HC Deb 09 February 1981 vol 998 cc603-10 3.31 pm
The Secretary of State for the Environment (Mr. Michael Heseltine)

With permission, Mr. Speaker, I should like to make a statement on the outcome of the review of inner city policy.

The inner city partnership and programme authority arrangements will continue, but I have taken steps to simplify their procedures and intend to consult local authorities very soon on guidelines that will enable programmes to be more efficiently handled.

The private sector should be encouraged to play the fullest possible part. I therefore intend to make effective consultation with local industry and commerce a prior condition of providing urban programme grant. The voluntary sector can also contribute much, and should also be consulted.

I have decided not to make any changes now in the list of authorities with partnership or programme authority status, or designated under the Inner Urban Areas Act 1978. This reflects my assessment of the latest evidence, the constraints on public expenditure and the need to allow time to measure the impact.

I have already announced, subject to parliamentary approval, my intention to establish two new urban development corporations in London docklands and Merseyside. The creation of the London Docklands Developments Corporation will mean the end of the existing partnership arrangements in London docklands, to be succeeded by separate arrangements.

We are planning significant increases in expenditure on inner city regeneration—the total provision in 1981–82 at 1980 survey prices will be some £224 million. Of that, some £158 million will go to the urban programme and £66 million to the two corporations. This latter figure includes some moneys for land acquisition; in addition, the urban development corporations may be able to acquire and redevelop some further land owned by statutory undertakers.

Allocations under the main programme, which, despite reductions, remain the largest components of public investment in inner cities, will continue, where possible, to take into account their needs.

Inner cities remain vitally important to the health of the country. This Government have ensured that more schemes under the urban programme are being aimed at strengthening the local economies and improving the environment, though there will continue to be a role for social and community projects. Our aim remains to make these places where people want to live and work, and where the private investor is prepared to put his money. The changes that I have made and intend to make should ensure that we can mobilise resources as effectively as possible to tackle the problems.

Mr. Gerald Kaufman (Manchester, Ardwick)

Why does the right hon. Gentleman never tell the House the straight truth? Why is he pretending that there is an increase in expenditure on the urban programme when, in fact, he is cutting the main urban programme for 1981–82 by 26 per cent. from the sums of money allocated in the 1979 White Paper?

Why does not the right hon. Gentleman also take into account his cut in rate support grant for the metropolitan areas of £440 million, a 10 per cent. reduction? Why does he not take into account his cut of 27 per cent. in the housing investment programme, including a cut of 36 per cent. in London?

Is the right hon. Gentleman aware that We cannot afford the waste of resources, of people and of land, represented by areas of dereliction and desolation around our city centres. We cannot risk the build-up of frustration and anger to which such decay gives rise, with the effect on the elderly, the poor, the new immigrant communities"? Does the right hon. Gentleman recall that those are the very words that he used in his statement on inner cities policy in September 1979? Is he aware that it is his victimisation of the inner city areas that is bringing about the very desolation, frustration and anger of which he spoke?

Mr. Heseltine

The House will realise that it is a curious sort of victimisation when one announces a record amount of money available to deal with the problem—more than the House has ever been asked to consider.

The right hon. Gentleman is not living in a real world when he tries to compare the increases that I am announcing—increases over past expenditure—with a notional White Paper published by a Government who were subsequently defeated and who had no prospect whatsoever of carrying out those plans if they had been elected.

I totally support the right hon. Gentleman's quotation of my expressed concern about the problems of dereliction in these areas. It was precisely because I felt such concern that I persuaded my colleagues that we should include the proposals for the urban development corporations and the land registers, which were the first really effective attempts to bring together in one organisation the methods needed to cater for the problems.

Mr. Anthony Steen (Liverpool, Wavertree)

I welcome the Government's recommitment to the revitalisation of the inner areas, but does my right hon. Friend agree that a number of other Government Departments and local authorities are doing various things that negate his continued efforts to revive the inner cities? For example, the favouring of beet sugar rather than cane sugar is resulting in Tate and Lyle closing its factory in the inner city of Liverpool, which means the loss of 1,600 jobs and £½ million of rate income. There is little point in announcing more money for partnership if the inner city is denuded of 1,600 jobs and £½ million of rate income.

Mr. Heseltine

I know that my hon. Friend shares my concern about the problems of trying to create a better infrastructure and a better climate in the inner cities, but I must ask him to talk to my right hon. Friend the Minister of Agriculture, Fisheries and Food about the specific problems of the cane sugar industry.

