HC Deb 26 July 1985 vol 83 cc1487-96

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

2.30 pm
Mr. Tony Banks (Newham, North-West)

It seems most appropriate that the last debate before the House finishes for the summer recess should arise from the subject which has so dominated our proceedings in the current Session. I refer, of course, to the abolition of the Greater London council which concerns a piece of legislation more misconceived and despicable than any other to pass through Parliament in recent years. It also seems most appropriate that answering the debate will be the familiar ministerial figure of the political odd-job man from Marsham street. If work-rate alone is any guarantee of political success, the Parliamentary Under-Secretary is well on course to take over from the Secretary of State, now seemingly reconciled to his own abolition in the much-awaited Cabinet reshuffle.

The implications of the GLC abolition, despite what Conservative Members may wish to think, will keep coming back to the House right up to the next general election, because we in the Opposition will not allow Ministers to escape the consequences of their politically motivated butchery of a great council and the democratic rights of Londoners.

The Greater London Enterprise Board is an industrial development and job creation agency set up by the GLC. I should like to pay tribute to Michael Ward, the chairman of the GLC's industry and employment committee, who devised the structure, and to the chief executive and staff who run the board. There have been difficulties, and one understands that immediately, hut GLEB was succeeding in its efforts to bring the prospect of work to some of London's 500,000 unemployed, who are on the dole without any hope of a job because of the Government's economically illiterate policies and their wilful refusal to understand the appalling social consequences of such policies.

GLEB exemplifies in practice what an alternative economic strategy should look like, and it is perhaps because dogmatic Ministers cannot tolerate the notion that there are constructive and viable alternatives to hand for the British people that they have done just about everthing that they can to try to undermine the stability of GLEB's operations. It is bad enough that the Government should be denying Londoners the right to elect their own government for the capital city, without at the same time trying to destroy one of the most exciting and widely appreciated initiatives taken by local government in job creation and economic development policy.

I should like to spell out the immediate situation facing the GLC and the enterprise board as a result of the tactics adopted by the Secretary of State for the Environment and his Ministers. During the first two years of the enterprise board's existence the Greater London council provided a total annual budget of around £30 million, made up of some £20 million section 137 funds and £10 million section 3 mortgage loan facilities. The section 137 fund essentially provided the enterprise board with the investment capital that it needed to preserve jobs and help restructure industry in the interests of the community. During that period the enterprise board has invested in some 200 projects, including more than 100 enterprises, creating and preserving between 3,000 and 3,500 jobs.

A recent report by the independent accountants Thornton Baker has confirmed that GLEB has been preserving and creating jobs in London at an average cost of around £4,000 per job. That is significantly less than the amount it costs the nation to keep one male adult unemployed for a year, not to mention the fabulous cost of job creation in the Government's own enterprise zones. Quite apart from direct investment in enterprises, the Greater London Enterprise Board has also implemented a path-breaking strategy in harnessing new technology to the production of goods and services needed in the community to provide long-term viable jobs, and is also implementing enlightened social policies, including encouragement for industrial democracy and greater equal opportunities at work.

The establishment by GLEB of five technology networks, which can harness the creative ingenuity of London's academic sector for the creation of new products and services for industry, has received widespread national and international praise. About one third of all GLEB's investments are in new forms of social ownership, notably in worker co-operatives, whose commercial survival rate is significantly better than the average for new private business start-ups.

It is accepted that neither the Greater London council nor GLEB can solve London 's economic problems, since that will take the Socialist policies of the impending Labour Government. But GLEB offers one way that it might be achieved and, since imitation is the sincerest form of flattery, I am proud to say that regional and local authorities in West Germany, New Zealand and Australia are actively examining the establishment of GLEB-type bodies.

For the current year, the Greater London council made a commitment comparable to the two previous years in allocating GLEB a budget of just under £20 million. However, under the paving legislation in anticipation of the abolition of the GLC, the Department of the Environment was given powers to veto expenditure under section 137. From the very beginning of the current financial year the Government have consistently refused to release the full amount approved by the Greater London council for the enterprise board's budget. I remind the Minister that this is not Government money. It is not money put up by his Department. It is money made available by the Greater London council out of the rates raised in Greater London.

