New solutions, new challenges - adapting to structural and cyclical changes Physical, economic and social regeneration - preparing for the upturn

The past decade has been a very good decade for English cities. They have undergone a substantial renaissance underpinned by a successful national economy and buoyant public spending as the State of the Cities made clear. But the sectors of the economy which underpinned their renaissance in that cycle may not be the most appropriate for the next cycle. The drivers of much of the renaissance were retail, leisure, residential and financial services.

Regeneration has physical, social and economic dimensions. All are important. But since the credit crunch initially had its impact upon physical development, the DCLG study of the impact of the credit crunch focuses mainly upon that.

Four things are clear. First, the financial crisis in particular is as severe as anyone can remember. Second, it is not over yet and the pressures on regeneration will get more intense in the coming months. Third, this means that identifying and sticking to some clear principles to guide our behaviour in the future will be even more important. Fourth, the model that has financed regeneration from development gains may no longer be viable.

The immediate impact has been particularly marked on midland and northern core cities, even although many suggest that unlike previous recessions London and the South East have been hit by dependence on financial services.

The market is very difficult. But it is not dead. Many regeneration schemes are continuing and will continue. Projects which have public sector funding, financially sound developers in places and where the market has not over-provided are continuing.

The market will come back, confidence will be restored and regeneration will also begin again. But it will be different. And we may need to find some new solutions to new challenges.

Many partners have welcomed the renewed policy focus on place making rather than simply house building - with its greater emphasis upon the provision of social and physical infrastructure. One benefit of the slowdown in regeneration is that it offers a real opportunity for the public sector to make the infrastructure provision now so that places are more ready to benefit from renewed private sector investment when the upturn does happen.

Most important the good principles that have worked in the past will work again in the future.

We must support an approach which encourages: long-term thinking and planning; government commitment; public-private partnership and investment which shares risks and rewards; more efficient, flexible and innovative local leadership and decision-making; a commitment to economic and social as well as physical regeneration. Regeneration is a long haul business.

Equally it is important that the wider public programmes which are not typically regarded as regeneration should be more closely aligned with regeneration aims and ambitions in future. The resources going into the building of schools, clinics and hospitals should wherever possible complement regeneration programmes. At present it is not clear this always happens.

The Credit Crunch and Regeneration Impact and Implications.

Prof Michael Parkinson for DCLG, 2009