Mr. Ian Mikardo (Bethnal Green and Bow)

Is the right hon. Gentleman aware that in that part of docklands contained within the borough of Tower Hamlets there has been a notable and rapid increase in the number of entrepreneurs, both large and small, being brought in for job creation and environmental improvement, all of which are doing very well, and that the coming of the urban development corporation will merely throw a spanner into those works?

Mr. Heseltine

It is an extremely cost-effective spanner, in view of the amount of extra resource that will be available, together with the more effective mechanism to cater for the problems. As the hon. Gentleman knows, what I am doing, following the original statement about inner city problems made by the right hon. Member for Stepney and Poplar (Mr. Shore), is to take the concept that the right hon. Gentleman first announced and to give it more public resources and a framework within which it can be more effectively administered.

Mr. David Alton (Liverpool, Edge Hill)

How does the right hon. Gentleman intend to involve private industry? Will it be through the chambers of commerce? I welcome the right hon. Gentleman's determination to involve the voluntary sector. How is that to be done? Will the right hon. Gentleman comment on the relationship between the partnership committee and the urban development corporation on Merseyside, in view of his statement on the urban development corporation and the partnership committee in London?

Mr. Heseltine

The method of involving the private sector will, in the case of most of the urban programme areas and certainly the Liverpool one, involve consultation with the chambers of commerce, as the most obvious of various candidates that we could consult.

The form of consultation with the voluntary sector is more difficult, because it is harder to identify so clearly the particular organisation that could represent the bodies in it. Nevertheless, as chairman of that urban programme partnership I shall want to see that proper consultation takes place.

The relationship between the partnership committee and the urban development corporation will be achieved by the close inter-relationship between local authorities and the Government in both organisations.

Mr. Fred Silvester (Manchester, Withington)

Is my right hon. Friend aware that there are difficulties with regard to inner and outer wards of cities? Is he further aware that the burden of the special problems of the inner cities is to some extent already borne by the ratepayers of the outer wards, who are receiving no benefit under his scheme? Has he given any thought to that problem?

Mr. Heseltine

That brings into focus the difficulty of the outer areas having to bear, through the rate fund, the problems of the inner areas. One of the factors that I have in mind in trying to get more economic momentum into inner city areas is that they should be able to cope with their problems.

Mr. Charles R. Morris (Manchester, Openshaw)

Will the Secretary of State confirm that the figures that he announced today indicate that the city of Manchester will receive about £5 million, which is precisely the amount that it received last year and the year before? Bearing in mind that that city has lost £12 million million in housing subsidies, £10 million in the loss of assisted area status, and £18 million because the rate support block grant does not take account of inner city problems, will the Secretary of State examine the finance that is available to the city?

Mr. Heseltine

I should have thought that the right hon. Gentleman would have noticed that the heavy over-reliance on public expenditure in the city of Manchester has led to a burden on the ratepayers there that is destroying far more jobs than public subsidy could ever create. We have pursued these policies in an attempt to ensure that the inflationary rate increases are reduced. It is now up to local authorities to respond to them, and I am delighted that so many are doing so.

Mr. Nicholas Scott (Chelsea)

I recognise that the burden of my right hon. Friend's statement is concerned with the run-down areas of inner cities, but does he not agree that there are other areas, particularly in London, that have suffered unduly from the burden of tourism? Will he examine ways, perhaps through the rate support grant, to protect the residents against that burden?

Mr. Heseltine

During the course of the next 12 months we shall have wide and detailed discussions on the factors that will influence the distribution of the rate support grant, and I welcome that. However, there are opportunities for boroughs such as that of my hon. Friend to make applications, through the traditional urban programme, for schemes, particularly small ones, that may help economic regeneration or the voluntary sector, and we consider them sympathetically.

Mr. Arthur Lewis (Newham, North-West)

While I welcome anything that can be done to help the deprived areas, may I ask the Secretary of State how he can cut public expenditure, preventing the London borough of Newham from improving its town hall to allow the physically disabled to enter it, especially in the International Year of Disabled People, and then give further money for other development schemes? Surely the local authority should be able to improve its town hall to enable the physically disabled to go in or out, and surely its budget should not be cut so that money can be given to other programmes?

Mr. Heseltine

If the hon. Gentleman checks on the details of the case that he mentioned he will find that under the flexibility that we have given local authorities on capital expenditure as from next April they are able to cost all their programmes and pursue their priorities. They already have the ability to pursue their priorities on revenue matters. To the best of my knowledge—I will check—there is no way in which it can be suggested that I am responsible for the changes that the hon. Gentleman pointed out. With regard to his general point, the reason why it is right to ask the local authorities to reduce their revenue expenditure, and therefore their rate costs, is partly that I want to release resources for capital expenditure. I am trying to do that now in the East End of London.

