Major development loan fund plans

Q&A: European funding for Wales

Plans for a multi-million pound loan fund for urban regeneration projects in Wales have been announced.

Assembly government, European regional aid and private sector cash for the fund would be boosted by support from the European Investment Bank (EIB).

Loans from the fund, worth as much as £250m, would be repaid and then reissued to new projects, creating a 'legacy of funding' for future schemes.

Welsh ministers believe the fund could be operating by 2010.

The fund could be one of the first of its kind in Europe and would be based on the European Commission's Jessica programme, intended to provide sustainable investment for urban areas.

The proposals were announced by Welsh Deputy Regeneration Minister Leighton Andrews at a 'regeneration summit' in Swansea.

The summit has brought together 300 people who are experts in how to develop and regenerate urban areas.

An initial investigation of the plans by property consultants King Sturge was commissioned by the European Investment Bank and reported back earlier this month.

Mr Andrews said negotiations were underway with Brussels and "whilst there is a long way to go" he was "optimistic that we will be able to develop one of the first urban development funds in Europe".

The fund would be a way of bringing private investment into Wales

"This would be a substantial multi-million pound fund run by a professional fund manager, with the Welsh Assembly Government and a private sector funder having equal stakes," he said.

Mr Andrews said the private sector partner would be chosen by tender and King Sturge had found that "a number of leading financial institutions" would be interested in becoming involved.

"It is envisaged that projects will be promoted and delivered by local project partners from either the public or private sector," said Mr Andrews.

With the economy widely believed to be heading for recession, the scheme is likely to be that much more important to the Welsh economy.

At the same time, the task of enticing the crucial private sector and financial institutions to get involved in the plans could be that much tougher to achieve.