HC Deb 02 June 1992 vol 208 cc707-13 3.30 pm
Mr. Bryan Gould (Dagenham)

(by private notice): To ask the Secretary of State for the Environment whether he will make a statement about the future of the Canary Wharf project, and what decision, if any, has been made about the transfer of civil servants.

The Secretary of State for the Environment (Mr. Michael Howard)

The future of the Canary Wharf development is in the hands of the administrators who were appointed last week to resolve the financial problems of Olympia and York with their creditors. The Government have made it clear that they have no intention of intervening in the affairs of the company, and it would be inappropriate for me to make any further comment on that at this time. There has, however, been much speculation in the media about the possible move of civil servants to docklands. I am grateful for this opportunity to clarify the position.

As the House knows, my predecessor decided in February that my Department's headquarters at 2 Marsham street should be demolished. [HON. MEMBERS: "Hear, hear."] That decision was widely welcomed—and clearly still is. A timetable for moving staff by the end of 1993 was then identified. In the context of that decision, consideration is being given to the relocation of those of the Department's staff who need to remain in London, but not in Westminster. As my predecessor told the House, the Department was particularly asked to examine the opportunities and value for money of relocation to docklands.

It is clear that exceptional value for money may now be secured in docklands. [Interruption.]

Madam Speaker

Order. This is an important statement, which I want to hear. Let us carry on with it in good order.

Mr. Howard

The work that has been done by the Department's advisers has reached a stage that makes it possible for me to announce that some 2,000 civil servants in my Department will move to docklands, provided that we are able to secure fully commercial terms giving value for money to the taxpayer. Detailed negotiations are now under way in respect of three developments: Harbour Exchange, East India dock and Canary Wharf. Subject to successful negotiations, I hope soon to proceed to the stage at which it will be possible for me to sign heads of agreement in respect of one of those developments.

A number of other Departments are also considering docklands as a location for their staff. The Department of Trade and Industry is working to a timetable similar to my own in respect of the Radio Communications Agency. That Department, with a number of other major Departments—including the Department of Transport—is reviewing its future accommodation needs, and is including docklands among the options for study. Decisions are likely later this year.

In all those decisions, I have been very much aware of the concerns of staff and of the need to put in place arrangements that will help to minimise the effect of any such moves on staff in the Departments concerned.

Mr. Gould

Is it not astonishing that the Government are still dithering about accepting their responsibility for a fiasco that is largely of their own creation? Do not Ministers accept that it was they who irresponsibly stoked up a property boom and who equally deliberately brought it crashing down, and that it was their blind faith in market forces which excluded the interests of local people and ensured that essential infrastructure simply did not get built? Canary Wharf is a monument to the Government's folly, as well as to the folly of the banks involved.

Is it not time to do what should have been done in the first place: make a proper assessment of where the public interest, and therefore the public responsibility, lies? That can be done only on the basis of full disclosure and total transparency. It cannot be done through a back-door deal to channel taxpayers' money to Olympia and York by way of rents for office space that cannot otherwise be let. Since that is so clearly what is in Ministers' minds, what consultation, if any, has there been with the civil servants who will have to move? What assessment has been made of the costs, administrative and financial, that will be involved? What guarantee is there that there will be no element of hidden subsidy in the move that is proposed?

Does not the Secretary of State recognise that the response of the House to his announcement will be reflected by the response of the people of this country? They will recognise not only that the Olympia and York investment is at stake but that Ministers' reputations are being protected. Is it not the case that the public interest cannot be properly protected unless we know to what extent it is already involved? When will Ministers tell us the truth about how much taxpayers' money has already found its way into this project by way of direct grant, tax breaks and rate relief, and when will the Government publish the agreements concluded between Olympia and York and Government Departments so that we can judge what is involved if the Jubilee line extension, which is surely essential to the project, is to be undertaken?

No one wants to see this project fail. We on this side of the House have no investment in failure—nor do the long-suffering people of east London—but we cannot judge the action needed until we know the facts. It is time for the Government to come clean and to face up, at last, to their responsibilities.

