Livingston Development Corporation

HC Deb 20 April 1994 vol 241 cc1013-20

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

11.45 pm

Mr. Robin Cook (Livingston)

I am grateful for this opportunity to initiate a short debate on the winding up of Livingston development corporation. This is probably the most strategic issue to confront my constituency in the 11 years in which I have represented it. It also raises wider questions, as testified by the presence in the debate of some of my colleagues from sister new towns who will seek to catch your eye, Madam Deputy Speaker, after I conclude, and by the support of my hon. Friend the Member for Linlithgow (Mr. Dalyell), who shares with me the local authority that is affected by the wind-up.

The background to tonight's debate is the Minister's decision to cut short the timetable for the wind-up by two years. That has compressed the time available for an orderly wind-up, and has given rise to a number of severe problems. I shall begin by focusing on the problems it causes for the economic development of the new town.

My hon. Friends will remember that, when the process began four years ago, we were assured by Ministers that the solution to maintaining the momentum for economic activity in the new towns was a local development company. Indeed, only three years ago, when the White Paper came out, it described local development companies as the most effective solution to maintain the momentum of economic development in the new towns.

Only last month, Livingston development corporation formally abandoned its plans to try to form a local development company. It has done so because the time scale available is too short, and, because once it has met the target for the sale of assets, it will not have enough left to provide a base for its own local development company.

My first question for the Minister is as follows. Now that we have lost the opportunity to have what he described as the most effective way in which to maintain economic activity, what now? How can he guarantee that there will continue to be the commercial investment—and the planning to provide for that investment—in a new town with a very young population, where we need another 1,000 jobs every year if we are simply to stand still and cope with the growth in the young work force?

The other aspect that arises from the short timetable, which has an immediate bearing on the economic development of the new town, is the future of the staff. They are now demoralised, which gives rise to serious problems for the functioning of the new town. The staff have a short time to remain in post, and no longer have the option of a local development company to which to transfer. As my hon. Friends will know, the enhanced redundancy offer to staff of the new town has been withdrawn, with severe implications for the staff of the other new town corporations which face imminent wind-up.

It is a great irony that, all over eastern Europe, countries and towns are struggling to put together teams of people who have some knowledge of attracting inward investment and managing commercial development. In Scotland, we have five very successful teams in the area, yet we are currently breaking them up. Why is there a shorter timetable?

It is no secret why there is a shorter timetable. I do not think that the Minister is free to admit why, but he knows perfectly well that we know why there is a shorter timetable, and that we know that he knows why. The reason is the Treasury. The truth of the matter is that, in the past year, the priority consideration in winding up has shifted from how we preserve the economic development of the new town to how we make as much money as possible, as fast as possible, from the sale of the assets of the new town.

I am grateful to the Minister for answering a parliamentary question that I asked a couple of months ago and confirming that the target that he set for the sale of assets by Livingston new town in the next two years was £70 million, from industrial and commercial premises and from land for industrial and commercial use. Livingston development corporation has only £84 million-worth of assets in those categories.

We are not looking at a phased sale of assets; we are looking at a closing down sale. It is not prudent, because the sales are taking place against a depressed property market, which will not give full value for the assets. It is not fair, because, in England, the new towns had a much more rational timetable in which to dispose of their assets, with the option of passing them to the New Towns Staff Commission if they were not disposed of. It is not in the long-term interests of the local residents to have such a rapid sale on such a short timetable.

How will the successor authority find the resources to meet the liabilities that it will merit? Currently, Livingston development corporation spends £1,355,000 on landscaping. That liability will descend on West Lothian district council or its successor local authority. Where will it find £1,355,000 to meet that additional liability if there are no assets left to be transferred?

When the Minister produced the White Paper, he suggested that voluntary organisations and charitable groups may run some of the community services in new towns and take them over with endowment packages. Again, that model was followed in England. Milton Keynes community trust took over most of the community services, but received 125,000 sq ft of industrial commercial property to pay for it.

I am glad that there is a current move in Livingston to form a Livingston foundation, which will maintain some of the town's identity after the development corporation is wound up, and which may also provide some kind of holding body for community assets. However, I must ask whether, given the target and the scale of the target for sale of assets, there will be anything left worth holding. Will there be any serious endowment package available, either for the local authority or for voluntary groups to maintain those community services?

