retail sector. We will assess all that and, as I say, jobs will get a heavy weighting in the scoring process.

But jobs are a high priority among other high priorities.

Absolutely. You have a particular interest in part of Glasgow. The problem in such areas is that it might not be possible to say that jobs will be created within a year, but, if the project does not go ahead, it will not be possible to create jobs or economic activity in the future, or to regenerate the town centre. Sometimes it will be a question of safeguarding economic activity and ensuring that an area can continue to do certain things rather than creating new opportunities. We will adopt a highly pragmatic approach to achieving the real objective, which is to bring life back to our town centres.

I seek clarification on the £60 million, which it was mentioned in earlier exchanges is accelerated funding. From where has that money been accelerated?

Next year's capital allocation. I anticipate that your next question will be about which budget it has come out of. Basically, the Government's view was that there were two options as far as the Treasury's requirements were concerned. If, for the sake of argument, £5 million out of the £60 million were to be spent on housing, should that £5 million come out of next year's allocation to the affordable housing investment programme? If another £5 million were to be spent on an aspect of Jim Mather's portfolio, should that £5 million come out of his budget for next year? After discussion in the Government, our view is that it is easier to top-slice the accelerated funding. We have just taken £60 million off the capital allocation for 2010-11.

Pursuing the alternative route would involve two dangers. The first is that one would get involved in inordinately lengthy discussions about which budget the money should come out of. As someone who was a minister, you will know that a lot of time can be spent doing that to no great benefit. Secondly, one could be accused of slanting decisions in order to protect someone's budget for next year. We decided to top-slice the £60 million from the capital allocation for next year because that is the simplest and most straightforward way of doing it.

That was not my second question, but your answer was useful recognition that you do not want to upset anyone, so you are not telling them that it is their money that is being taken away.

Given that we have £40 million to allocate and have received £125 million-worth of applications, the chances of upsetting someone are quite high.

My second question is whether the acceleration of that money means not only that you will not be able to guarantee that there will be £60 million in next year's budget for town centre renewals but that you will have to find £60 million to fill the gap that has been left.

All the accelerated capital that has been brought forward by the UK Government and the Scottish Government from next year into last year and this year is, by definition, not available for next year. That is true of the £120 million that we have brought forward on housing, £40 million of which went into last year and £80 million of which will be spent this year. By definition, if money is brought forward, it will not be available again. The UK Government is in exactly the same position. As you know, the two Governments agreed, along with our Welsh and Northern Irish colleagues, to bring forward accelerated capital as a counter-recessionary measure. I think that that was the right thing to do at UK level as well as at Scottish level, but the implication of bringing that money forward is that you ain't got it to spend twice.

Along with the concerns that I have raised about the gap that that will leave in housing spend next year, there are grave concerns that, given the amount of bidding that there has been for the town centre regeneration fund, we will not be able to meet the need that undoubtedly exists.

Exactly. That is one of the reasons why we are so exercised about the UK Government's cutting of £500 million from our budget next year.

And it is why you must welcome the extra £2.2 billion that will come to the Scottish Parliament over the next two years.

Yes, but we should have had £2.7 billion.

As you said, everyone has to make adjustments because of the current financial circumstances. However, you must take responsibility for your decisions.

That is why we took the decision to bring forward the accelerated capital.

Mr McLetchie asked whether the list of applications will be made publicly available. You talked about information that is FOI-able and you said that you would much prefer information to be made available voluntarily rather than through compulsion. I am not convinced that the list of applications cannot be published, and I do not understand your point about commercial confidentiality. Will you clarify the position?

At this stage, we would require everybody's permission to publish a list of applications. Under the Freedom of Information (Scotland) Act 2002, the information is not FOI-able at this stage; it is FOI-able only after the event. If an FOI request was made at this stage for a list of all the applications and their details, it would be turned down. The Scottish Information Commissioner would support the decision to turn down the request because at this stage the information is provided strictly in confidence—it is a question of commercial confidentiality. That is the normal procedure.

I am not certain about this and perhaps Mr Black will help, because it might be a good example for the minister and his officials to consider—although I appreciate that his experience is in housing bids. In relation to the national planning framework, I remember there being much controversy about the assessment matrix of candidate national developments. There was much concern about the openness of the process and how the matrix was applied, and senior planners in Scotland were very upset about the process. Can Mr Black confirm that a list of planning applications was provided to the committee as part of the process and was made available publicly?

I am sorry. I am not able to confirm that.

Perhaps the minister should check. If such list was published, I do not see why the same approach cannot be taken to applications to the town centre regeneration fund.

With all due respect, there are differences between the situations. We are not necessarily comparing apples with apples. We have received—

I am not necessarily comparing the town centre regeneration fund process with the housing bids process as apples with apples.

I agree, but there are rules that we must follow throughout Government. For example, when companies apply for regional selective assistance, information about which companies are awarded money and which companies apply but are turned down is published only after awards have been made. We would not be allowed to publish such information during the application process and before a decision was made.

I seriously do not get the commercial confidentiality argument. We are not talking about private tenders or whatever. I am struggling to accept your point.

I have set out my decision, which is consistent with all the rules, including the FOI rules. I think—

You have decided not to provide the information because it is not FOI-able. You could write a simple letter to local authorities tomorrow to allow them to provide to this committee a list of bids.

Local authorities are not the only bidders. My clear position is that I will publish the information when decisions have been taken about who will be awarded money, but it would not be fair to bidders to do so before then.

Is your approach consistent with your earlier remarks about wanting the process to be open?

Yes.

We will see. Thank you for your interesting evidence.