Mr. Howard

The hon. Gentleman is living in a fantasy world. There is no question whatever of back-door deals. There is no question of subsidy, hidden or otherwise. There has never been any subsidy for this development. The hon. Gentleman knows full well that the grants which have been made to the London Docklands development corporation for the development of docklands as a whole are a matter of public record and are there for the House, the country and the world to see. The decisions on relocation will be taken in full consultation with the trade unions that represent the staff. The decision which I have just announced to narrow the options was taken on the basis of a value-for-money survey that was put in place, following my predecessor's much welcomed decision to vacate the Marsham street building so that it could be demolished.

Mr. Robert Adley (Christchurch)

Did my right hon. and learned Friend note that the one group whom the hon. Member for Dagenham (Mr. Gould) failed to mention was the taxpayer, and that most normal people will regard the Secretary of State as doing nothing less than his duty in trying to ensure better value for money for the taxpayer? If I may ask my right hon. and learned Friend one specific question about the transport infrastructure, what principle lies behind the proposition that the taxpayer has funded £250 million for one and a half miles of road while the private sector is expected to fund part of the cost of the railway line?

Mr. Howard

I am grateful to my hon. Friend. He is right to identify the criterion that we have applied and pursued in considering this matter. He referred to the cost of the Jubilee line extension in the second part of his question. It is widely accepted that there is a role for mixed public and private sector funding in such a development. The owners of the Canary Wharf development, whoever they may be, will benefit from the fact that there will be a station at Canary Wharf on the Jubilee line extension. That is why Olympia and York thought it appropriate to offer a contribution of £400 million towards the cost of the line and why I have no doubt that any other owners of the development will think it right to make a similar contribution.

Mr. Simon Hughes (Southwark and Bermondsey)

Does not the Secretary of State's announcement confirm that the rescue or salvation of Canary Wharf will not be achieved only by market forces, any more than was the development of docklands in the 1980s? Is it not true that, although the jobs of civil servants are important, the jobs of people in the docklands boroughs, with some of the highest unemployment rates in the country, are far more important and far more a reason for ensuring that the project does not fail?

If civil servants are to travel from Whitehall to docklands, is it not the most ridiculous proposition in the world that there should be no direct rail link? Do riot the Government realise that the money for the Jubilee line extension must be secured by the end of this month, since otherwise the team of engineers and so on working on it will not be in place and the project will fall apart?

Mr. Howard

On the hon. Gentleman's last point, the team at London Transport will be kept in being while negotiations take place over the completion of the Jubilee line extension. I was interested in the hon. Gentleman's observations about jobs in docklands. He did not mention the fact that the number of jobs in docklands has doubled since the development corporation was established, and there are now 60,000 people employed in docklands. I would have thought that the hon. Gentleman would want to give some credit for what has been achieved by the corporation during its existence. The hon. Gentleman seemed to be coming perilously close to suggesting that the Government should bale out this project. That is not our intention, and we shall not do so.

Mr. Roger Moate (Faversham)

My right hon. Friend is already aware of the widespread welcome for the imminent demise of Marsham street. However, if we are to make Westminster a more green and pleasant land, is it not illogical to add to the office surplus by putting even more offices in that location?

Does my right hon. Friend agree that there is widespread acceptance that the Jubilee line extension must be built, but that this is a time to be looking not for less private sector contribution but for other means of bringing more private sector participation into that underground line and others as well?

Mr. Howard

My hon. Friend's first point anticipates a decision that has not yet been made about what is to happen at Marsham street. I agree with him that the principle of mixed private and public sector funding for developments such as the Jubilee line extension has obtained increasing acceptance and will, I expect, play a continuing role in such developments in the future.

Ms. Mildred Gordon (Bow and Poplar)

You may be aware, Madam Speaker, that more than 1,000 of my constituents are taking legal action to seek redress for the disruption caused to their lives by the Canary Wharf development and the Limehouse link road. My constituents want to know whether they will obtain any benefits from the public money that has gone into the area. If Government Departments move to Canary Wharf, will the Government have a policy of employing local people in the civil service, or will there be only part-time cleaning jobs and other jobs of that ilk?