The Minister has suggested that it will be possible to fund the local authority's extra liability through the revenue support grant. I do not wish to be unkind to the Minister, who is a pleasing man in his own way, and who also has the advantage of not having been in the Government throughout their period in office; but, considering the record of the Government over the past 15 years, and hearing the suggestion that we may look to the revenue support grant as the means of additional funds to meet additional liabilities, anybody would have severe difficulty maintaining a straight face. It would make a horse laugh.

The history of the Government in cutting the revenue support grant gives us no confidence that that represents a long-term vehicle to provide for the additional liabilities that the local authorities will inherit. If the Minister is to insist on that as the way out of his problem, I must put it to him that, if that is to be accepted in good faith, he must separately identify what that money is, and he must ring-fence it, so that we can all see how much it is and what it is for. However, it would be much better if the Minister agreed to the English model of endowing the local authorities with assets from the new town, from which they can meet the costs of the liabilities.

I want to put one specific question to the Minister, and if he cannot answer it now, I should be happy if he would write to me again. It is a question for which I am anxious to have a reply, as are the local authorities.

In his letter to my hon. Friend the Member for East Kilbride (Mr. Ingram) on 29 March, the Minister said that one development corporation had reached a voluntary agreement through negotiation with the local authority about the transfer of assets, which would meet the liabilities from the additional costs imposed on the council when the development corporation was wound up.

That has happened once. If the other new town development corporations were to achieve a similarly negotiated package with their district councils, would the Minister also approve that? If he approved it, would he be willing to adjust his targets for the development corporations and asset sales to reflect the particular agreement with the district council?

I shall move on to housing before allowing my hon. Friends to make their contributions. My hon. Friends and I, including my hon. Friend the Member for Linlithgow, have repeatedly told Ministers over the years that it was vital that tenants should have the opportunity of transferring to the district council at the point of wind up. In fairness to the Minister, I should say that this is one area in which we have made progress. We secured an agreement from the Minister that, if the tenant opted for that transfer, he could have that choice.

Mr. Tam Dalyell (Linlithgow)

That was the promise from the beginning.

Mr. Cook

Indeed.

I regarded that as a fair offer that we had to win on a vote of the tenants, and I am prepared to go with it. But what is happening at Livingston breaks that promise.Under trickle transfer, any house that becomes vacant is transferred to a housing association. People on the waiting list get the tenancy of the house only if they accept the association as their landlord. That means that they have lost the opportunity of a tenancy with the district council for the future. No applicant on the Livingston development corporation waiting list—the applicants are often second-generation families who have been on the list for two or three years—can obtain a development corporation tenancy.

Mr. Dalyell

When I first represented Deans and Knightsbridge in 1962, there was a solemn promise that applicants would be able to obtain such a tenancy.

Mr. Cook

I am grateful to my hon. Friend for confirming that point from his own experience in the area that we both represent.

The Minister must accept responsibility. The minutes of his meeting with the Livingston development corporation in September confirm that he raised the matter. The problem has arisen because the targets for the sale of houses obliges the Government to go for trickle transfer if the targets are to be met. How can he square the process of denying tenants the opportunity of an LDC tenancy, and therefore a district council tenancy, with his commitment that every tenant would have the opportunity on wind-up of a council tenancy?

I assure the House that the new towns of Scotland are a success story. I think that Ministers would take more credit for the success story if they did not find it uncomfortable to take credit for a public sector success story. Let the Minister understand that he cannot take credit for the success if he now puts it at risk, and that is what is happening.

For once, I invite the Minister to take pride in what he has helped to create, and to claim the success that has been built in the new towns as one that he partly helped to achieve. Having recognised that success and taken his part of the credit for it, he should think again about holding to a breakneck timetable that is leading to a forced fire sale of the assets of a new town.

11.58 pm

Mr. Adam Ingram (East Kilbride)

I am grateful to my hon. Friend the Member for Livingston (Mr. Cook) for allowing me briefly to take up some of the points that he has made. I agree with all the arguments that my hon. Friend has advanced. The same arguments could apply to all the other four new towns with equal force in terms of housing and the disposal of assets.

The work forces that have been employed by all the new towns over the years have been crucial to the success of the new towns. All of us in Scotland have benefited from their input and from the way in which they have developed the new towns and enhanced the economic structure of the local area and the wider economic area. Yet, for the first time in 47 years since the new town of East Kilbride, which I represent, was established, the work force are now engaged in a policy of non-co-operation with their board. Incidentally, that board is trying to deliver for them in the areas in which they are arguing with the Scottish Office. I understand that that policy is beginning to extend to other new towns; it will be probably only a matter of time before it arrives on the doorstep of Livingston new town as well.

