HC Deb 19 June 1973 vol 858 cc610-23

2.42 a.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

The House will recall that I and my hon. Friends representing Manchester constituencies had the following motion on the Order Paper for debate on 23rd March this year: That this House is deeply disquieted by reports that the disposal of Manchester Central Station by British Railways has already led to the making of substantial private profit, insists that the public are entitled to full information on the disposal of public property, including the price at which it is sold and the conditions agreed for the sale, recalls that the Manchester Central Station property was sought by Manchester Corporation for important community projects, and calls upon the Secretary of State to institute immediate inquiries into the future of this property which will take fully into account the social need for its retention in public ownership. Unfortunately, my motion was not reached because of the time spent by the House in debating the previous motion. The Minister may, however, be interested to know that I have heard only one slight but constructive criticism of the motion, namely, that it was phrased in terms of the utmost moderation.

With good reason, there is strong feeling among representative people in Manchester on this deeply important matter. This strong feeling arises from both the handling of the sale of the Manchester Central Station property and numerous press reports of enormous profits made from its almost immediate resale.

The property is of considerable importance to the city of Manchester. The site is one of some 23 acres and was capable, if the city of Manchester's bid had succeeded, of providing many new amenities without sacrificing the need for open space in a crowded and commercial city centre. Once the busiest of the four main line stations in Manchester, the station was the terminus of the London Midland line from St. Pancras and was surpassed only by St. Pancras itself in the size of its train shed.

The station was closed in 1968, when the line was superseded by the high-speed electrified line from London, Euston to Manchester, Piccadilly. After the closure, although the station is a listed building, its uncertain future soon became the subject of unreported negotiation between unnamed property developers, unnamed architects and unnamed officials of British Rail. Although public property was at stake, the public knew little, if anything of what was going on. Genuine information was scarcer than roast beef among old-age pensioners. Only the grapevine flourished.

Manchester Corporation twice made an offer for the property. The second is said not even to have been rejected in writing when it was first disclosed that the property had been sold to an unnamed property company. The much respected chairman of Manchester City Council's planning committee, Councillor Keith Eastham, commented as follows: It is really a disgraceful way to treat the city. It is a contemptuous way of doing business. British Rail have never had the courtesy to come back and positively say that our offer, which was a fair one, was rejected". Manchester Corporation's interest in the property was informed by a keen desire to ensure, first, that the site would be developed in the public interest, and secondly, that the public rather than property speculators would benefit from rising property values.

We are now told that the site was privately acquired for the largest single development project in the history of the city. It is reported that between £30 million and £40 million will be spent on developing the site. The plans are said to include provision for 1 million square feet of office space, housing accommodation for 300 people, shopping space, and an exhibition hall. With the city of Manchester's still agonising housing problems it seems especially wrong, not to say scandalous, that the new housing development is to be placed in other hands.

The strong feeling excited by the manner of the disposal of Manchester Central Station reflects widespread public anxiety about the future of other buildings in the city. Of the distinguished buildings in Central Manchester, including even listed buildings within conservation areas, most are now vulnerable to the pressures of redevelopment.

Mr. Robert Waterhouse reported in The Guardian of 16th July, last: Apart from the Town Hall, the John Ryland library, Manchester Cathedral and Chetham's School, there is not one building which is totally secure. After the long and silent dealings with property developers, Manchester Corporation was first informed that the Central Station property had been purchased by McCrea Holdings Limited. In fact, the building was bought by Arkle Holdings Limited. Although Manchester City Council, as the planning authority, cannot impose a condition on prospective purchasers that they must, before purchase, consult the authority about their proposals for the use of property, except among speculative purchasers sound business sense normally dictates that consultation takes place. Arkle Holdings did not consult the planning authority.

Mr. Frank McElhone (Glasgow, Gorbals)

I have read with some interest about this case and I should like to ask my hon. Friend if he is aware that the disclosures he has made are disturbing, and call for an immediate public inquiry.

Mr. Morris

I am grateful to my hon. Friend. There are further disclosures that I wish to make. I am certain that the Under-Secretary will have taken very careful note of the point made by my hon. Friend.

On 8th February 1973, the parliamentary journalist, Roger Carroll, reported in the Sun: Tycoon Patrick McCrea has netted a quick £1 million in an amazing British Rail property deal … Irish-born Mr. McCrea, aged 35, was a ship's cook before he moved into the property business. He formed Arkle Holdings last year to buy Manchester's … Central Station from British Rail. Mr. Carroll also reported that the price at which the property was sold was £2,700,000 plus an allowance for inflation and development. He went on: Mr. McCrea and his associates promptly resold to the English and Continental Property Company for an extra £1 million. A little more than half the £1 million made on the deal went to Mr. McCrea's bankers, Dalton Barton. Since the sale, Dalton Barton have been taken over by Keyser Ullman. the big City bank headed by Mr. Edward Du Cann, chairman of the Tory back-benchers' 1922 Committee. Here it is interesting, and also disturbing, to note that Keyser Ullman is a direct financial contributor to the Conservative Party.

