§ The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey)
I beg to move,That the draft New Towns (Extinguishment of Libilities) Order 1986, which was laid before this House on 1st July, be approved.
The draft order gives effect to the financial reconstruction of four new I own development corporations — Milton Keynes, Peterborough, Telford and Warrington and Runcorn. Powers to carry out the financial reconstruction of the new town corporations were included in the New Towns and Urban Development Corporations Act 1985, which contained two distinct powers to effect financial reconstruction of the new towns — by the extinguishment of corporations' liabilities to repay loans made by the Secretary of State, and to provide for the suspension of repayments on such loans. The power to extinguish corporations' liabilities under which this order is being made lapses on 30 September 1986.
As I have said, the Order deals with four new town development corporations, but we also propose to implement a financial reconstruction of other new town bodies—the development corporations for Aycliffe and Peterlee and for Washington and the Commission for the New Towns. The financial reconstruction of these bodies will be effected under the power to suspend payments of loans and we expect to bring forward the necessary orders in due course.
In the debates on the 1985 Act there was, I believe, general recognition in all parts of the House of the need to place the corporations on a sound financial footing. The original financial regime of the new towns was established by a Labour Government in 1946 and continued more or less unchanged until the 1985 legislation. Apart from housing, which was subject to the same subsidy arrangements as for local authorities, development corporations' main source of finance for all their activities was long-term fixed interest borrowing from the Secretary of State, who in turn drew loans from the National Loans Fund. This applied both to new investment and to deficits on revenue account which were also capitalised and met by borrowing.
The sum of the liabilities being extinguished in this order is approximately £1,688 million and is thus within the £1,750 million ceiling set in the 1985 Act.
§ Mr. Tony Marlow (Northampton, North)
I may be wrong, and I apologise if my hon. Friend will come to this point later in his important speech, but I assume that some assets of the new towns are housing assets. If the debts are to be extinguished, and if, as we all hope, some of the houses will later be purchased by the sitting tenants, what will happen to the money that is so released? Will it come back to the Exchequer to make up the debt from which we are releasing the new towns?
§ Mr. Tracey
My hon. Friend raises a good point on which I can reassure him.
The sum that I have mentioned is admittedly large, and it could well be asked why it is necessary to write that off. However, it was always envisaged that the corporations' revenue deficits would continue for the early years of 1341 development, but that in due course they would be able to achieve break-even and be in a position to redeem the borrowing.
Most of the first generation of new towns achieved that. They were Basildon, Harlow in Essex, Bracknell in Berkshire, Crawley in West Sussex, Hatfield, Hemel Hempstead, Stevenage and Welwyn Garden City. There were also the new towns at Corby, Aycliffe and Peterlee.
Whereas those corporations benefited from the boom of the 1950s and early 1960s, the second and third generation new towns developed against a background of growing economic difficulties in the late 1960s and early 1970s.
§ Mr. Anthony Steen (South Hams)
Was the money that the Government now want to write off spent primarily on infrastructure by the new towns in years gone by?
§ Mr. Tracey
That was an important part of the construction of the new towns but, as I have explained, under the legislation of 1946, this was the major method of financing the new towns. I covered that point earlier and I am now explaining the further developments and why we now believe that we must extinguish the liabilities.
The second generation towns were Runcorn in Cheshire, Skelmersdale in Yorkshire, Washington in Tyne and Wear, and Redditch and Dawley, which is now called Telford, in Shropshire. The third generation new towns are perhaps better known — Milton Keynes, Peterborough, Northampton, Warrington in Cheshire, and the central Lancashire new town.
§ Mr. Marlow
My hon. Friend mentioned Northampton which woke me up as I was dozing off.
This is a complex and important subject and, as the debate unwinds, there is a lot of information that some of us would be interested to have. It would be wrong to expect my hon. Friend to have the information at the moment, but perhaps it could be provided for him before the debate is concluded. One thing that would be of interest to myself and to my hon. Friend the Member for South Hams (Mr. Steen) is the amount of money that we are writing off that is attributable to housing assets and the interest arising from the establishment of those housing assets in the first place, and I hope that that information can be found.
§ Mr. Tracey
I take good note of what my hon. Friend says. No doubt he will be developing that point and posing further questions as the debate goes on. We shall seek to give him the answers that he wants.
The task facing the second and third generation towns was in many respects fairly onerous. For example, at Telford more than a quarter of the designated areas was derelict at the beginning of the operation. There was also a substantial reclamation task at Warrington, while at Milton Keynes the scale of infrastructure required was larger than anything which had previously been undertaken because of the nature of the site on which Milton Keynes is being constructed.
High rates of interest and low economic growth over the period contributed to a situation in which the deficits of the second and third generation towns spiralled inevitably upwards. Thus a number of factors worsened the financial position of the new town corporations.
§ Mr. William Cash (Stafford)
I happen to be a member of the Ironbridge Gorge Museum Trust which has done a great deal to improve and enhance Telford's environment. I live near to Telford and I would not want any impression to be gained—I hope that my hon. Friend is not giving the impression—that there is a state of dereliction in that area. In fact, it is quite the opposite. Many would regard that area as one of the most outstandingly beautiful parts of this great British isle.
§ Mr. Tracey
I proceed quickly to deny that I am in any way suggesting that the state of dereliction which may have been there at the beginning has remained. Indeed, I pay tribute to the work that has been done in the Telford area were there have been great environmental benefits. My hon. Friend has noted, in an articulate way, some of them. I certainly do not want to say that there is a problem at present as great as there was when the work on the new town began.
