Finance: Will Godiva take off?

The management of Coventry city centre is being handed over to a private company in a project named after the place's most famous daughter. Other towns will be casting an eye on its success, says Paul Gosling

Coventry is preparing itself for a revolution in two months' time. The council is voluntarily handing over to a private company responsibility for running the city centre. If it is successful, the West Midlands' car capital could provide a model of civic management that is copied throughout the country.

The Coventry City Centre Management Company will, from April, take over from the council a pounds 4m budget to run the commercial heart of the city. It will award the contracts and monitor the performance of street cleaning, decide the level of closed-circuit television surveillance, manage the car parks and set parking fees, organise special events to attract shoppers and tourists, run campaigns to promote the city and attract inward investment, and be consulted on all planning applications in the city centre area.

But this is no straightforward privatisation of civic responsibilities. The company is a joint venture between the city's Labour-controlled council and some of its leading businesses, including Boots, the Prudential and Land Securities, which owns much of the property in the centre. Other directors include a vicar, representatives of the city's university and its training and enterprise council, and just one councillor and one officer from Coventry City Council.

Chairman of the company is Martin Ritchley, chief executive of the Coventry Building Society. Mr Ritchley says: "We are bringing together all the interest groups in an environment where you can make things happen. The private sector will be taking decisions and responsibilities for how the budgets will be spent, and this must be a good way forward. It will have influence over policies such as parking, safety and cleansing, instead of just being critical from the outside."

Coventry City Council expects the company to be more effective in attracting private capital into renovating the city's shopping area, which was mostly rebuilt in the Fifties and Sixties and is now badly showing its age. Commercial interests on the board have committed themselves to raising an extra pounds 500,000 over the next year for improvements to the existing city centre.

What the city desperately needs, though, is major investment to see off out-of-town developments such as the nearby Merry Hill centre at Dudley. The company has bid for pounds 2m from the European Union, but the key to progress is for the new company to lead a private finance initiative to rebuild the central shopping area.

Mr Ritchley believes that additional investment has to be earned by the new company. "In the longer term there may be extra money, but the most important priority is to prove to residents and businesses that this represents real progress to make the city better, and then to build investment. The companies represented on the board will be bringing in experience from elsewhere, and I hope they will be able to influence investment decisions from outside the city."

Some Coventry residents have criticised the proposal as an abandonment of the council's responsibilities, but Councillor Nick Nolan, chair of the authority's economic development committee, says it has not been controversial within the council. "There are sceptics, but getting it through the Labour group really wasn't difficult," he recalls.

Mr Nolan says it is important for commerce to commit itself to improving the city's environment. "We have been letting the private sector get out of its civic responsibilities for years, and it is about time we ended that. It is the growth of quangos that has made councils say that we can't allow these people to go off at tangents, but get them into what is important."

The Coventry project, called Godiva after the city's most famous daughter, builds on what has become a consensus among major cities that the private sector needs to be brought into planning and managing commercial centres. Many cities have now appointed town centre managers, who are responsible for liaison with store owners and for ensuring that councils work in co- operation with retailers to compete more effectively with out-of-town shopping areas.

Alan Tallentire, chief executive of the Association of Town Centre Management, says that he expects several other major local authorities to follow Coventry's example, with Edinburgh, Glasgow and Belfast all looking closely at how it operates. "It is based on business improvement districts in the United States," he says, pointing out that this has had a major positive impact in many downtown areas there.

"It is about pulling investment strategies together where the private sector can see a reward cycle from which they can increase profitability. For the public sector it can help to prioritise economic development programmes."

Coventry is, in effect, acting as a pilot scheme for the future management of city centres, but the timing has its ironies. Just as the Labour Party has its best chance of government for years, so its own councils are moving much closer to the style urged on them by Margaret Thatcher and her former environment secretary, the late Nicholas Ridley. The ideas of Baroness Thatcher and Lord Ridley clearly had their own momentum, just a rather slower one than they had hopedn