Urban Renewal (Hansard, 11 March 1982)

§ 6. Mr. Greenway
asked the Chancellor of the Exchequer if he will take new iniatives to encourage banks to invest in urban renewal.

§ Mr. Bruce-Gardyne
Lending decisions are a matter for the business judgment of the banks themselves. However, as my right hon. and learned Friend announced on Tuesday, my right hon. Friend the Secretary of State for the Environment intends to make special arrangements for giving high priority to joint projects between the public and private sectors in the urban aid and derelict land programmes. The Government also look forward to the findings of the financial institutions group studying urban problems that has been set up by my right hon. Friend the Secretary of State for the Environment.

§ Mr. Greenway
Does my hon. Friend agree that financial institutions are bound to look for maximum return on their investment and that inner city areas offer risks in this direction? Will my hon. Friend therefore consider special incentives for them? Does my hon. Friend agree that the 90 per cent. rate increase in London is particularly unhelpful?

§ Mr. Bruce-Gardyne
My hon. Friend is correct. It is very hard to see how we can expect to have substantial 958 commercial investment in areas covered by Labour-controlled local authorities, which have put up rating burdens on commercial premises by the sorts of percentages that have occurred in boroughs such as Hackney, where last year commercial rates went up 47 per cent. That is a major deterrent to incoming industry and investment.

§ Mr. Eastham
Apart from the banks, would it not be a good idea if we tried to encourage insurance companies to shake out some of the many funds that they have at their disposal? May I remind the Minister that many of the partnership cities have had their assisted area status taken away? If the Government are not prepared to return that status to the partnership areas, will the hon. Gentleman at least give some major tax reliefs to encourage development in these areas?

§ Mr. Bruce-Gardyne
It is precisely to enlist the help and support of institutions such as the insurance institutions that my right hon. and learned Friend has established the financial institutions group. It is working hard on joint projects between the private and the public sector on these questions. However, as I said in answer to the original question, the decision must ultimately rest with the commercial institutions concerned.
We have to face the fact that if assistance is spread too widely it is of benefit to nobody. That is why my right hon. Friend the Secretary of State for Industry has concentrated aid where it will be most effective.