In November 1982 the then Minister for Housing and Construction, my right hon. Friend the Member for Tonbridge and Malling (Mr. Stanley), explained that legislation would be needed to deal with the problem. As an interim measure, the Finance Act 1983 introduced a power to suspend repayments on some new town debts until 30 September this year. The order, under the powers taken in the 1985 Act, provides a long-term solution which will give the four corporations a realistic debt structure so that they are able to service and repay their debts in due course.
The financial reconstruction proposals embodied in the order have been formulated by reference to projections of income and expenditure over the next 20 years. This exercise has been carried out with the co-operation of the corporations and the results have been analysed by consultants commissioned by the Department of the Environment.
In parallel with the financial reconstruction, we are introducing other measures which should improve the financial regime which the new towns operate. New towns' capital investment in the provision of roads, which is the major item of expenditure on which there is no direct return to them will in future be eligible for grant under a provision introduced in the 1985 Act. We are also in the process of introducing an improved system of corporate planning which will provide the focus for discussion of the corporations' activities and resource allocation. Some changes will be introduced to the form of the corporations' published accounts to make them more informative and these will include a requirement for the corporations to report on their progress towards achieving cumulative break-even. Taken together, these measures will provide a sound financial basis for the corporations during the remaining period of their lives as they complete their development programmes. An essential element of this is the financial reconstruction of the corporations to establish a capital structure which they will be capable of servicing. If the house approves this order today, this will be achieved.
§ Mr. Marlow
My hon. Friend appears to be coming to the end of his speech. I apologise for interrupting again. I accept that we are writing off certain debts, but the new towns will still own assets. As the years unfold, how much do the Government expect to get back? How much will the taxpayer get back from the new towns?
§ Mr. Tracey
The aim is to conduct the exercise in the most efficient way. I cannot give my hon. Friend a figure, but we believe that by the extinguishment of liabilities and by building from a sound base we shall achieve a sound financial basis.
§ Mr. Ian Gow (Eastbourne)
Before my hon. Friend leaves that point and moves on to the second part of his speech, will he kindly tell the House to what extent he has studied reports produced by the development corporations for the year ended 31 March 1985? These are the most recent reports available in the Vote Office. My hon. Friend knows that.
I refer my hon. Friend to the pictures on page 210. I am grateful to the Opposition for following what I am saying with such care. I wonder whether my hon. Friend has before him a copy of the report. The assiduous spokesman for the Opposition, the hon. Member for Houghton and Washington (Mr. Boyes) has a copy. Perhaps I should allow my hon. Friend time to obtain a copy of the pictures. Perhaps his private secretary, or one of my hon. Friends, can assist him.
§ Mr. Deputy Speaker (Mr. Ernest Armstrong)
Order. I hope that the hon. Member for Eastbourne (Mr. Gow) is not making a speech. This is supposed to be an intervention.
§ Mr. Gow
I apologise, Mr. Deputy Speaker. I was referring my hon. Friend and the official Opposition spokesman to some pictures. I do not know whether you have a copy, but they appear on page 210. One picture is of Milton Keynes' Texas Homecare store. Is that store and the loan that applied to it included in the order?
§ Mr. Tracey
I cannot answer that question at the moment, but if my hon. Friend will bear with me I shall seek the information.
I was about to conclude my speech. We believe that the essential element is the financial reconstruction to establish a capital structure which the corporations will be capable of servicing. If the House approves the order, this will be achieved.
I commend the order to the House.
§ Mr. Warren Hawksley (The Wrekin)
I welcome the order, but I am slightly disappointed at the way in which it was introduced. I had hoped for more detail in my hon. Friend's explanation. My concern is about Telford in my constituency. About £440 million of the capital given to that new town over the years is to be extinguished. I am shocked and surprised at the complete lack of details about the loans involved in the statutory instrument.
New town corporations should be more receptive to people's wishes and to the views of our constituents. They should tell people exactly what is happening. New towns should open their board room doors so that the public can see what is happening. It would be possible to deal with the commercial confidentiality problems which apply to new town corporations as they do to local authorities. New towns such as Telford are happy to provide publicity on matter about which they want the public to know, but that does not reveal the whole picture.
I am unable to find out what the Telford new town corporation is debating, but I believe that the board papers were available to my Labour predecessor. The Labour-controlled local district and county council chief 1344 executives are furnished with the information, so they know exactly what is happening and according to Lord Northfield, the new town corporation chairman, they are able to brief their members. It is extraordinary that a new town corporation should keep a Member of Parliament in the dark but advise officers of the local councils. After all,. new town corporations are Government-supported bodies.
I hope that the Government will persuade the corporations to be more forthcoming in the advice and information that they pass on to Members of Parliament. Board members have asked for me to be furnished with papers, but that request has been refused by the chairman of the corporation.
§ Mr. Hawksley
I have not been given a satisfactory explanation. Lord Northfield told me that he had taken advice from the Department before refusing my request for the papers.
§ Mr. Gow
I am sure that my hon. Friend will accept that it is not necessary to have a constituency which abuts his own to take a keen interest in this matter. He will find if he studies the order that the powers exist as a result of the New Towns and Urban Development Corporations Act 1985, and some of the members of the Committee which considered that measure did not have new towns in their constituencies.
§ Mr. Hawksley
I thank my hon. Friend for reminding me of that fact, which I admit had slipped my mind.