If 5,000 civil servants move into the area, will the Jubilee line extension be built or will my constituents have to suffer daily the nightmarish congestion that they suffered whenever there was an event at the arena? Will the Government stop the LDDC giving crazy planning permission for further superfluous office developments such as that granted to Olympia and York for Heron Quays only a few weeks ago? Will the Secretary of State confirm or deny the recent press statements that the LDDC is to give land to developers and allow deferred payment until they make a profit? If the right hon. and learned Gentleman disputes my figures of nearly £3 billion of direct and indirect subsidy, when will he produce his own figures for the public money involved?

Mr. Howard

On the last point, I have already made it clear that the funds made available to the London Docklands development corporation are a matter of record and have been published more than once. I am surprised by the attitude that the hon. Lady adopts to the considerable number of jobs that have been created in docklands. I should have thought that she would welcome that.

As for the relocation of staff who work for the Department at the moment, wherever they live, we shall be assisting them when we move to docklands, as I expect we shall be able to do. I should have thought that the hon. Lady would be as keen as anyone to encourage the private sector to contribute £400 million to the cost of the Jubilee line extension, which will secure that extension's future.

Mr. John Wilkinson (Ruislip-Northwood)

Will my right hon. and learned Friend be realistic and recognise that civil servants such as those in my constituency in north-west London, who are prepared to put up with a difficult journey to central London because they welcome the good schools and the pleasant residential area in which they live, will not be prepared to travel to the Isle of Dogs unless good, effective and reliable high-speed surface transport is in place? To that end, is it not vital that the Jubilee line be completed—if necessary, with public money —and that the crossrail link be finished, with a platform at Northwood in my constituency, which was promised and then taken away?

Mr. Howard

I very much hope, and indeed expect for the reasons that I have given, that the Jubilee line extension will be completed. That line, and the considerable improvements to the infrastructure of docklands, will make it quite feasible for civil servants to travel to docklands from my hon. Friend's constituency and from other parts of London and surrounding areas. As I said in my statement, we shall put in place arrangements to help to minimise the effects of any move on Departments' staff.

Mr. Peter Shore (Bethnal Green and Stepney)

Is the Secretary of State aware that he is dealing with the biggest failure of planning in post-war Britain? It is a perfect example of the folly of proceeding with a massive office development without making any sensible provision for public transport. Will he now answer, truthfully and directly, the question that was put to him by my hon. Friend the Member for Dagenham (Mr. Gould): what is the cost, in terms of incentives paid for by the taxpayer, of the enterprise zone—in particular, the amount of money available by the suspension of the business rate for office development at Canary Wharf—and of the special facilities offered to assist construction by writing off initial allowances against expenditure? What is the cost to the taxpayer of those great concessions for Canary Wharf? Does he not accept that, if that vast amount of money is correct—we believe the figure to be correct—he has not given the House, or anyone in the east end, any prospect for the future? He is apparently prepared to write off completely his former investment.

Mr. Howard

The right hon. Gentleman's criticisms are entirely misconceived. I was astonished by the form in which they were made, because, when he held my office, docklands was renowned for dereliction—and for nothing else. Under the London Docklands development corporation, the position of docklands has been transformed, as the right hon. Gentleman knows only too well. [Interruption.]

Madam Speaker

Order. I would be very much obliged if hon. Gentlemen would not bawl and shout from sedentary positions.

Mr. Howard

The right hon. Gentleman may be aware that the total sums made available to all enterprise zones amount to £660 million and that there are no figures available for individual enterprise zones. The benefits made available to docklands are in no small part responsible for that. The number of jobs in docklands has doubled over the relevant period. I hope that the right hon. Gentleman will welcome that.

