HC Deb 02 December 1980 vol 995 cc233-44

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

11.44 pm
Mr. Anthony Steen (Liverpool, Wavertree)

I know that my hon. Friend the Minister will agree that no time is too late to discuss the problems of Liverpool. The only trouble is that we have been talking about the problems of Liverpool for a decade or more and the solutions are always seen in terms of further public finance and public intervention.

In 1968, the country woke up to the fact that there was an urban crisis, and the right hon. Member for Huyton (Sir H. Wilson), then Prime Minister, gave £20 million to solving it and launched the urban aid programme. This had three rather unfortunate consequences. It pinched money from the shire counties in order to bolster up the depleted inner city rate base. It diverted attention from underlying problems of economic decline by providing funds to build health centres and employ adventure playground leaders. It also made local authorities poorer by requiring them to find a quarter of the urban aid expenditure from the local authority rates.

The urban aid programme set the scene for a whole series of public interventionist programmes designed to cure the ills of cities, each programme distinguished by its extravagant name, suggesting that a cure for the problems of cities had teen found.

You may remember, Mr. Deputy Speaker, that in 1968 solving the problems of the city was defined in terms of pockets of deprivation; all that the country needed to do was to extinguish those pockets of deprivation and the cities would be restored to health. But the pockets of deprivation theory, as expressed through the community development project of the Home Office and the educational priority areas of the Department of Education and Science, soon gave way to the fact that the pockets did not solve the problems, and neighbourhood schemes were all the rage. But neighbourhoods did not solve the problems, and the city as a whole became a study area through the inner area studies—the total approach.

Then it was concluded that it had nothing to do with the regions and localities of the cities and that the problems of the cities were to do with the people who lived there, and the transmitted deprivation theory was financed by the Department of Health and Social Security. Then there were the quality of life studies, then there was the urban deprivation unit to co-ordinate the lot through the Home Office, and then it was a question of priorities through the comprehensive community programme. Then there was partnership, which kept out the private sector, and more recently there have been the urban development corporations and enterprise zones.

Liverpool has had nearly every one of these special schemes, which have cost the country more than £100 million in the last 12 years. The only snag is that in Loverpool's case nearly every statistic of deprivation has increased, in spite of these schemes. There are fewer jobs, there are more unemployed, there are fewer small firms, there are fewer people and there is a lower per capita income.

The city will not revive by willing it, and what is clear is that public intervention has caused a great number of the problems from which we suffer today. For example, in Liverpool there has been an exodus of the population from the inner city — the result of the grand clearance schemes which destroyed homes and businesses and split neighbourhoods and families. Liverpool lost 150,000 people—22 per cent. of its population—in the 10-year period from 1966 to 1976. But what did the public authority do then? It built the vast soulless, apathetic council estates on the edges of the city and the green field sites, destroying good agricultural land, transferring people from the inner city old slums and making new slums of the new neighbourhoods.

The failure of the local authority to rebuild on cleared sites resulted in land hoarding by the local authority and the nationalised industries. Today, there is 1,200 acres and more of dormant, derelict and vacant land, at least half of which is in the hands of nationalised industries and local authorities. This has created land scarcity, it has created artificially high land values, and it has reduced the rate base by pushing up the rates for those who remain.

The mindless destruction of small firms was the result of the overall clearance strategies of the 1950s and 1960s. The preference for green field site development is understandable because it is cheaper and easier. There are inadequate resources for the necessary infrastructure for the inner city sites. The expansion beyond the city boundaries on green field sites throughout the country is gobbling up 60,000 acres of agricultural land annually. Bearing in mind that we currently import half of our food, it is a national scandal that we continue to consume good agricultural land.

It is also worth mentioning that one of the problems that is created by the mindless destruction of small firms is that the local authority often has a monopoly, which results in its aggravating an already serious situation. For example, in the Stanley Market Association on the edges of the city, the local authority has a monopoly of steam. It provides the steam for the association and charges it £6.85 per thousand pounds of hot steam. That is in contrast to £3.54, about half that amount, for the same product if it is bought from private enterprise.

More problems are created by regional aid, and there are further distortions. About 100,000 jobs move from inner to outer Liverpool at a cost of over £14,000 per job from public money. Companies attracted by grants and subsidies are the first to leave when there is an economic downturn. There is a problem of housing in Liverpool, created by the Rent Acts, the decline of the old rented housing in the inner city and the local authority preferring to serve compulsory purchase orders rather than encourage a process of homesteading. The building societies are operating a red-lining programme, which discriminates against lending for the older housing in the inner area.