I turned to the draft statutory instrument with hopes that I would be able to ascertain exactly what the Telford development corporation had been doing with the large sum that we shall write off today. Unfortunately, the order provided no clues. We are asked in respect of all four new towns to accept the writing-off of nearly £1,750 million without one word about what the money has been spent on. I was so worried that last week I tabled a question to my right hon. Friend the Secretary of State for the Environment. I asked him whether he would give details of each of the advances from T1 to T409, which appear in the order. I thought that that would provide helpful information for the House to have when debating this important issue. I received a reply on Wednesday 16 July 1986. The written answer stated:Long-term loans from the Secretary of State have been the principal source of finance for the new towns programme. Individual loans cannot be linked to specific activities or items of expenditure."—[Official Report, 16 July 1986.]That is an extraordinary answer.
§ Mr. Cash
Does my hon. Friend think it possible that some of the money to which he has referred went into the fine new public house that is known as Quenchers, or the sophisticated night club and disco complex that is called Cascades? We are told the Cascades has lost no time in becoming the local "Talk of the Town".
§ Mr. Hawksley
I should declare an interest because I was involved in the opening of one of those premises. There are good facilities within my constituency. The town centre is currently owned by the development corporation and we may well find that some of the money has gone that way. It is frightening that an answer to a parliamentary 1345 question fails to list the items of expenditure. The House will be aware that T399 is one item of expenditure of £27 million, and presumably the Department passed that sum over Telford development corporation. I find it frightening that the answer to my question does not tell us what the items of expenditure were.
I must assume that the items that we are debating, which are listed in the order, cover all the expenditures of the Telford development corporation. They seem to appear as half-year expenditure groups, and we must assume that the expenditure in the new town has come from these funds. I hope that I shall be in order when I try to deal with some items of the expenditure which I believe need discussion.
When I was elected the hon. Member of Parliament for The Wrekin in 1979 I said in my maiden speech that I believed that the new town corporation should be supported by the Government. I said also that I believed that the Government could and would give the help that was needed. I never dreamt that the Government would give so much help and do so much for the area. The opposition in this place and at local level in the district council is The Wrekin deride on many occasions the Government's expenditure plans, but I believe that this instrument puts to rest the charge that the Government are not spending the money that should be expended in the area.
When my hon. Friend the Minister introduced the order he talked about the state of Telford when the corporation was set up. There were old quarries and old collieries. There was much reclamation to be done. Although it has not been finished yet, much has been done. I welcome the expenditure that has allowed that to happen.
It should be remembered that in 1979 Telford had no hospital and no motorway. Telford was in a worse position than previously because of the closure of the Cosford hospital. There was no accident or emergency cover in the east of the county. There were no motorway connections to the M6, which all the industrialists in the area told us were essential. We went into a third inquiry because the previous Labour Government kept changing their mind. We had no development status and there was no station in central Telford.
What is the position now? Thanks, presumably, to some of the money that we are talking about, we shall have a new hospital. That hospital is almost built. I suppose that the roads approaching it have been financed by the new town's money. The M54 is open and it is bringing jobs to the area. The Government have given the area intermediate status, which gives it money from Europe as well as from our Exchequer. We have an enterprise zone and a station has been built and opened. This is all good news.
Jobs are being created in the town. Although we have an unacceptable level of unemployment at 21 per cent., 3,000 jobs have been created in the past year within the new town of Telford, thanks to the Government's help. We have international firms and many of them have come to the area with Government money. These include Maxell, Ricco and Tutung. Local companies such as Brintons and Blockleys have been expanding quickly. This has happened in Telford because of the facilities that have been provided by the new town corporation.
1346 The Government have given every support for which we could possibly ask and I am upset that the creation of 3,000 extra jobs has been hailed by certain Socialist councillors as the 'sham of Telford'. I welcome an additional 3,000 jobs. It reflects great credit on Telford that at this time it has been able to create that number of jobs, even with Government help.
I address myself to a couple of the outstanding issues that will arise if we pass the order. One has been mentioned already by my hon. Friend the Member for Northampton, North (Mr. Marlow). Housing transfer is an important issue in Telford. The demise of the corporation is envisaged in the early 1990s and we are talking of housing being transferred to housing associations, the district councils or to trusts. I welcome the decision to allow tenants to have their views listened to and I want to know when the Government will ask for their views. I hope that my hon. Friend the Minister will confirm that housing may be transferred legally to authorities other than district councils. I know that some district councils claim that that cannot happen and that they must have first option. Perhaps my hon. Friend will be able to clarify the position.
To repeat the question my hon. Friend the Member for Northampton, North asked, what will happen to the proceeds that are received as a result writing off these assets today? I wish to put on record my appreciation of the hard work that the chairman of the corporation, Lord Northfield, carries out on behalf of the new town. He spends money wisely and takes a great personal interest in every housing scheme. I have in mind especially the Admaston scheme. The corporation encouraged and persuaded a developer to design houses that would be appropriate for that area, which is one of outstanding beauty. Lord Northfield was personally and closely involved with the choice of the builder and the way in which a decision was arrived at. The land did not go to the highest bidder. It went instead to the one which, it was thought, would produce the right sort of development.
§ Mr. Hawksley
I assume that my hon. Friend is correct. I have not discussed the order with the noble Lord. I believe that he would welcome the proposals. I know of his great interest in housing. The matter that creates, great concern in Telford. As the House knows, the noble Lord is the paid chairman of Consortium Development, which is a consortium of building companies such as Barretts, Wimpey, Tarmac, Brosely and Christian Salvesen. My constituents are worried that there may be a conflict of interest in his chairmanship of the new town corporation.