Ministers have put objections and obstacles in the way of the enterprise board throughout the whole of this sorry period. First, they said that they wanted to see a system of accountability instituted with the London boroughs. GLEB is quite prepared and ready to do this. Indeed, it is already doing it now in conjunction with the Greater London council.

So the Government adopted another tactic. They started to drip-feed GLEB by allowing the GLC to put a little of its own money into GLEB. But such an unhelpful policy inevitably will lead to a loss of confidence by financial and commercial institutions in the future of the enterprise board and its supported companies.

Matters became even more difficult when the Secretary of State made it clear that a condition for drip-feeding was that the board called a complete halt to any new investment work. As a result of that decision, some 20 major projects, involving a potential of about 1,000 jobs which could have provided some hope for London's unemployed have had to be abandoned by the enterprise board as a result entirely of the Government's malicious attitude and obstructive tactics towards the functioning of GLEB.

Still more serious were the indications of increasing nervousness by the banks which have been helping to finance these enterprises, as they perceive the refusal by the Government to release GLEB's entitled funding as a clear signal to withdraw their support from a number of GLEB companies. The Government are responsible for that, and the Minister should hang his head in shame. It has only been the dedication and expertise of the professional staff of the enterprise board which has prevented a series of GLEB companies from being destabilised this summer as a result of the Government's mixture of malevolence and ignorance in the way that they have handled GLEB affairs.

The Minister for Local Government has now told the GLC and the enterprise board that unless a scheme is put to him by the end of this month—Wednesday of next week — he will not even be willing to consider the release of the remaining £10 million of funds due to the enterprise board from the GLC. I underline yet again that this is not money coming from the Minister's parsimonious Department, starving local authorities of cash. It is money coming from the rates already raised and provided by the GLC.

It is well known that a large number of Labour and Tory boroughs want to continue to support GLEB. But the financial uncertainty surrounding the abolition of the GLC, together with rate capping and all the other penalties and controls which the Government now impose on local government, makes it difficult for the boroughs to commit themselves irrevocably. True to form, the Department of the Environment has said nothing about what Ministers consider to be an acceptable level of borough support. The boroughs are told to provide guarantees, but they are never told what guarantees would be acceptable to the Department. I hope that the Parliamentary Under-Secretary of State for the Environment will elaborate on this matter.

In "Streamlining the Cities" the Government said that they wanted to transfer responsibility for industry and employment from the Greater London council to the London boroughs. During the proceedings in Committee on the Local Government Bill we said that such a proposal was economic nonsense. We remain of that opinion. London desperately needs a regional strategic authority which is able to make plans for jobs and industry in the few difficult years that lie ahead for this Conservative Government. I do not wish to insult the London boroughs, but they do not have the resources and the expertise to deal with these matters.

At least in the early stages of the debate Ministers recognised that in order to take on the additional responsibilities for industry and employment which the Government are to push on to the boroughs they would need increased resources. We were told that the present section 137 2p rate might be doubled to a 4p rate for London as a whole. When the Greater London council is abolished, London will lose the product of a 2p rate. However, no sooner was the ink dry on the White Paper than the Government abandoned their promise to increase the resources made available to the boroughs for industry and employment purposes. They gave that promise in order to get out of a difficult corner, but they have reneged on their hint that they might provide additional resources.

The boroughs and the Greater London Enterprise Board are therefore in the position that even if the great majority of London boroughs agree to support GLEB they will be unable, with their present resources, to do so. They will be unable to raise the funding to the level that is necessary to maintain, even at an acceptable minimum standard, the board's investment programme. The Government should provide most of the resources for this programme.

I hope that the Under-Secretary of State will be able to tell us whether the Government intend to honour their promise to raise the section 137 limit. If the Government are not prepared to raise it, I hope that he will be able to identify other resources which the Government will make available to the boroughs. I hope that at least the Government will be able to pledge an amount that is equal to the amount raised by the boroughs. Without such a commitment there will be a serious question mark over GLEB's ability during the next few years to maintain its investment and its operations.