Similar reports to Mr. Carroll's appeared in other newspapers, notably in the Daily Telegraph and the Daily Mirror. There was then a denial by Mr. McCrea. However, we were not told by Mr. McCrea just how much profit had been made by the quick—some would have said "slick"—change of ownership. What is definite is that the property was resold to the English and Continental Property Company for more than £3 million.

A spokesman for the English and Continental Property Company told the Manchester Evening News earlier this year: The only reason we acquired Arkle was because of the Central Station.… We have every intention of developing the site. It is my strong conviction that the public are entitled to full information on the disposal of public property. If, as several highly responsible newspapers have reported, huge profits are being made from the disposal of public assets, we are entitled to know who is making them. Why should the people of this country be left so completely in the dark about the disposal of their own property?

The Minister for Transport Industries will recall that I have put it to him in the House that the appropriate local authority should have the option of buying surplus railway property at valuation. He was asked to give a general direction to British Rail to this effect. He refused to do so. I have also put it to him that the sale of such property should be handled in a much more satisfactory manner than has been the case with Manchester Central Station.

I hope that the Under-Secretary will now tell us why we could not have been informed from the outset, first, to which company Manchester Central Station was sold by British Rail, and at what price; secondly, whether the property is in the same ownership and, if not, at what price and profit it was resold; thirdly, whether the city of Manchester's bid for the property was turned down on financial grounds alone.

In the light of this debate, the hon. Gentleman may now agree that full disclosure is a matter of urgent necessity. In correspondence, his right hon. Friend has told me that the figures quoted in the Press are misleading. If he can say that, why cannot he give the correct figures? I appreciate his difficulties, but why is he unable to disclose more information about the handling of this deal? Is he aware that there are now insistent demands from the Greater Manchester area that we must break down the wall of secrecy surrounding the disposal of public property?

I have no doubt that the hon. Gentleman will want to remind the House that the public interest in the development of the Manchester Central Station site could be safeguarded by powers exercisable by Manchester Corporation as the local planning authority. But why should the planning authority already have been treated so scurvily in the handling of the sale? Is this in the interests either of the ultimate purchasers of the property or of the general public?

I remind the Minister that Manchester Central Station was closed in 1968. For a long period, the city council has lost rates on a very valuable site. Moreover, the deterioration of the site became so marked that on 6th June 1972 the city planning officer felt it necessary to report his deep concern to the Historic Buildings Panel and the planning committee. In his report, he drew the attention of the planning committee to the fact that the repair of damage that had been caused to the historic train hall as a result of a fire had not been carried out. He reported further that upon a tour of inspection with representatives of British Rail, on 21st March 1972, these representatives had stated:

  1. (1) British Rail had no fire insurance policies.
  2. (2) They did not intend to put right the damage done in the recent fire.
  3. (3) They had no maintenance plan for the station.
  4. (4) They had no plans to carry out any works of maintenance and repair.
I understand that these statements were confirmed in writing by the district estates surveyor on 26th May 1972, when he stated that whilst the future of the property remained uncertain he was unable to recommend his management to undertake remedial works to that part of the structure about which the conservation panel had complained.

Is all this not deserving of some ministerial action and inquiry?

I turn now to the reported terms of sale of the property. If my figures are wrong, the Minister may like to correct them. If he cannot do so, I shall be grateful to him if he will inform the House what he believes to be the correct figures.

The terms of sale by British Rail are reported to have been £2.7 million, plus a share of the equity up to a maximum of £1.75 million, depending upon the amount of office accommodation it was possible to develop on the site. In the absence of some indication in writing from the planning authority, it is incredible that these terms of sale could have been agreed.

If the reported terms of sale are correct, they now place both English and Continental Property Company and the planning committee in an invidious position. The developer will be bound to press for the maximum amount of office accommodation to produce sufficient equity to give British Rail a further £l¾ million. If the planning authority thinks that office accommodation can be allowed only at a certain level, which I am sure it will, it must be questionable whether British Rail has in fact sold at the best price.

Again, what happens if the developer and the planning department finally decide that the site should be developed for purposes other than office accommodation? Does this mean that British Rail will not obtain anything above the £2.7 million? I understand that English and Continental obtains funds from the Crown Agents. I am not, however, sure that it is funded from that source with regard to the Manchester Central Station property. If it is, the situation has arisen where one public authority has sold to another public authority, with a third person being allowed to make an unwarranted profit. If English and Continental is unable to produce a development that is acceptable to the planning authority, is it then going to market the property again? Does this also mean that there will be continuing neglect of this very important city site, which is already an eyesore, and that it will continue to deteriorate?