§ Mr. Deputy Speaker
Order. The hon. Member must confine his remarks to the order. He must not stray as wide as he is doing at the moment.
§ Mr. Hawksley
I thank you, Mr. Deputy Speaker, for that warning. Respecting your decision, I wonder whether the payment of the chairman and the expenditure and the policies that he implements in the corporation have not something to do with the items of expenditure that we are writing off and about which we have been told so little. The Government should advise us whether they are happy 1347 that the chairman of their corporation, which is allocated a large sum of money, has a conflict of interest as chairman of a consortium that has interests in the town. That is the important point, because nearly all those building companies do work in Telford.
I gather that there is a precedent. When the Docklands board was set up, it had a chairman who was involved in housing. It was decided that his companies could not operate in Docklands. Will the same happen in Telford? Is the land sold to private builders to be excluded from companies in the consortium of which the noble Lord is chairman? We want to know the answer to that important point. If we cannot solve this conflict to the satisfaction of my constituents and many builders in the area who are not members of the consortium of which his Lordship is chairman, his Lordship may have to resign, or he may have to be replaced.
§ Mr. Gow
In a most interesting speech, my hon. Friend has referred to the advances to the Telford development corporation. I have studied the expenditure closely, as I know my hon. Friend the Member for Milton Keynes (Mr. Benyon) has. Will my hon. Friend direct his formidable intellect to the final line of page 9 of the order, which has puzzled my hon. Friend the Parliamentary Under-Secretary as it has puzzled me. What has happened to the sum of £373.26, which is the difference between the sum in the first column and the sum in the second column? Will my hon. Friend address himself to that problem? He has not got round to doing so.
§ Mr. Hawksley
I thank my hon. Friend for drawing that to my attention. I am sure that the Minister heard the question. I hope that, whith the advice of his civil servants, he will be able to answer that in reply. My hon. Friend has raised an interesting point. It shows the lack of information that we are receiving on this important order.
My hon. Friend the Member for Stafford (Mr. Cash) spoke of his personal involvement with the Ironbridge Gorge Museum. That museum was set up with finance from the corporation. It was a Museum of Europe a few years ago. It is the leading tourist attraction in Shropshire. It is doing a good job for the area. If we are to write off loans, we should be told what the Government believe should happen to the sites of the museum that are currently owned by the Telford development corporation. We should be interested to know whether the Government intend to give continued support to the museum to ensure that it has the resources it needs and which are now channelled through the new town corporation of Telford. We must support and welcome the museum and its development, because it has an important part to play within the ambit of the Telford development corporation.
I turn to a further item of expenditure in the order. As I do not have the details, I am unable to pinpoint the number of the item. It concerns the purchase, in the late 1960s, of land at Nedge Hill. That involves a scandal of frightening proportions. I believe that the corporation has wasted £500,000 of public money, and that it is hiding that fact. The corporation purchased the land, with vacant possession, with money that was given in the late 1960s for the purchase. The corporation then offered to let the land back to the farmer.
The corporation has found, now that it wants the land back, that instead of giving a 364-day licence, it gave a full agricultural tenancy. The corporation is now having to 1348 pay anything up to £500,000 to get its own land back. In view of the fact that the corporation bought the land with vacant possession, I believe the public would view the expenditure of an extra £500,000 ill spent.
I believe that there should be an inquiry by Ministers into the reason why the expenditure is necessary. It may be, as the corporation has implied, that the last Labour Government, as a policy decision, insisted that the land was let back to the former owner. On the other hand, it may be that the officers of the corporation made a mistake when they issued the licence for an agricultural tenancy. In any case it is scandalous that £500,000 could have been wasted.
§ Mr. Kenneth Hind (Lancashire, West)
Perhaps my hon. Friend would consider the importance of getting the matter that he has raised — the purchase of land for £500,000 — cleared up following the extinguishment of liabilities and the handing over to the corporation and the district council. In Skelmersdale, we found that many projects that needed to be sorted ur were left over. I urge my hon. Friend to consider, when he advises the local development corporation what to do, to ensure that all the loose ends are tied up so that the problems will not continue into the future, as was the case in the north-west.
§ Mr. Hawksley
I thank my hon. Friend for those words. It is essential that the matter be sorted out quickly. The corporation wants the land for its own use. However, a similar position may apply in respect of other land in the Telford area. The public should be told whether the corporation has put other land that it bought with vacant possession under an agricultural tenancy that it must buy back when it wants to use the site.
§ Mr. Marlow
I wonder whether it is proper to point out at this stage that, in this important debate about new towns, apart from the hon. Member for Houghton and Washington (Mr. Boyes) and the hon. Member for Linlithgow (Mr. Dalyell)—
§ Mr. Deputy Speaker
Order. The hon. Member should not intervene. It has nothing to do with the order before us.
§ Mr. Tam Dalyell (Linlithgow)
On a point of order, Mr. Deputy Speaker. Until the last election I represented the Deans and Knightsridge area of the new town of Livingston. As I understand it, I would be ruled out of order if I raised the problems of Livingston in this debate.
§ Mr. Deputy Speaker
Order. Hon. Members know very well that they do not have to represent a new town in order to take part in a debate or be interested in what goes on in the House.
