NEW TOWN DESIGNATION (Hansard, 28 March 1974)

§ Mr. Hal Miller (Bromsgrove and Redditch)

I rise to speak on the Adjournment as a result of the arcane mysteries of the selection of these debates, which I gather is more inscrutable than usual on Thursday evenings. I am correspondingly grateful to you, Mr. Speaker, for the opportunity to bring to the notice of the House the financial burden on local authorities resulting from the designation of a new town.

Before going into the subject I should like to offer my humble congratulations to the Minister on his appointment, which has given genuine pleasure to the House and also, I hope, to the right hon. Gentleman as he is now in a position to carry on the noble work first undertaken by his noble father. Those of us connected with new towns greatly welcome his appointment, and I am most grateful to him for the interest he has shown in the subject by attending this evening to reply to the Adjournment debate of a new Member. In the same spirit, I hope that he will forbear to notice the inadequacy of my remarks and that his customary generosity will extend even to supplying answers to the points that I omit to make.

The financial burden of new towns on receiving local authorities has exercised better minds than mine. It is right that I should record my thanks to all members and officials of the various local authorities I have consulted who have been so ready with help and advice. In particular I should like to mention Mr. Frank Hirst, the retiring treasurer of the Redditch Urban District Council.

769 I pay tribute, too, to the valuable work of the New Towns Sub-Committee of the Expenditure Committee of the House and the part played in its deliberations by my predecessor as hon. Member for Bromsgrove. In the memoranda of evidence submitted to that sub-committee there is frequent reference to the financial burden, but from the minutes of evidence it does not appear that there was any wide discussion of the subject. That is why I am glad to bring it to the attention of the House this evening.

The issue is of general application to all new towns of the second and succeeding generations, even if the examples I shall quote are necessarily somewhat parochial in their compass. He is a brave man who ventures into the labyrinth of local government finance, and there are not a few who have emerged from that labyrinth only with difficulty, as the House will have witnessed as recently as Monday of this week. I make no bones of the fact that I shall be seeking the exit myself by means of the thread of the right hon. Gentleman's interest and expertise in these matters.

I admit at once that these matters offer severe difficulties in the way of quantification because of the protracted negotiations and discussions among all those involved. Although the aggregate may be difficult to quantify, however, it is easy to detect some of the fingerprints of the heavy hand of this burden and to illustrate them. The components of the burden are also easily distinguished and they consist of standards and costs.

The origin of the burden lies in the simple fact that the services and the amenities have to be provided in advance of the arrival of the population. This effect is aggravated by the lumpy nature, if I may so describe it, of much of the expenditure, for instance, on roads and schools. In this way, heavy expenditure is incurred before there is any appreciable increase in the rate product. Indeed, the previous natural increase in that product may have been delayed by reason of the standstill imposed on planning applications and development because of the new town designation itself.

The burden of servicing this expenditure is also greatly increased should the population build-up be slower than the planned programme of expansion. The 770 relative element of the rate support grant is based only on the previous year's population and, to make matters worse, it is reduced as the population increases although the expenditure we are talking about may still be rising.

The consequence is a heavy increase in the rate levy, which falls mainly on the original inhabitants and businesses of the receiving local authority. If I may be permitted to quote some figures from Redditch, I can illustrate the point very simply. Over the past six years the population has risen by 24 per cent.—that is, 14,000 fewer than planned. The rate product has increased by 45 per cent., but the net rate fund expenditure has increased by 201 per cent. The rate levy has accordingly gone up by 125 per cent.

But it is not Redditch alone that is affected. Part of the burden falls on the county authority. The county expenditure per head of the population is already £6 higher than the average in Redditch and £14 higher in Droitwich, a town under the Town Development Act programme.

The effect also spreads to water charges. The Minister may be aware that the charges of the East Worcestershire Waterworks were increased by 50 per cent. last year, mainly as a result of the capital expenditure involved in Redditch and Droitwich. The sewerage charges—if I may turn to such unsalubrious matters —are even more onerous. As a result of the new water authority confining the burden of the corporation's expenditure in this area to the new Redditch District Council—the smallest following the local government reorganisation—there has been an increase already of 5p over the expenditure that would otherwise be incurred. Not only is there a burden, but the high rate, now at 67p—the highest but one in the county, the other being Droitwich—must act as a deterrent to the new businesses that it is the policy and purpose of the new town to try to attract.