I am sure that the Minister will agree that, in this case, there is a legitimate cause for public concern and for an inquiry. If he argues that he has no powers to institute an inquiry, he should seek such powers as a matter of urgency.

In a letter dated 21st March of this year the Minister told me: The property was sold to the highest bidder. As the hon. Gentleman knows, I am not satisfied that that is so. He knows that prominent Mancunians—including a former Lord Mayor of the City—and a Manchester businessman who himself made a bid for the property, would argue that British Rail did not accept the highest bid. The businessman to whom I refer strongly maintains that he made the highest bid and that it was rejected.

Whatever the Minister's reply is tonight, the pressure for an inquiry will persist if he is unable to ease the genuine concern that has been aroused by this deal. The whole question of land profits is a deeply sensitive issue outside this House. It was recently found by Counter Information Services that five men, between them, had made £125 million out of property deals. The five men are Mr. Harry Hyams, owner of the controversial Centre Point office block; Mr. Robert Clarke, a director of Stock Conversion; Mr. Joseph Levy, Chairman of Stock Conversion; Mr. Maurice Wohl, Chairman of United Real Property Trust; and Lord Samuel, Chairman of Land Securities Investment Trust. The report from Counter Information Services says that everyone in London has paid, directly or indirectly, for the fortunes of these five men.

A member of the group—Mr. Michael Armitage, an accountant—has said: The five men we have named are greedy. But we live in a society based on greed. We are all to blame for letting it happen. The House must now correct the abuses that support conclusions of this kind. In asking for a constructive response from the Minister, I remind the hon. Gentleman that the subject of this debate is directly related to a much bigger problem, on which the people now want effective action from this House. I understand the heavy pressures upon the Minister and I am grateful to him for being here at this late hour. This debate is an occasion for parliamentary stayers, as whom the Minister is certainly one. I trust that he will feel able to reply constructively and sympathetically to my call for a thorough-going inquiry into this most disquieting affair.

3.3 a.m.

The Under-Secretary of State for the Environment (Mr. Keith Speed)

I am grateful to the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) for his closing remarks and for the way in which he has raised this important subject of the disposal of Manchester Central Station. From what he has said it is clear that misunderstandings have arisen, and I welcome this opportunity to try to clear them up and put the matter into perspective.

In his opening remarks the hon. Member was particularly concerned about the station's future. I recognise that this is a matter of considerable public interest and concern, not least to the citizens of Manchester, which the hon. Member and other hon. Members represent. But I must make it clear at the outset that at this moment the station's future is a matter for decision by my right hon. and learned Friend the Secretary of State for the Environment.

As the House is aware, British Railways have sold the station. I understand that the company that bought it—The English and Continental Property Co. Ltd.—is actively discussing its development plans with the local planning authority—Manchester Corporation—and that the possibilities include offices, residential, hotel and exhibition accommodation, shops, parking and open space.

I gather that as matters stand at present the corporation sees no reason to doubt that a satisfactory scheme will be evolved to form the basis of a formal planning application. Once the application is received, it will almost certainly be given a great deal of publicity by the corporation, since it seems likely to involve a substantial departure from the development plan which, of course, marks the site as a railway station. Publicity would also be required if the application involved demolition of, or substantial alteration to, the station building which, as hon. Members will know, is listed as of special architectural or historic interest.

So, at the stage when the planning application is made, anyone with an interest in the station's future will have an opportunity of expressing it to the local planning authority, which will take what he says fully into account before reaching a decision.

Thus, if the hon. Gentleman—or any other hon. Member—wishes to press his views on the future of the station, the appropriate course is for him to make them known to the Manchester City Corporation, which is in the best position to take an informed view about what is in the interest of the local community and can safeguard the public interest by means of planning controls. Furthermore, I understand that the developers—the English and Continental Property Co. Ltd.—would be willing and, indeed, have made an offer, to have discussions with the hon. Gentleman about what they have in mind for the site.

The House will appreciate that at the present time it would be inappropriate for the Government to adopt a particular attitude on the station's future. Should the planning application come before my right hon. and learned Friend on appeal or call-in, or because development involved the demolition of, or substantial alteration to, a listed building, there would almost certainly be a public inquiry, and my right hon. and learned Friend would then have to form a view and take a decision. In the meantime, therefore, it is important that both he and I maintain an open mind on the matter. I am sure that the hon. Gentleman will appreciate our situation.