The Government do not directly criticise the Greater London Enterprise Board, but they carry out cynical and careful manoeuvres to ensure that they will not be held responsible for the financial strangulation of the future operations of the board. However, the Government will not be allowed to escape from their responsibilities. The Government must release the money that is owed to the board. That money has already been provided for it by the ratepayers of the Greater London council.

The Department of the Environment must also accept that it has a responsibility to help the boroughs to find the necessary resources, including those that are provided from the Government's coffers, so that adequate funding of the board can be ensured during the period after the abolition of the GLC and before the next general election. After the next general election the incoming Labour Government will translate the commitment of the Labour party to the board into a major priority in terms of its new economic reconstruction programme. They will pledge significant national resources for the investment and job creation activities of the board.

The jobs of many Londoners are being jeopardised by the irresponsible attitude of Ministers to the Greater London Enterprise Board. That attitude is inspired more by political malice and hatred of the GLC than by concern for the job prospects of Londoners.

2.44 pm
Mr. Frank Dobson (Holborn and St. Pancras)

I join my hon. Friend the Member for Newham, North-West (Mr. Banks) in asking for some guarantees from the Government, even at this late stage, on the future of the Greater London Enterprise Board. My hon. Friend's case illustated the problem. The Government are not worried because the GLEB has been a failure; they are worried because it has been a success. Just as they hammered into the ground the GLC's fare's fair policy, which proved to be successful, popular, economical and sensible, so they are hammering into the ground the Greater London Enterprise Board because it has been extremely successful in creating jobs cheaply, in a way that puts to shame the enterprise zones which the Government have promoted and their lack of enterprise in creating jobs in any other area.

As my hon. Friend said, the Government's attitude to the Greater London Enterprise Board or to any success which conflicts with their irrational, Victorian and stupid economic policies is vindictive and malicious. That characterises the Government's attitude to the future of the board when the GLC is abolished.

2.45 pm
The Parliamentary Under-Secretary of State for the Environment (Sir George Young)

As the hon. Member for Newham, North-West (Mr. Banks) said, it is appropriate that the last debate before the House rises should be on the subject that has dominated the business of both Houses this Session. Of course, it was inevitable that he and J would have to conduct that debate.

There was something symbolic about the hon. Gentleman's solitary stand on this matter today. Until recently he led armies of people round the streets of London, determined to defeat the Government. In Committee he had an army of speech writers, press people and aides at his right hand, and a huge budget available to publicise his case. But now he stands almost alone, apart from the cuddly figure of the hon. Member for Holborn and St. Pancras (Mr. Dobson). His armed forces have deserted the field. His commander-in-chief is negotiating surrender terms, and I suspect that he had to write the speech that he delivered. The hon. Gentleman resembles the Japanese soldier who emerged from a Pacific island not long ago convinced that the second world war was still in progress.

The hon. Gentleman made a series of remarkable claims about the achievements of the Greater London Enterprise Board. I think he said that it was widely appreciated. I have here a letter from the Consultative Group of Greater London Chambers of Commerce and Trade, which states: We are of the opinion that GLEB should be wound up, and that viable assets should be transferred to a new company with an effective management. As a first step we would like to see a completely independent valuation made of the assets of GLEB … we do not wish to see major amounts going from ratepayers to continue the expansion of GLEB or to keep in being enterprises that can only be sustained by continuous public funding. The hon. Gentleman also said that the board was supported by the London boroughs. I have a letter from the clerk of the housing and works committee of the London Boroughs Association, which states: We are … highly critical of much of the work that has been undertaken by the GLC and some of the London boroughs in this area of economic development … In spite of the large budget GLEB have only created a relatively small number of predominantly short-term jobs, and have done nothing to encourage the removal of restrictive practices, overmanning, and the maintenance of artificially high wages. Unless there were significant change in the composition of the management of GLEB and its policies and activities. I do not see any possibility of our members wishing to be involved with it. That hardly suggests a body that is widely appreciated.

May I deal with some of the figures mentioned by the hon. Gentleman. We could spend the rest of the day debating the cost of the jobs created by the board, but other councillors at County hall, who share the hon. Gentleman's concern about the economic problems of London, have calculated that the jobs created by the board cost, not the £4,000 that the hon. Gentleman mentioned, but between £17,000 and £22,000 each.