I return to the question of standards and costs. Standards are higher in the new town, one of the aims being to provide better living. Therefore, the projects are more expensive as well as being better than their equivalent in the existing town. Because of the burden on the rates and because of the 771 inadequate resource base of the receiving local authority, it is not possible to provide the same standards of provisions in the original town for the original inhabitants.

I need not go into all the services and amenities but I shall name a few that impinge most particularly, such as playing fields, meeting rooms, libraries and such mundane items as bus shelters and public lavatories. Apart from the effects in the receiving local authority of Redditch, the effect on the county as a whole is that priority provision has to be made for the new town's schools and roads, with consequent delay on the similarly needed projects in other parts of Worcestershire and my own constituency.

It is not only that standards are higher, but the average cost of these provisions is much higher. The Minister is much more experienced and better equipped than I to picture the reactions of the original inhabitants to paying higher rates for better amenities for the newcomers. I am advised that the difference one might have expected in the assessment to rates as a result of the inferior amenities in the existing town does not in fact perceptibly reflect itself in the assessments following the recent revaluation.

To some extent the incidence of this burden has indeed been recognised, and there was recently an improvement in the amenity contribution, although that improvement was only a one-quarter of the sum recommended by the joint working party studying the matter and reporting to the Minister. But in our case this improvement in amenity grant has been nullified, indeed more than offset, by the decision to exclude meeting rooms from the scope of the permitted expenditure. I am afraid, therefore, that we are right back not just to the start but behind the start as a result of the recent decisions in the case of the amenity contribution.

To some degree there has also been recognition of this burden in the right hon. Gentleman's determination recently made in respect of the proportion of the water and sewerage charges of expenses incurred by the corporation that fall to be met by the local council. Similarly, some roads expenditure was deferred but, again, the specific roads grants are 772 to be taken away, and I fear that here again we are moving forward only to go backwards. These measures, although a welcome relief, are still only palliatives. We have not got down to the nub of the problem.

The difficulties of quantification remain, but there are other difficulties of consultation and negotiation. These have been referred to at some length in the memoranda of evidence submitted to the Sub-Committee of the Expenditure Committee, and I do not wish to go into them in detail now.

It is clear that there is a burden and that it results from central government policy. Therefore, there is a natural feeling that the central Government should be doing rather more to meet it. While I cast an eye on the surplus in the New Towns Commission which is open to a direction by the right hon. Gentleman, I very much hope to hear from him that there will be a full examination of the problem, to include consultation with all the concerned public bodies—and I refer particularly to the Association of New Towns Local Authorities, which has up to now felt rather excluded from the process of consultation—to devise an equitable solution. This may involve wider use of the powers under Section 3(3) of the New Towns Act. It may also be the right hon. Gentleman's view that the Sub-Committee of the Expenditure Committee should continue its valuable work in this field.

§ The Minister for Planning and Local Government (Mr. John Silkin)

I am grateful to the hon. Member for Bromsgrove and Redditch (Mr. Miller) for his kind remarks. It is something of a novelty for a son to follow exactly in his father's footsteps on so wide and interesting a subject as this one. The hon. Gentleman made a gallant reference to his predecessor, Mr. Terry Davis, who was a good friend of mine and of many hon. Members. We are glad to see that the hon. Gentleman is taking so keen an interest in his constituency, and in the new town and the local authorities that lie within it.

The hon. Gentleman has, rightly, raised a rather broad subject, and, understandably and properly, has dealt partly with 773 the wider implications and partly with his own narrower constituency interests. Part of the trouble of those who reply to Adjournment debates is that they are never certain on which of the two widths the hon. Gentleman who has raised the subject wishes to concentrate, so if I also mix the broad with the particular I am sure the hon. Gentleman will understand.

The hon. Gentleman began by asking me to redefine the objective of a new town. I would say that the main objective of a new town is to provide jobs, houses and other urban facilities for people who are prepared to move from overcrowded conurbations.