The hon. Member said that the site was sought by the city corporation for important community projects. I understand that the hon. Gentleman and his colleagues believe that there is a social need for its retention in public ownership in one form or another. I again suggest, with respect, that, if that is what he feels—or what anyone else in Manchester feels is the case—he ought to talk to the corporation about it. The corporation has made no complaints to me or to my right hon. and learned Friend, and this is not surprising because, if there is a problem here, the remedy would appear to have been in its hands. It has the necessary statutory powers to acquire by agreement, or compulsorily, any land it needs for essential community projects, and the procedures under which the land may be acquired include a built-in provision for the holding of a public inquiry, where this is appropriate, to examine the case for public ownership.

My latest information, however, is that the city corporation is no longer seeking ownership of this important site, but that its main concern—and this is understandable—is to do what it can to ensure that it is developed in a fitting manner as soon as possible, not least for some of the reasons of maintenance and general appearance of the station, upon which the hon. Gentleman remarked. I gather that the current development plans, if implemented with the corporation's approval, would go some way towards meeting the requirements that the corporation had in mind when it made its original offer to buy the property.

Perhaps I may now turn to some of the main points in the hon. Gentleman's remarks about the property deal itself and reports in the Press that substantial private profit was made out of the sale of the station. A figure of £1 million was mentioned, and this is apparently derived from reports that British Rail sold the property for £2.7 million to a company—Arkle Holdings Limited—whose total assets have been acquired by another company—English and Continental Property Company Limited—at a price quoted in a newspaper as £3.7 million. I do not know what other assets were taken over in addition to Manchester Central Station, but I understand that representatives of both companies concerned denied that profits of this magnitude were involved. I am in no position myself to end such speculation by giving the actual figures because, as is the normal practice in matters of this kind, the contractual details are commercially confidential and ought not to be revealed except with the consent of both parties to the contract.

However, I have been authorised to say on behalf of British Railways that their contract of sale as was hinted at by the hon. Gentleman, provided not only for a basic price for the site plus expenses but also for substantial additional payments depending on the area of office space constructed on the site by the developer, and this important consideration was not, on the whole, taken into account in the Press reports. I am told that on the basis of plans now being discussed by the proposed developer with Manchester Corporation—I cannot comment on this, for the reasons that I have given—the full return to British Railways will be broadly comparable with the figures quoted in the Press as the price paid to the company that first bought the property from British Railways. Thus, I think that I can reassure the hon. Gentleman on the points that persuaded him to press for publication of the terms of the sale by British Railways.

I also remind the House that it has been the policy of successive Governments that the British Railways Board should act as far as possible in a commercial manner. This is under a statutory obligation, embodied in Section 41 of the Transport Act 1968, to pay its way, taking one year with another. In pursuance of this objective in its property transactions it established the British Rail property board in 1969, expressly to ensure that its land resources are used in the most beneficial way. This is not a separate entity, but a British Railways management division whose members are appointed by the main board and include several with outside business experience in property and financial affairs.

It would not be consistent with the Government policy that I have mentioned to treat the board in these matters on a more restrictive basis than private property owners by requiring it to make the details of all its contracts subject to public scrutiny. Contractual relationships are traditionally treated as commercially confidential, and I see no justification on the evidence of this particular case, or for any other reason, to deny the Railways Board this privilege.

Moreover, the board carries out hundreds of such sales annually. I am told it has sold over 20,000 acres in the past three years, giving a return of nearly £50 million, and in none of these transactions has there been, to my knowledge, any suggestion of impropriety.

To compel British Railways to publish details of each sale would impose upon them a heavy additional administrative burden which their competitors do not have to bear, and would slow down their sales of surplus land just when they are gaining a desirable increase in momentum. We all know the problems of British Railways, and we ought not to hamper them in a way in which their competitors are not hampered.

Mr. Alfred Morris

Is it not a principle of public policy that the public are entitled to know the facts about the disposal of public property? Is this not something that we should look at very carefully, as a matter of urgency?

Mr. Speed

At the end of the day British Railways produce accounts and are answerable to Parliament in that way. I feel that in day-to-day management of property or other affairs we should not expose them to the full public gaze in a way that no other company is exposed. It would hamper British Railways at a time when we should be giving them maximum support and help in facing their very difficult problems rather than hindering them in the most desperate way commercially. The public interest in property sales by British Railways and other nationalised industries is safeguarded by voluntary agreements under which in the first instance they offer the property to the local authorities in whose areas it is situated.

Price is, of course, subject to negotiation, and if agreement cannot be reached the nationalised industries are free, as matter of management, to sell the property by such other means as they think fit—

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twelve minutes past Three o'clock a.m.