That is too much central and local government intervention, which is creating a distortion in Liverpool, resulting in the failure of the area to operate on the free market forces. It is not surprising that there is so little investment in the inner area. Why should the financial institutions put their money into an ailing city centre? We have to blame central and local government for creating the uncertainty and for dramatic changes in their policy. There is no chance of insurance companies, pension funds or banks investing money in urban revitalisation in Liverpool and other great cities unless there is a financial incentive for them to do so. I am not speaking about more grants and subsidies. It is the antithesis of grants and subsidies that distort the economy. We should not tax the windfall profits of the banks, as has been suggested by Labour Members, but we must make sure that there is a good reason why finance should be invested in the older inner city areas.

I have given a quick resume of the problems facing Liverpool that have been created by too much public intervention. There have been too many special programmes which have made matters worse and too much Government meddling with the economy locally, with the result that things have deteriorated rapidly.

Mr. David Alton (Liverpool, Edge Hill)

Will the hon. Gentleman give way?

Mr. Steen

No, I shall not give way to the hon. Gentleman. I would normally have given way, but I was in the House when he spoke for just over 30 minutes on the motion relating to the Queen's Speech. I was not called to speak in that debate, but I would have made the same speech. I should like to finish my speech, and if I have time I shall give way.

I was talking about the level of public intervention and the effect of it in Liverpool. The Government cannot withdraw the public money and put nothing in its place, although they are trying to do that. If the public sector money is withdrawn, there must be a transitional period in which the public sector finance is used to lever private money into infrastructure and other facilities to encourage private money back.

People will put their money into urban revitalisation only if they believe it to be a sound investment. As things stand, there is no motivation for the private sector to invest in Liverpool. It certainly sees no chance of its money being safe or of the city being revitalised.

What, therefore, should the clearing banks be doing? Can they be persuaded to invest in the revitalisation process? Can the building societies be persuaded not to discriminate against older housing and not to operate a redlining programme? If they can, what role should the Government play in persuading them? The Government have an important task to see that the older housing stock in Liverpool does not deteriorate further. They cannot talk about inner city revitalisation while maintaining the importance of the Rent Acts. The two do not go hand in hand.

Compulsory purchase orders are served daily on older houses in Liverpool, and the bulldozers move in soon after. That is a complete antithesis of repeated statements by Ministers of both parties that the bulldozer has been pensioned off. It has not. It is operating at a tremendous speed in Liverpool, destroying houses and small firms. The Government cannot talk about an inner city policy while allowing the local authority to destroy the houses that would help to create the prosperity and the health of that inner area.

The problem with the inner city is that a lot of small firms have been destroyed. That has resulted in a severe depletion of the rate base. Not surprisingly, the rates have had to increase by 50 per cent. this year, and that has helped to drive more firms out. The problem is compounded by an inflexible and unenlightened planning department that continues to favour green field sites on the edges of the city to accommodate industrial development rather than ensuring that firms can expand and develop on their existing sites.

A small company in my constituency—Pakenhams—had a turnover of £250,000, employed a local work force and had an overseas trade. It was bulldozed about nine months ago to make way for more council housing. That company will never restart, and the men who worked in it are still unemployed. A more recent case concerns a warehouse owned by a constituent and let to Trust Houses Forte Ltd. on a lease with 21 years to run. It was the subject of a compulsory purchase notice. The lease has been terminated. The rent provided extra income for an elderly constituent, but that has been stopped. The area is becoming blighted. The city council has been responsible for the further destruction of good Victorian housing and warehousing in that inner area.

It is no good the Minister saying that he is doing what he can for small firms. No one doubts his integrity, his hard work, his conviction and the tremendous job that he has done for small firms since the Government took office. The problem is with the Government's total commitment to the inner area. It is no good one Minister in one Department talking about revitalisation if another Government Department is taking entirely contrary action.

The picture of Liverpool that is emerging is of a doughnut. The centre of the city is being emptied to form the hole in the doughnut. What steps can my hon. Friend and his colleagues take to ensure that the doughnut is not left with an empty centre?

I turn next to the problems of companies such as Tate and Lyle. If the Ministry of Agriculture favours beet sugar over cane sugar, 1,400 jobs could be lost in that company. What is the point of talking about small firms and saving one or two jobs if Tate and Lyle might close with the loss of 1,400 jobs?