Mr. Mark Wolfson (Sevenoaks)

Does my right hon. and learned Friend agree that there is an interesting comparison between the new business centre development in docklands and La Defense in Paris? The development in Paris did not have an easy route, but in the end it has been highly successful. I am therefore optimistic that the docklands development will also be successful. However, there is one difference between Paris and here. The strategy of putting in a very effective public transport infrastructure was followed there, and I hope that my right hon. and learned Friend will give that a high priority here.

Mr. Howard

I have no doubt that the future of docklands will be as exciting as we originally contemplated it would be, and that it will realise its full development potential. We have, of course, done a great deal to improve the infrastructure in and towards docklands. We are building roads, and some roads have been completed.

I have referred to the £400 million contribution offered by Olympia and York to the Jubilee line extension, which we expect any other owner of Canary Wharf to contribute. The taxpayer is contributing £1.5 billion towards the cost of the Jubliee line extension. We want and expect to put in place in docklands a partnership between the private sector, which I hope we shall see not only in docklands, but elsewhere in our country in future.

Mr. Nigel Spearing (Newham, South)

Does not the Secretary of State agree that the collapse of Canary Wharf exemplifies the collapse of Thatcherite economics? Is it not a fact that, in addition to the inducements in the enterprise zone outlined by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), there was no inquiry into the strategic planning implications of Canary Wharf, that public funds met most of the cost of the Bank extension and that the Jubilee line extension would not have been built without the presence of Canary Wharf? Is it not now a fact that the frontiers of the state statutory have been rolled back, that enormous sums of public money have rolled in and that the powers of Ministers and central Government have greatly increased, which has given them arbitrary powers of patronage over companies that come in? Even with all that, there is no assurance of success.

Mr. Howard

There is no question of arbitrary behaviour and no question of patronage. It is not the case that there was an absence of planning in docklands. The London Docklands development corporation drew up a plan and consulted the local authorities on it. The difference is that, under the LDDC, action has been taken to deal with the dereliction which was the hallmark of docklands when the local authorities were responsible for planning and development decisions. We have seen great progress made since the corporation was put in place.

The hon. Gentleman began by referring to the collapse of Canary Wharf. Canary Wharf has not collapsed. The fact that the company that developed it has now appointed administrators is an entirely different matter. There is a clear distinction between the fate of one private sector company and the fate of docklands. Docklands will realise its development potential in the future, to the benefit of all those who live in it and of the hon. Gentleman's constituents.

Mr. Henry Bellingham (Norfolk, North-West)

Does my right hon. and learned Friend agree that, given the scale of dereliction and unemployment in docklands, one should pay tribute this afternoon to the corporation, of which Canary Wharf is only one part, and to the vision and courage of the Reichmann brothers, without whom the development would not have been possible? Although they failed, they failed in the teeth of the worst recession since the war. Does my right hon. and learned Friend agree that, as well as the Jubilee line, there is obviously a need to improve road communications? What is the up-to-date position on roads?

Mr. Howard

I can certainly help my hon. Friend with regard to the question of roads. Great progress is being made with the Limehouse link and the associated docklands highway. Those key road links will help greatly to assist movement into and out of docklands. The docklands light railway is now operating to 95 per cent reliability. The perception of its reliability that still undoubtedly persists is no longer consistent with its performance.

Mr. Robert Sheldon (Ashton-under-Lyne)

Is the Secretary of State sure that all those 2,000 jobs need to remain in London? Is there not a case for considering the dispersal of at least some of them? Is he aware that London weighting will still be allowed in docklands, but it is not allowed in Manchester, the north-east, Scotland or Wales? It has been estimated that London weighting can add up to £10 per square foot to the rent of such premises in London.

Mr. Howard

A very large proportion of my Department's staff already work outside of London. The decision to relocate in docklands relates to staff who need to be in London because they need to have regular contacts with Ministers, but do not need to be in quite such close proximity as to justify the retention of accommodation in Westminster. The point made by the right hon. Gentleman was taken into account.

Several Hon. Members


Madam Speaker

Order. We must now move on