Several Hon. Membersrose—

Mr. Speaker

Order. If hon. Members will co-operate, I shall call those who have been rising in their places.

Mr. Den Dover (Chorley)

I welcome the need for consultation with the private sector, but will my right hon. Friend the Secretary of State give further consideration to the possible membership of the private sector on the partnership committees? Does he not agree that that could lead to better and more effective spending and control of the money, and to a better return for that money?

Mr. Heseltine

I am grateful to my hon. Friend for asking that question, but that is probably not the right way to proceed. The partnership committees are already far too large, and all the people who attend the meetings, which run to perhaps 40 or 50 people, realise that this is not a way to make effective progress. To add more people would probably slow up the procedures. I want to ensure that the details of the programmes are more fully considered and explored with the private sector before decisions are made by local authorities and the Government.

Mr. Greville Janner (Leicester, West)

Has the right hon. Gentleman given consideration to the vast problems of estates that are urban but are not in inner cities, which are hugely disadvantaged and increasingly decimated—for example, the Braunstone estate, in my constituency? Will he consider the definition of an inner city in order to try to bring help to those people who are gravely affected by all the cuts, particularly those in the housing sector?

Mr. Heseltine

The hon. and learned Gentleman will appreciate that it is for local authorities to pursue their priorities in the light of the resources that are available to them. As part of the review, I have had to consider whether I would be wise to spread more widely the limited resources that are available in the urban programme. I have taken the view that for the time being we should stick with the authorities that were originally chosen and give a longer period of experimentation, so that we can assess the working of the programme in an area that is more concentrated than it would otherwise have been.

Mr. Clinton Davis (Hackney, Central)

Was the Secretary of State speaking with tongue in cheek when he spoke about improved consultations with private industry? With regard to Hackney, is he aware that his measures have emasculated private industry and dealt the partnership scheme a mortal blow? Can he say whether the overall effects of his package will improve or diminish the prospects of partnership in Hackney?

Mr Heseltine

I am sure that the hon. Gentleman's memory is not so short that he will have forgotten the reason why there has been so much devastation in the private sector. It is because of the high cost of borrowing, the over-extended programmes for the public sector and the consequent high costs of rates. The Government's policies are essential in order to get those matters in balance.

Mr. John Sever (Birmingham, Ladywood)

Will the Secretary of State confirm that he said in reply to a supplementary question a few moments-ago that he and other Ministers found it difficult to interpret what the voluntary organisations were saying to the partnership committees? If that is so, does he not accept that in central Birmingham there is no difficulty in finding out what needs to be done? Is he aware that certain projects are in need of urgent attention, and that the answer to the problem is not a matter of finding a list but of finding the money to pay for the items on the list?

Mr. Heseltine

I do not disagree significantly with the hon. Gentleman. There is no problem in finding a list of projects, but there is difficulty in finding a body that can be claimed to represent the whole of the voluntary sector. It is easier to find such a body in the private sector. However, that does not in any way diminish the need to involve the voluntary sector. I was talking purely about the processes of consultation.

Mr. Jack Straw (Blackburn)

Is the Secretary of State aware that his decision to continue the designation of Blackburn and other areas will be greeted with some relief? Is he further aware that the severe cuts that he has made in the main programmes that he has made have greatly undermined the borough's ability to deal with the jobs and housing crises in the area? Does he not accept that the number of homes that will be started this year is four, compared with 129 last year, and that the cutting of assisted area status has contributed to the doubling of unemployment over the last 18 months? Is he willing to examine closely the amount of main programme money for inner city area? If he is not, his policy approach will be greeted with a great deal of scepticism.

Mr. Heseltine

Obviously, all Ministers will take those factors into account when allocating their resources. The inner cities receive proper consideration for whatever resources are available for distribution. Perhaps the more serious aspect of the urban programme allocations—an aspect that is of great concern to me—is that since the previous Secretary of State announced the programme, year by year a far higher proportion of available resources has already been pre-empted by the revenue consequences of earlier schemes. As we allocate next year's resources we are finding that there is far less money available, not because new, specifically urban programme schemes have been allocated in the past but because the main programmes have pre-empted a considerable part of the previous urban programme. I am trying—I intend to continue to try in the future—to remove the revenue implications of past schemes in order to have available for annual disposal a far higher proportion of new capital projects.