§ Mr. Hind
It is a separate point of order, Mr. Deputy Speaker. There are a number of hon. Members present who do not represent the new towns which are listed in the order but who represent other new towns. Would it be proper to raise the problems that occur in those other new towns that are similar to the problems that will be created in the new towns listed in the order?
§ Mr. Deputy Speaker
It is not for me to give advice to the House. If an hon. Member is out of order, I shall say so. I shall decide when an hon. Member is speaking whether he is in or out of order.
§ Mr. Hawksley
Thank you, Mr. Deputy Speaker.
I remind the House that I began by praising the Government for their support for Telford. They are not given, locally or nationally, the credit that is deserved for the size of the expenditure on all the new towns, especially on Telford.
The Telford development corporation built an ice skating rink in the Telford town cenre. Many of my constituents welcomed that project. But the corporation gave that rink away—it would probably claim that it was sold—to the Wrekin district council for £1 towards the cost of building the rink. I hope that my hon. Friend the Under-Secretary of State will clarify how the budgeting was done in charging for that item. I wonder whether this is one of those items that are being written off.
It is interesting that The Wreckin district council, having taken over the rink for £1 and having said that it would break even on running costs, succeeded in the first year in incurring a loss of amost £200,000. That is not very good. I know that the district council is aware of the problems and is trying to correct them. Credit must be given to the Government, the TDC and Ministers for giving Telford an ice skating rink for £1. My electors appreciate that. Credit should go where it belongs—to the Government for having provided those resources.
§ Mr. Gow
Will my hon. Friend please direct his mind to the specific problems revealed between pages 7 and 14 of the order? Has he noticed that it is the Telford development corporation, not the development coroporation of any of my hon. Friends, which has the largest number of items—419? Will my hon. Friend explain how we are supposed to know to which item each number relates? In my respectful submission, we cannot debate this matter properly unless we know to which items those numbers relate. Can my hon. Friend tell me one of those 419 items that relates to a specific project?
§ Mr. Hawksley
I am afraid that my hon. Friend is right. I cannot give one item with a specific expenditure against it.
§ Mr. Hawksley
Not even one. The reason is, to quote from the parliamentary answer to one of my questions,Individual loans cannot be linked to specific activities or items of expenditure."—[Official Report, 16 July 1986.]It is frightening that in this document there is a large number of items, which my hon. Friend the Member for Eastbourne (Mr. Gow) rightly highlights, which are attributable to Telford, yet we do not know what any of them are. I hope that we shall be enlightened before the end of the debate as to the exact purpose of the loans that we are asked to write off.
§ Mr. Gow
On a point of order, Mr. Deputy Speaker. You will have been listening carefully to my hon. Friend the Member for The Wrekin (Mr. Hawksley). There are 419 items before the House which relate to my hon. Friend's new town, but he cannot identify one project that is related to an individual loan. Do you not think that a Treasury Minister or possibly my right hon. and learned Friend the Attorney-General should be present to help us in these serious matters?
§ Mr. Deputy Speaker
The hon. Member has been a Member for a long time and he knows very well that the presence of Ministers is not a matter for the Chair.
§ Mr. Hawksley
Thank you for your ruling, Mr. Deputy Speaker. I am slightly disappointed because I had hoped that the proposals of my hon. Friend the Member for Eastbourne would help the House in our proceedings on the order. I hope that we shall be advised of the details of these items of expenditure. Because we are talking of such large sums, I hope that it is possible for my hon. Friend the Under-Secretary of State to find out what at least some of the items are. I assume that the items to which I have referred in the corporation's expenditure are hidden away somewhere in those figures. I assume that I am right, because you have not yet ruled me out of order, Mr. Deputy Speaker, for dealing with the expenditure on these items.
§ Mr. Hawksley
Thank you for that second warning, Mr. Deputy Speaker.
I shall draw my remarks to a conclusion to allow my hon. Friends who represent other new towns to speak of the experiences of their corporations. It is important that we put on the record the amounts that the Government have put in to the new town corporations. I hope that the questions of vacant land, of Lord Northfield's chairmanship of the Telford development corporation and of the items of expenditure listed in the order will be clarified. Provided we are given clarification that I consider to be satisfactory I shall be only too happy to support the order.
§ Mr. Roland Boyes (Houghton and Washington)
It may be helpful if I say a few words at this time.
When my hon. Friend the Member for Copeland (Dr. Cunningham) asked me whether the order should be discussed upstairs or on the Floor of the House, I advised my hon. Friend, who with others made the final decision, that it should be taken on the Floor of the House to give those hon. Members who live in, represent or are interested in the new towns an opportunity to take part in this debate in public and, as the Under-Secretary of State has done, to make constructive criticism and offer helpful suggestions and even praise.
In future I shall hesitate long before making such a recommendation if Conservative Members abuse it by talking at great length with the single objective of preventing a second Adjournment debate.
§ Mr. Christopher Murphy (Welwyn Hatfield)
On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to criticise other hon. Members before they have even spoken, especially those who represent new towns and therefore have a particular interest in the order? I beg you to make a ruling, Mr. Deputy Speaker.
§ Mr. Deputy Speaker
I am listening carefully to the preamble of the hon. Member for Houghton and Washington (Mr. Boyes). I am grateful for hon. Members' great interest in what is in order and what is not, but that is really a matter for the Chair to decide.