The hon. Gentleman's problem is that he is trying to say that the GLEB is a responsible body backing worthwhile commercial enterprises in a businesslike way, but he also says that unless the life support system of County hall is continued after 1 April next year the board will collapse. He must make up his mind. Is the board a viable commercial proposition, or not? If it is, there will be no problem, in his words, of convincing the London boroughs that it is worth pursuing. If, as I suspect, it is not a commercial organisation, but an organisation which has funded many projects which can survive only with continual injections of public money, the London boroughs will have understandable reservations about picking up the commitment which the GLC has undertaken.

The achievements of GLEB were compared by the hon. Gentleman with those of the London Docklands Development Corporation, the London Enterprise Agency and other bodies. However, he did not make those comparisons on a common basis. While GLEB's substantial costs to London ratepayers compare with some of those initiatives, its achievement in terms of creating secure, long-term jobs is relatively insignificant. Despite the strenuous efforts made by the council, the hon. Gentleman and GLEB itself, all that we have is a large amount of hot air, a range of political activities of very dubious benefit to Londoners and precious little in the way of a real contribution to the economic well-being of Londoners.

GLEB is almost friendless, in spite of the hon. Gentlemans' claims. The future of the board is quite properly in the hands of the London boroughs. They have told the GLC that they are unable to express support for the board, that they entertain doubts about the wisdom of its policies and investments, and that they may wish to call for a genuinely independent assessment of the board's activities. They will meet my right hon. Friend the Minister for Local Government on Monday to enlarge on those views. I am sure that he will want to pay close attention to what they have to say. Some London boroughs have gone quite a long way. They see no merit at all in the board, and no justification for expenditure of ratepayers' money on its activities.

Mr. Tony Banks

The Minister said that the boroughs had asked for an independent audit. If they get it, and if that audit says that GLEB is worth maintaining, will the Minister make extra resources available to the London boroughs so that they can maintain support for GLEB?

Sir George Young

I do not think that the hon. Gentleman has been listening to what I have said. I have made it clear that the decision rests not with the Government but with the London boroughs. It is they who have to decide whether they wish to continue to support GLEB. It is not a decision in which the Government have any specific role to play.

One of the most damning of the representations that we have received about GLEB is from a company that went to GLEB seeking help to expand its activities and create new jobs. Its approach failed, not, apparently, because it did not have a good case for support, but because the company's energies were exhausted by the excessively bureaucratic and detailed procedures of the board's staff. I am also tempted to speculate that the board's reaction was prompted, not out of concern for proper investment appraisal, but because the company did not match the board's irrelevant social and political requirements concerning trade union membership and the like——

Mr. Dobson

Will the hon. Gentleman give way?

Sir George Young

No, I must make progress.

One of the difficulties that faced that company was that at a crucial point in the negotiations the GLEB official concerned was in Tahiti for three weeks, and at another critical stage he disappeared to America for another three weeks.

Against the background of criticism from the boroughs, the chambers of commerce, the Confederation of British Industry and individual companies which have been in touch with GLEB, hon. Members may consider that the Government have been reasonable to the point of generosity in our response to the GLC's application for consent to its proposed funding of GLEB in the current financial year to the tune of £20 million, in addition to the £30 million to £40 million that had been provided in the previous two years. The locus of my right hon. Friend in relation to GLEB is narrow, and it is totally misleading of the hon. Gentleman to claim that the board's future is prejudiced simply because he has not without question given his approval to the expenditure concerned.

The problems that now face GLEB and the uncertainty about its future are not of the Government's creation. It is clear from what I have said that those difficulties arise out of the way in which the board has pursued its activities on both the political and investment fronts. Its declared aims include such matters as creating novel methods of social ownership and control and pursuing radical methods of worker involvement in production.". The impression that one gets when one looks at GLEB is very much that the objective of investing in economic development is subordinated to such political aims to the extent that they are an impediment to what might be achieved. Even when the board's investment policy can be divorced from the overriding conditions about trade union membership and so on, it seems that both the property developments and the company investments have, in practice, been made in such a way that they will not be viable without repeated and substantial subsidies from ratepayers. As I have said, GLEB appears to want it both ways. It wants to be a successful commercial company, but it cannot survive without constant injections of public money.