Similarly, there is little point in the Minister saying that he is concerned to see the enterprise zones working if within them there are hypermarkets which take the trade away from the small retailers in the inner areas and thereby destroy the inner city policy of the Department of the Environment.

Again, Department after Department pulls in different directions. It seems to be of little value to Liverpool unless we can have a total urban strategy. I hope that the Minister will say that he will push for such a strategy. Unless we can have real tools with which to revitalise and strengthen the local economy, there will be no chance of the inner area of Liverpool surviving. I am thinking of industrial revenue bonds, allowing local authorities to lever finance through municipal bonds, rate holidays, outlawing red lining, persuading the banks to use windfall profits in more socially useful projects, discouraging green field site development and auctioning off public land which is not used. Unless such an approach is adopted, people who have left Liverpool will not return. So long as they do not return, the rate base will continue to shrink, the local authority will continue to raise its rates in an effort to contain the services and small firms will continue to go to the wall.

Will the Minister make a commitment that he will not just use his best endeavours in his Department to revitalise the ailing centre of Liverpool but will take steps to consult all his colleagues in the other Departments which are making his job so much more difficult?

Mr. Alton rose

Mr. Steen

I will give way to the hon. Gentleman now.

Mr. Alton

I am grateful to the hon. Gentleman for giving way to me. Indeed, I gave way to him in the debate on the Queen's Speech, as he will recall. I am grateful to him for returning that courtesy.

I share the hon. Gentleman's concern about the future of small businesses. One thousand extra jobs will be bulldozed out of existence as a result of spending £100 million of taxpayers' and ratepayers' money on the construction of the Liverpool inner ring road. How can the hon. Gentleman support a policy which will mean the closure of additional small businesses?

Secondly, how can the hon. Gentleman justify the continuation of the moratorium, imposed by the Conservative Government, which is driving many small building firms on Merseyside out of business?

Mr. Steen

I am sorry that I gave way, because the points made by the hon. Gentleman go beyond this debate. There is some dispute between us, but I point out that the inner ring road is designed as a long-term project of revitalisation. I share the hon. Gentleman's view that we cannot displace small firms unless we can find somewhere else for them to operate at similar rents. Otherwise, they cannot afford to operate.

The problem seems to be that Government and local government departments are working in opposite directions. Although one Minister is responsible for small firms, another Department is destroying them. We have a constant conflict in the centre of Liverpool which needs to be resolved not by the urban aid programme but by a total strategy designed to see new private investment the rehabilitation of older houses, small firms and the auctioning off of derelict sites.

I am delighted that my hon. Friend the Minister is here to answer for one small par: of the Government, but it is clear that something far bigger and more comprehensive is needed if we are not to get the doughnut with the hole in the middle.

12.4 am

The Under-Secretary of State for Industry (Mr. David Mitchell)

My hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) raises the problems of Liverpool not for the first time. Indeed, he is much identified in this House and in a wider field as the voice of that city. I was fascinated as he sketched in the history of the various attempts which have been made in the past to deal with be very severe problems—we recognise their severity—of the city of Liverpool.

It is perhaps a tragedy that at this hour of the night, in the year 1980, we are looking at the problems of Liverpool—and Liverpool is not unique in this respect, although it is a very severe example—and casting our minds back over the years to the time when if had just been born and the original policies concerned with the depressed areas, as they were then called, were beginning to be evolved. When those fist policies were evolved, we found and identified structural weaknesses in employment in those areas. All these years later, with all this money and all the schemes that my hon. Friend has sketched in, we are still looking, perhaps somewhat shamefacedly, at the same areas and the same problems, having recognised that for all that has been done and all that has been spent we have hot been successful in making the real dramatic change which is needed.

I think that my hon. Friend has highlighted very much the heart of the problem. He referred to the doughnut with no jam in the middle. At one stage I thought that he would be asking me to provide the jam, but he will recognise that that is beyond the limitations imposed upon Under-Secretaries in the Department of Industry. But he dramatically demonstrated the problem when he referred to the 22 per cent. of the population removed from inner Liverpool to the surrounding areas.

I remember visiting Liverpool at my hon. Friend's suggestion last year and seeing for the first time exactly what it was like with that great inner dockland, heartland area, the really depressed area of housing around it, and outside the town the newer and more modern factory areas with the employment and the housing estates in the surrounding areas — just employment and housing estates, and precious little else.