§ Mr. Boyes
I have not as yet made any criticism of any individual Conservative Member. I am saying merely that I hope that my recommendation is not abused by 1351 Conservative Members speaking at great length with the objective, which is now well known to the House, of preventing a second Adjournment debate.
§ Mr. Marlow
On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Houghton and Washington (Mr. Boyes) to make dire allegations about hon. Members without giving way and responding to the legitimate points that they might wish to make? This is Parliament at its worst.
§ Mr. Deputy Speaker
The hon. Gentleman knows that whether an hon. Member gives way or not is a matter for him.
§ Mr. Boyes
The hon. Member for Northampton, North (Mr. Marlow) again suggests that I am accusing Tory Members of something. I am merely suggesting that I hope they will not abuse my decision on this occasion.
This is an extremely short order, as is the explanatory note, but I shall argue that it has some important political significance. As the Minister said, the objective of the order is to extinguish, on 1 September 1986, liabilities in respect of certain advances made by the Secretary of State to the development corporations of Milton Keynes, Peterborough, Telford and Warrington and Runcorn. In section 62A of the New Towns Act 1981 there is a limit to which the liability can be extinguished, but the figure of approximately £1.7 billion is well within that limit.
As I have said, this debate is of interest to people regardless of whether they represent or live in a new town. My experience of new towns is extremely wide. I have lived in Peterlee in the north-east of England for 25 years and represented it at local authority level. I now represent the new town of Washington, having represented it from 1979 to 1984 in the European Parliament. Hon. Members on both sides of the House are aware that the new town movement is very important. When a student ccomes to write the history of the new towns, he or she will note the significant contribution that they have made to all aspects of our lives. They are one of the great post-war experiments carried out by many, at great risk. There is no doubt that the risk has been well worth while and that the new town movement is undoubtedly highly successful.
The new town movement is a great tribute to Lewis Silkin, the father of the right hon. Member for Lewisham, Deptford (Mr. Silkin), who was the great architect and innovator of the new town movement. He had the foresight to see that housing, economics and other problems would arise in the future and, most importantly and significantly, he was able to find a solution to those perceived problems. His son, the right hon. Member for Deptford, in a distinguished career in the House, has continued his father's aspirations.
The director of the Town and Country Planning Association agrees with the point that I have made. He wrote in Town and Country Planning in October 1985:I believe it amply confirms that the new towns' programme represents one of the greatest achievements of post-war planning.
1352 It is because of the success of the jobs started by many corporations but which have not yet been finished that I am resentful of the Government's policies. The Government are putting their fingers, sticky with the glue of privatisation, into areas where they have no right to go, sometimes less openly than others. Opposition Members and others outside the Chamber have demonstrated on many occasions that sometimes their privatisation plans are carried out overtly and sometimes covertly. I shall make a few remarks about that, because the order is directly related to those privatisation plans. Privatisation of new towns may make sense in the extremely narrow ideoligical thoughts of the Government, but it makes little sense politically, economically, financially or socially for many others.
Conservative Members have already referred in speeches and interventions to economic development. The new towns have played a vital role in the generation of jobs. In the process, they have demanded billions of pounds of public investment in town centres, house building, factory site preparation and job promotion. I do not think that anyone on either side of the House can question the fact that the experiment has proved to be worthwhile and that the investment is important for those who chose to live in the new towns. That investment has also been of great help to people who live in the areas surrounding new towns. In areas of high unemployment, new towns have played a particularly important role. Although the new town that I represent and the one in which I live are not the subject of this debate, they have been essential in promoting, obtaining and protecting jobs.
No one on either side of the House believes that the new towns, run by development corporations, or by quangos with representatives appointed by the Secretary of State, should last for ever. There will come a time when the new towns will be considered to have completed their useful lives and their assets will have to be disposed of. What is of concern is that the Government appear to be hell-bent on winding up the new towns without considering their role within the region in which they exist. In particular, they are ignoring their relationship to industrial decline and the related high unemployment levels. Although those aspects are not the main subject of the debate today, they will have to be the subject of a debate in the near future.
This debate is concerned with the disposal of assets—how, and to whom. I have listened with great interest to the intervention of Conservative Members who have been trying to get more details about what this mass of figures represents. Clearly, judging by the number of hon. Members who wish to take part in the debate, they have found the order extremely interesting — I cannot say enlightening—reading.
The reports of the four new towns under discussion today, Peterborough, Milton Keynes, Warrington and Runcorn and Telford are, as the hon. Member for Eastbourne (Mr. Gow) pointed out, referred to in the "Reports of the Development Corporations," dated 31 March 1985 and, as the hon. Gentleman rightly stated, that is the latest available annual report. We expect the next one a little later in the year.
The board of each new town has expressed a desire, in its annual report, to carry on with the work that it is doing. The chairmen especially want to complete the job aspect of the new towns. I shall consider one comment from the remarks of the chairmen of the four boards.
1353 Peterborough, which has a population of 128,000, was designated as a new town in 1967. The chairman in his annual report said:To enhance the attractions of Peterborough — and underpin this success—more building and infrastructure are required. But for the most part, the need is to keep together, for as long as necessary, the special expertise that an established development corporation provides to promote enterprise and foster further growth.
The chairman of Milton Keynes with a population of 122,000, which was first designated as a new town in 1967, said:It is our emphatic view that the city should be completed with the care and attention to balance so necessary for a 'greenfield' site and that the skills of the Corporation are essential to that task. The benefits of Milton Keynes to the region and the nation, as well as to the local inhabitants, must be fully realised.