I stress that development corporations contribute substantially to the health and wealth of everyone living in those areas, not only those who move there as the new towns develop, but those who were already living there when designation took place. There always is an element of readjustment to be dealt with in this situation, but from the local authority point of view the capital investment introduced by development corporations, some two-thirds of it financed from Exchequer sources, will generate rate income on a scale unprecedented in those localities. Of course, I recognise that a good deal of agricultural land and other useful land is lost, but, on the other hand, there is a gain, and the gain is a thriving urban community living and working in decent modern surroundings

The new town development at Red-ditch vastly increases the resources from which local authority rate income derives. There is a certain amount of evidence on the subject of overall local authority finance, and it seems to show—from evidence both before the new town designation and when the new town is complete or nearing completion—that, taking full account of normal local authority disbursements but bearing in mind Government grants, the overall cost to the local authorities of their share of new town development is no more than the overall gain in terms of rateable value.

I suppose that it would be rather surprising if all the new town local authorities were able to cope on the usual basis at the start of a new town development. The hon. Gentleman made this point strongly about Redditch. After all, such an initial start entails heavy outlay 774 on roads, as he pointed out, and main sewers and sewage disposal before the rate income from people moving to the new town is able to finance the charges relating to the capital projects involved. All this I accept. For this reason, in respect of main sewerage and sewage disposal, development corporations make financial contributions to local authority disbursements. These represent the cost of advance provision rather than the provision as such.

The idea is that by the time the new town is complete, the local authority should be meeting the full costs of providing sewerage and sewage disposal for the whole town. The usual form of corporation contribution is an annual reducing contribution towards the loan charges incurred in providing main sewer-aged, based on a formula which takes real account, we believe, of growth of population and of rate income. If there is a dispute over the terms of settlement the Secretary of State has power to make a determination, as the hon. Gentleman knows from the determination which my right hon. Friend made on 25th March in the case of Redditch.

The hon. Gentleman mentioned the question of amenities. I am very conscious of the difficulty that new towns face in the provision of amenities. In opposition, I pointed out that the original £4 provision that my father gave to the new towns for amenities in about 1946 had not been altered in all the years that followed. It has now been altered, and for the provision of these amenities—in the case of Redditch, for example—the development corporation may now contribute to local authority amenity expenditure up to £11 per head of immigrant population, if I may call it that. That figure, despite what the hon. Gentleman has said, was recommended recently by the New Towns Association and the Association of New Town Local Authorities sitting together. In the case of Redditch, I am told that this represents a total of £343,000 on new town amenities. I hope that we shall never be satisfied with that, but at least it is not a bad start.

I come to the subject of land. This is a subject which exercises me considerably at present. When land is acquired by a development corporation and transferred 775 to the local authority it is in most cases transferred not at its acquisition cost, nor at its commercial value, but at a figure about half way between the two. There is a gain in land values for the new town. I believe that the Development Corporation in Redditch and the local authorities concerned have behaved extremely well, and I am grateful to them for the way in which they have conducted matters.

I am grateful for the far-sighted way in which the Redditch Council has taken action to provide amenities in advance of the arrival of people moving into the town and of the rate income which their arrival affords. It does not seem that Redditch in general has a better case for special treatment than other local authorities. At the same time I recognise that the new towns and those authorities in new town areas do have something of a special problem. I have already signified to the Redditch District Council that I will be pleased to meet a deputation, and I hope to see members of that deputation in the near future.

776 I will willingly discuss with them not only the problems of finance which the hon. Gentleman mentioned but any other matters that concern them and the new town which they may wish to discuss. I hope that I shall be equally accessible to all the new towns and local authorities in those areas. The answer to so many problems can come in an understanding at least of one another's point of view. Consultation too often in the past seems to have been a question of the Minister saying what he believes is best and telling local authorities or new towns that that is the rule. That is not the way I intend to deal with matters in the short or long time that I may occupy this position. It is in that spirit—I hope that the hon. Member will feel he has gained some recognition of his point—that I say that I am grateful to him for raising this matter and that I look forward with great pleasure to meeting the deputation from Redditch.