Mr. Allan Roberts (Bootle)

Will the right hon. Gentleman reconsider his decision not to extend partnership areas? How, for instance, can he justify the fact that the urban development corporation in Merseyside is to extend into my constituency of Bootle but that that part of the Sefton local authority area is not included in the partnership agreement along with Liverpool, when the same inner city conditions pertain in that part of Sefton as pertain in Mersyside? Will the right hon. Gentleman say what percentage of the £66 million allocated to urban development corporations will be spent on Merseyside and what percentage will be spent in London? People in Merseyside are sceptical about the value of the urban development corporation, and they would be less sceptical if they knew that there was to be a significant amount of public money available for public initiatives and that all the money was not going to London.

Mr. Heseltine

The hon. Gentleman will remember, on reflection, that the reaction on Merseyside to the urban development corporation has been extremely favourable. When they learn today that about one-quarter of the funds that I have announced are to flow into Merseyside they will realise that this is a very significant increase in the Government's commitment to the Merseyside area.

As for the hon. Gentleman's specific questions about the areas and the lines that we have had to choose, I am the first to say that no one can pretend that these are as precise or as absolute as the standards that, ideally, one would want. We have had to make a judgment and, broadly, we have supported the judgment of the previous Secretary of State. There are endless anomalies, but wherever we change we shall simply throw up more anomalies. We take the view that as we have not the resources to increase dramatically the amount of the commitment that we are making it is as well to stay where we are for the time being.

Mr. Alfred Dubs (Battersea, South)

The right hon. Gentleman will know better than most hon. Members the enormous financial difficulties facing inner city local authorities as a consequence of other decisions that he has made in relation to the rate support grant. Looking at it in relation to urban aid, is there not a serious danger that as urban aid schemes come to an end local authorities will not have the money to continue them and, therefore, it will be even harder for new schemes to get off the ground? What is the right hon. Gentleman's assessment of the net effect of the money that he has announced for urban aid? Will most of it simply go to keeping old schemes going, with the result that there will be no new ones?

Mr. Heseltine

The hon. Gentleman is very much on the point that I was trying to make in relation to my concern about the hangover of past revenue commitments. I find, for example, that in this year—1980–81—out of a total of £181 million at 1980 survey prices, £67 million—more than one-third—is committed to paying revenue implications of previous years. I want to get that down to a much lower figure in order to free resources every year for more capital schemes. As each scheme is judged on its merits, and as each is free standing, provided that the Government keep up the amount of commitment to the urban programme there is no reason why resources should not be available in any given year for additional new schemes.

Mr. Clive Soley (Hammersmith, North)

Is the Secretary of State aware that he is in danger of going down in history as a one-man neutron bomb, devastating people's lives and leaving properties empty and decaying? Is he aware that housing lists are growing whilst public and private house building has almost ground to a halt and builders are going bankrupt, and that there is no way, important as it is, that the voluntary sector can fill the gap? Is not this a half-hearted and pathetic attempt, which does not even maintain the status quo?

Mr. Heseltine

The hon. Gentleman should remember that public sector housing is today the subject of a capital allocation of more than £2 billion and that the Housing Corporation has expenditure programmes of more than £400 million. It makes no sense to describe the problem in the terms that the hon. Gentleman does. If we pursued higher revenue expenditure programmes in the areas about which the hon. Gentleman questions me it would lead automatically to higher levels of rates, and that would accelerate the industrial decline that we are trying to avoid.

Mr. Ken Eastham (Manchester, Blackley)

May I take the right hon. Gentleman back to his shabby remarks to my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris), who referred to Manchester and its problems? I remind the right hon. Gentleman that as a direct result of his policies and the wicked denial of rate support grant he has cost the city about £17 million, which will greatly accentuate the problems of the inner city. What is the Government's policy towards the commitment of the Labour Government? Are they still committed to a 10-year programme for the inner cities?

Mr. Heseltine

Since I have announced a record amount of support for inner cities, it was my hope that the hon. Gentleman would recognise that it is an indication of the commitment that I have to this aspect of my policy. However, I must tell him that the need for economies in local government is self-evident everywhere, otherwise the implications for the rates and the burden on the private sector are unbearable. The higher the levels of rate increases, the more jobs will be lost as a direct consequence. This is the trade-off that must be understood by local authorities as they fix rate levels for the coming year.

Mr. Speaker

I have received notice of three applications under Standing Order No. 9. I shall call them in the order in which they were submitted to me.