As hon. Members are well aware, Warrington and Runcorn is a combined development corporation. Warrington development corporation was designated in 1968, and Runcorn in 1964. The population at the latest known figures, was about 210,000. In his annual report, the chairman of the board said:A great deal undoubtedly remains to be done, if the continued development of the two New Towns and the satisfactory termination of the Corporation's role in the process are to be accomplished in parallel and with equal success.
The fourth new town under consideration is Telford, to which the hon. Member for The Wrekin (Mr. Hawksley) addressed his remarks. It has a population of about 109,000. As has been correctly stated, it was originally designated as Dawley new town in 1963. In the 22nd annual report of the Telford development corporation, the chairman said:My regret is that the constraints of government policies on the new towns emphasise less what could be achieved than how little time there is to do something worthwhile. It is perhaps even more regrettable that so successful an instrument of national policy should be seen as having no further role in the revival of the economic fortunes of other parts of the United Kingdom.
Whether this is the correct time to be winding up development corporations is an important matter for debate. On the other hand, each of the remarks that I have chosen from the annual reports shows that each development corporation is putting much energy, expertise, money and cash into the promotion and development of jobs. The Government's policy has led to massive unemployment, and each of those corporations sees the continuation of its existence as important in the battle to create jobs throughout the nation.
Although many people would say that the development corporations have been successful to date, there are still many problems to be solved. I note that some hon. Members in the Chamber were present at the meeting with representatives of the Association of District Councils new towns committee earlier this week. Problems were raised which will need to be discussed at great length in the House in future. Some of the problems raised related to housing assets. There was quite a good discussion about whether local authorities should be offered the houses, and whether housing associations or co-operatives should run groups of the houses. The debate was on whether the local authority should have an automatic right, or whether tenants should be consulted as to their desires about the 1354 houses in which they live. That is a vital debate, which will have to be concluded. It is of interest to hon. Members on both sides of the House.
One of the aspects of the Government's privatisation programme is to sell off the town centres in the new towns. As a former member of a local authority, I am not suggesting for one moment that the local authorities should take over and run town centres, but I believe, as do many of my collagues in local authorities, that at least the local authority should have some say in how the town centres in the new towns are disposed of.
When assets are sold, what happens to the proceeds? Surely some of the proceeds, especially in areas of high unemployment, should go to the local authorities. Surely it is not unreasonable for the local authority to have a share in something that it has been instrumental in helping to develop. The director of the Town and Country Planning Association shares that view and said in an article in The Guardian by the journalist John Cunningham on 10 April 1985:The basic idea is that the enhanced values created by the development corporations on the community's behalf should be ploughed back. It was the initial investment of the taxpayer which set them off.If those assets went back to the local authority, the product of the assets would stay fairly and squarely in that area, where the development corporation is.
What is the order all about? Many interventions were made by Conservative Members to the Minister about that. The purpose of the order is to extinguish certain liabilities of the development corporations that are under discussion. The power to make the order was provided by section 62A of the New Towns Act 1981, which was inserted by section 8(1) of the New Towns and Urban Development Corporations Act 1985.
The hon. Member for Eastbourne, the then Minister for Housing and Construction, led for the Government when the Bill was going through the House. Some of my colleagues and I asked particularly about what is now section 8, and its consequences. To clarify the point, I shall quote from section 62A of the New Towns Act. It says:If Conservative Members have studied the new towns annual reports for the year ending 31 March 1985, as the hon. Member for Eastbourne clearly has, they will have seen the financial statements for each of the development corporations. For those who are following closely, I refer to page 121 dealing with Milton Keynes development corporation's annual report, although a similiar paragraph is inserted in each of the new town's reports. The paragraph is headed, "Suspended Loans" and states:
- "(1) The Secretary of State may, with the Treasury's consent, by order extinguish to such extent as may be specified in the order any liabilities of a development corporation in respect of advances made by him to the corporation under section 58(1) of the corresponding provisions of the 1946 Act or the 1965 Act.
- (2) The aggregate amount of liabilities extinguished by order under this section shall not exceed £1.750."The Government has announced that it intends to take measures to produce a permanent solution to the problem of the substantial and growing revenue deficits of certain development corporations.We are discussing that this morning.
The New Towns and Urban Development Corporations Bill was debated on 20 November 1984. The then Minister for Housing and Construction, the hon. Member for Eastbourne, explained why the provision was necessary. He said: 1355clause 8 gives to the Secretary of State power to write off sufficient debt to give a capital structure which is capable of being serviced by the assets which the corporations hold."—[Official Report, 20 November 1984; Vol. 68, c. 165.]That is to say that the Government wanted to achieve the objective of reaching a financial break-even point. That argument is put forward to justify the writing-off of debts and liabilities of new towns to enable further growth and expansion, and especially to attract industry and jobs as part of the immediate sub-region development.
However, other than ideological dogma—a perpetual drive fuelled by monetarist policies — it is difficult to find a justification for what the Government are doing. When the Labour party forms the next Government it should take a leaf out of the Conservative book and introduce mechanisms to write off some of the massive debts that local authorities face as a consequence of many years of Conservative Government.
§ Mr. Marlow
On a point of order, Mr. Deputy Speaker. I regret having to raise a point of order, but the hon. Member for Houghton and Washington (Mr. Boyes) has said to every Labour local authority in the land, "Spend as much as you like. When we come into power, if we come into power, we will pay"—
§ Mr. Deputy Speaker
Order. The hon. Gentleman must resume his seat. He knows very well that that is a matter for debate and not a point of order for the Chair. He is certainly not raising a point of order.