Mr. Tony Banks

The Minister wants to kill it off.

Sir George Young

The Government are not against local authority involvement in economic development. We recognise that there is a role for local authorities to play, such as the provision of sites and the use of the Inner Urban Areas Act 1978. There is a legitimate role for local authorities to play in providing direct financial assistance to new and expanding companies. However, such activites must be based on a professional and realistic assessment of the market and of local needs. They must be undertaken in partnership with the private sector, which alone can identify the true requirements of industry and commerce and the particular areas where a public sector input can be be of assistance.

GLEB does not meet those tests, and I shall contrast the situation in London with that in the west midlands. It seems that the West Midlands Enterprise Board has concentrated on the job in hand and has attracted the full support of all the district councils in the area, which will take control of the board when the West Midlands county council is abolished. At a cost of £12.5 million to the county council and its ratepayers, the WMEB has created over 4,000 jobs. In these circumstances, I am pleased to announce that my right hon. Friend has today given his consent to a final contribution by the West Midlands county council of £3.5 million, which it seems will be sufficient to ensure the board's long-term future. Hereafter, it will continue with the help of the private sector and self-generating income. The WMEB has the green light, but for GLEB the light is still at orange. The WMEB has received all-party support, whereas GLEB has created difficulties for itself politically and with the investment fraternity. It is not an encouraging prospectus for the London boroughs, which might otherwise wish to fund GLEB.

The hon. Gentleman asked me about the 2p rate for spending under section 137 of the Local Government Act 1972. He knows that the GLC has to use section 137 in circumstances where the boroughs do not have to because the boroughs have social service powers which they can use without resorting to section 137. The GLC and the metropolitan counties are not in that position. My right hon. Friend has said that he was willing to consider representations on this front. However, we are not yet convinced that there will be a real problem in any particular area, especially when some of the authorities which complain the loudest are spending large amounts of section 137 money on political propaganda.

The Government believe that to be responsive to local needs and conditions in London and in the metropolitan counties it is right for the boroughs and districts to assume, if they so wish, responsibility for the economic development activities of the GLC and the metropolitan county councils. They have all the powers that they need to carry out such activities, and many of them already play an active role in this area. After abolition they will have the full rateable resources of their areas to devote to initiatives which their electorates consider to be necessary. Some of them may wish to join together in such initiatives, and they will be entirely free to do so.

The future of GLEB is therefore for the London boroughs to decide. The GLC reluctantly conceded as much only after my right hon. Friend said that he could not agree to the release of all the expenditure proposed by the council in the current year without satisfactory assurances as to GLEB's continuing accountability to London ratepayers for the large sums which it has received. As an independent company, the board is not affected by the abolition legislation. Only the rights of the GLC in relation to the board which remain in existence at 31 March 1986 will pass to successor authorities. We want to know what rights the GLC proposes to hand over to its successors.

In the meantime, we have gone out of our way to allow the board to continue in operation and to protect its previous company investments, however imprudent some of them might have been, while the GLC belatedly opened negotiations with the boroughs about the future. Consent has been given to the entire staffing costs of the board for the first half year and to certain repeat investments. Indeed, we have gone further than that and the board now has sufficient funds to discharge all its contractual liabilities throughout the year, and a separate consent has been promised to secure the future of the five technology networks until next July.

The fact that the board's horizons may have been foreshortened is due entirely to the GLC and the policies that it has adopted. It is for that reason that there is uncertainty about the board's future.

Mine is the last speech before the House rises for the summer recess, Mr. Deputy Speaker. You will shortly be putting the milk bottles out in Parliament square, cancelling the newspapers and locking the door. The occupants of the Chair and the staff of the House have had a difficult time during the summer Session and I am sure that their humour and patience have been tested to the full. I hope that I end on a note of unanimity by saying that the entire House wishes the occupants of the Chair and the staff a long and happy summer recess.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I am grateful to the Minister. His good wishes are reciprocated, of course, especially to hard-working Ministers who re ply to so many Adjournment debates.

Question put and agreed to.

Adjourned accordingly at one minute to Three o'clock till Monday 21 October, pursuant to the resolution of the House of 24 July.