What my hon. Friend has underlined is that what has happened in Liverpool—as has happened in London and so many others of our cities—is not something that was inherent, necessary and inevitable but is the result of decisions taken by the local authority and the local people in those areas to transport the commercial and industrial life and the people out from the centre of the city. Just as London did it to my constituency, Basingstoke, and Ashford and a circle of towns around it, so Liverpool has done the same. The tragedy is that this has worsened the problem instead of healing it. My hon. Friend is so right to draw attention to it in the way that he has done.

My hon. Friend referred to 1,200 acres, I think, of derelict land—that is rather more than the figure in my brief — and he mentioned the holdings of the nationalised industries. He will know that my right hon. Friend the Secretary of State for the Environment is deeply concerned about this problem, and that is why he has set up the Domesday Book of derelict land, which he will be using as a lever to force local authorities to put land on to the market when they do not need it, and the public undertakings likewise. This sort of approach, coupled with my hon. Friend's prodding, identifying areas of land which are not needed to be retained by public undertakings and seeking to bring them back on to the market, is the right way to move.

Mr. Steen

May I raise two matters in that connection? The first is that registers are all well and good, but unless the Minister makes a local authority or public undertaking put the land on the market by way of auction, the price that is likely to be asked will be far too high because of the historical land value.

The other way of doing it, which would be much more effective than registers, is to have a compulsory purchase order in reverse. In other words, any member of the public could serve a compulsory notice on a nationalised industry to show cause why it should not sell a piece of land. Registers are a step in the right direction, but they are too slow.

Mr. Mitchell

My hon. Friend has made an ingenious suggestion. The idea of a CPO in reverse is certainly an ingenious one. But my hon. Friend will appreciate that this is a matter for my right hon. Friend the Secretary of State for the Environment. I undertake to draw my hon. Friend's ideas to my right hon. Friend's attention.

My hon. Friend rightly highlights the damage which the high level of rates has done to the smaller business community. It is a tragedy to see a local authority, supposedly and probably with good intention, seeking to help small businesses to start up and at the same time pursuing policies which involve, in this case, a rate increase of more than 40 per cent. to become the fourth highest percentage increase in the country and against an average for metropolitan districts of only 25.2 per cent. To increase rates to that extent must inevitably have a severely damaging effect on the prospects of small businesses starting up.

Although my hon. Friend is somewhat contemptuous of Government intervention, in a way he is also still asking for it. We recognise that the Government have a role, and that is why special development area status, the highest possible rate of 22 per cent. regional development grant, the availability of additional selective financial assistance under section 7 of the Industry Act and the availability of 25 per cent. grant under the Product and Process Development scheme all are very important. I urge my hon. Friend not to denigrate them, because there has been a tendency, I am afraid, from the Opposition Benches to convey the impression that the present Government have done away with regional assistance and assistance to industry, and I believe that we are not getting as many people coming forward with projects asking for Government support because they believe that it has been swept away. I am glad to put on record that Liverpool has these very considerable advantages.

Mr. Alton

As the sole representative on the Opposition Benches, may I ask the Minister to deal with two very brief questions? Does he accept that the very high level of interest rates has been crippling for small businesses? Secondly, what will he do to ensure that the rate support grant settlement this year is such that the rates do not have to rise by an enormous amount, forcing small firms out of business?

Mr. Mitchell

I have only a little time at my disposal, and the hon. Gentleman is being a little unfair to my hon. Friend the Member for Wavertree.

My hon Friend referred to small businesses being driven out by mindless destruction. He knows the situation in Liverpool better than I do. I am alarmed by what he said, and I shall draw his views on that subject also to the attention of my right hon. Friend the Secretary of State for the Environment.

My hon. Friend also spoke of the need for finance for small businesses. We have now arranged through the small firms counselling service of the Department of Industry a link with the Norwich Union Insurance Group. If there is a small business which he knows of and he puts it in touch with our consellors, and if it is an appropriate business for a pension fund to invest in, even though it is much smaller in size than a pension fund normally would invest in, our counselling service will do the monitoring, do the assessment and present the case to the Norwich Union investment fund. In that way, there is a real prospect of getting risk money into small businesses in Merseyside. I hope that my hon Friend will follow that up.

Finally, my hon Friend called on me virtually to act as a co-ordinator of all the Government's services. I cannot undertake to do that, even though I might like to do so and understand the problems to which he draws attention.

I have to say to my hon Friend "Well done."

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Twelve o' clock.