§ Mr. Boyes
The nonsense spoken by the hon. Member for Northampton, North absolutely justifies my not giving way to him. What he said about me was quite incorrect and not worth an intervention. I shall not join in the charade in which some Conservative Members are hoping to play a part later this morning. To save hon. Members rising, I say now that I shall not give way—
§ Mr. Barry Sheerman (Huddersfield)
Will my hon. Friend please stop banging the Dispatch Box, as he might destroy it?
§ Mr. Sheerman
No, it is being reserved for the right hon. Member for Finchley (Mrs. Thatcher), who will be on the Opposition Benches in the near future.
§ Mr. Boyes
I fear that my hon. Friend's interventions are encouraging Conservative Members.
What was the motivation behind section 8? The hon. Member for Eastbourne said in the debate on 20 November 1984:If investment is needed, it will be met from receipts. The surplus will be used to redeem debt. In this way, the assets of 1356 the new towns will be realised as quickly as practicable for the benefit of the taxpayer."—[Official Report, 20 November 1984; Vol. 68, c. 166.]There is a contradiction in terms there. It is all part and parcel of the Government's privatisation programme. The new towns are being privatised and the extinguishment of liabilities is an essential and necessary element in the process to make them more attractive to purchasers.
That is a well-known technique. As my hon. Friends know, I have been involved in the anti-water privatisation campaign. There is an interesting comparison here, as the Government are threatening to write-off £5 billion debts of water authorities, forcing them to make price increases to make abnormal profits. The Northumbria water authority has increased its profits sevenfold, and the Thames water authority, on an increased turnover of £46 million, has made an increased profit of £45 million.
Section 8 is part and parcel of the Government's programme to privatise new towns. Hon. Members should be aware that the reason for the liabilities being written-off is to make the new towns more attractive to purchasers.
If I may digress for a moment on the question of water authorities and tell the House what Mr. Watts, the chairman of the Thames water authority, said yesterday—
§ Mr. Deputy Speaker
Order. The hon. Gentleman really is digressing and he must address himself to the order.
§ Mr. Boyes
I am trying to establish a point that has not been made by any Conservative Member — the real intention behind the writing-off of new town liabilities.
During the latter stages of the 1970 to 1974 Conservative Government, the third generation new towns faced problems caused by rising interest rates and rising inflation. However, the power in section 8 was introduced for quite different reasons. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, section 8 was clearly designedto whet the appetite of the private profit motive." — [Official Report, 20 November 1984; Vol. 68, c. 173.]
The fact that this order is to do with privatisation is echoed in an article by John Cunningham in The Guardian on 10 April 1985 and by Gareth David in The Observer on 13 October 1985. John Cunningham wrote:Compared with the furore over the privatisation of the aerospace, oil and telecommunications industries, the Government's disposal of the substantial national assets represented by the new towns is proceeding almost by stealth.
Gareth David wrote:one equally far-reaching privatisation exercise has been taking place almost unnoticed. Since 1979 the Commission for the New Towns has been selling off the assets of the 8 towns it inherited when their respective development corporations completed their work. By the end of March 1985, it had raised some £317 million.
On 10 June 1986 the hon. Member for Welwyn Hatfield (Mr. Murphy) asked the Secretary of State for the Environment if he wouldindicate the main achievements of Her Majesty's Government with respect to urban and new town affairs in the last seven years.The Minister for Housing, Urban Affairs and Construction replied:The Government's policy is to bring the programme to a successful conclusion with the maximum possible involvement of the private sector.
He said that an important achievement was 1357The realisation since 1979 of about £1.25 billion from the sale of assets (approximately £850 million from sales of industrial and commercial property and approximately £450 million from sales of dwellings and housing land)."—[Official Report, 10 June 1986; Vol. 99, c. 115–17.]
That represents a typical Government objective. Irrespective of the needs of the people and the local authorities, cash must be raised by selling assets to the private sector. Assets can be sold only once, and clearly the best parts go first. It is what Lord Macmillan described as selling off the family silver. It has created an imbalance in the economics of the new towns.
In simple terms, this order means that the four new towns — Milton Keynes, Warrington and Runcorn, Telford and Peterborough—will have enough of their debts written-off so that income from assets will balance costs. For the past three years, financially, time has been frozen. However, the premature forced selling of assets to the private sector meant that a break-even point could not be reached, so a calculation was made of how much debt needed to be written-off to balance the books.
If the objective had been financial manipulation to deal with losses related to long-term borrowing agreements with the Treasury, that would have been a logical move with which the Opposition could agree. There is little point in accumulating debt that can never be repaid. However, that was not the reason. The reason for the write-off is to make assets more attractive to private investors but, as more and more assets are sold, servicing the accumulated debts becomes more difficult and eventually impossible. Clearly the most valuable assets, producing the most income, are sold first, and the assets left cannot produce enough income to pay off the interest on the debts. That makes what is left behind less attractive to the private sector and means that fewer liabilities are extinguished.
The Minister may talk about financial reconstruction, but we in the Labour party are well aware that the Government's real objective is to move further down the road towards privatisation. They are making the new towns that have been developed over many years attractive to private investors in order to line the pockets of their friends in the City.
§ It being Eleven o'clock, MR. SPEAKER interrupted proceedings, pursuant to Standing Order No. 5 (Friday sittings).