Kick-start for property in blighted city centres

Inner cities

Deprived areas of Britain's inner cities are to be brought back to life with a £1bn regeneration package.

Deprived areas of Britain's inner cities are to be brought back to life with a £1bn regeneration package.

The Chancellor unveiled measures designed to lift the blight on properties in poor areas and encourage businesses to invest in inner cities.

In the next Budget, the Government will abolish stamp duty on property transactions in disadvantaged communities in an effort to kick-start local property markets. Immediate tax relief will also be available to property owners who convert spaces over shops into flats in a measure that the Government hopes will revitalise commercial districts by making use of "redundant space".

Property investors will get immediate tax relief on their costs in cleaning up contaminated areas, to try to regenerate derelict sites.

The Government said yesterday that the tax relief would help to "address the legacy of the past" while reducing the pressure on greenfield sites.

In an effort to encourage the conversion for residential use of properties that have stood empty for 10 years or more, developers will be given concessions on VAT payments.

The Government will also look at giving tax relief to the Urban Regeneration Companies that have been set up in Liverpool, East Manchester and Sheffield. The nine English Regional Development Agencies will also be given more freedom to invest from a budget that was increased in the summer from £1.2bn to £1.7 bn.

By giving rate relief for small businesses, the Government hopes to attract more investment into deprived areas. Banks are to be encouraged to disclose their individual lending activities to businesses in under-invested districts.

Responding to Mr Brown's report, the Deputy Prime Minister, John Prescott, said the package was a "major step" in "bringing about an urban renaissance".

Mr Brown's report comes ahead of publication later this month of the Urban White Paper that the Government claims will set out, for the first time in 20 years, a comprehensive strategy for improvement. A National Strategy for Neighbourhood Renewal will set out how the Government intends to help the poorest communities.

Tony Burton, assistant director of the Council for the Protection of Rural England, said the Chancellor's announcement was "a welcome package of measures, which harnesses the tax system to breathe new life into our cities and protect the countryside".

The measures were also welcomed in the Liverpool district of Kensington, identified as in need of regeneration.Once a Victorian suburb at the eastern gateway to the city centre, this area suffered badly in the Eighties job slump and the later collapse of the property market.

Back-to-back terraced homes tumbled in value, unsaleable properties were rented to students and people on benefits and the population became transient. Kensington's fortunes were transformed two years ago by the Government's New Deals for Communities, which lasts for 10 years and is driven by the wants of local people rather than outside planners. A business plan, submitted to the Government in the spring, won a grant of £31m with perhaps another £30m to come.