Why has the policy of non-co-operation suddenly been imposed? As my hon. Friend the Member for Livingston said, the reason is that the Government have reneged on a commitment they gave to the staff of East Kilbride new town in 1989, that there would be enhanced redundancy payments to retain the key personnel in that new town in the crucial period leading to the wind-up. Clearly, they are reneging on a promise and a commitment that they made.

Indeed, it is argued that they are reneging on an agreement that was reached with the Scottish Office. Morale among the staff in East Kilbride new town has collapsed, and it is collapsing all over the other new towns. Obviously, my hon. Friend the Member for Cunninghame, South (Mr. Donohoe) will comment on that with regard to his area.

I shall ask the Secretary of State one question on this matter. Why has the Scottish Office decided to renege on that promise, that commitment and that agreement? We know that the new towns cannot exist for ever. We know that they must be wound up. We realise that there must be honour in the way in which that is carried out but that is not being delivered by the Scottish Office.

If the Secretary of State does not have the opportunity to respond to that question tonight, he should write to me in detail, because a previous letter that he wrote to me on the matter has been no help whatever.

12.2 am

Mr. Brian Donohoe (Cunninghame, South)

I also thank my hon. Friend the Member for Livingston (Mr. Cook) for allowing me briefly to contribute to the debate. I draw the attention of the Minister to the fact that, like staff in Livingston development corporation, the staff in Irvine development corporation are unhappy. Indeed, the Minister may know that today the staff were balloted to take part in industrial action simply because the Government have welshed on the redundancy package which was on offer, and which had been on offer for a great number of years. That is shameful action by the Government.

I am concerned that the wind-up programme in Irvine, as in Livingston and elsewhere, will lead to lowering of staff morale to such an extent that the work of the development corporation —there is still work to be undertaken by the corporation—will be affected. Outstanding projects that will be undertaken in the remaining two years will be unsatisfactorily dealt with by the staff, simply because they will not be operating as staff committed to their task before the wind-up is due.

In the time that I have, I simply ask the Minister to give the staff a commitment and resolve the situation with regard to the redundancy package. I await his answer with some interest.

12.3 am

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

First, I congratulate the hon. Member for Livingston (Mr. Cook) on obtaining this Adjournment debate on a subject that is clearly of the greatest importance to him, and to the constituents of the hon. Members for Linlithgow (Mr. Dalyell), for East Kilbride (Mr. Ingram) and for Cunninghame, South (Mr. Donohoe). I have no doubt that the hon. Member for Fife, Central (Mr. McLeish), who is also a new town Member of Parliament, would have been in his place if he had not been injured in a contest with the press earlier today. I am glad that his injuries are purely temporary.

I hope to return to this point, but I am absolutely astonished that the hon. Members for East Kilbride (Mr. Ingram) and for Cunninghame, South (Mr. Donohoe) did not refer to the findings of the Public Accounts Committee on precisely the matter that they raised.

I shall endeavour to reply to all of the points which were raised by the hon. Members. If I am unable to do that in the available time, I give them an absolute assurance that I will write in detail to them on the matters as soon as I can.

The hon. Member for Livingston, in a well-considered speech, made the major criticism that somehow the wind-up of the new towns was being pursued at a great pace. He was reflecting the phrase of some others about the dash for cash in the wind-up of the new towns. I must say that the wind-up was announced when I was the new towns Minister some 10 years ago. That was followed by a Green Paper, by a White Paper and then, of course, by the 1990 legislation.

The hon. Member for Livingston was right to point out that the wind-up has been accelerated. That has been done essentially for two major reasons. The first is the rapid emergence of Scottish Enterprise and the local enterprise companies, and the success of Locate in Scotland. Collectively, those bodies will have the prime responsibility for the future economic development of lowland Scotland.

The second is the opportunity of local government reorganisation in Scotland. We want to ensure that the new authorities—in the hon. Gentleman's case, that will be West Lothian—begin life with all their functions essentially on board.

The hon. Gentleman also suggested that this was Treasury-driven. Under the present rules—which have, of course, been changed—the cash received by the Scottish Office from the sale of the assets of the Scottish new towns remains, in effect, within the Scottish budget. It is spent elsewhere in Scotland. [Interruption.] I must say to hon. Members that there are other areas in Scotland where there are economic, industrial and housing problems, and that is where the money is, in effect, going.

The hon. Member for Livingston was right to point to the success of the new towns as part of Scotland's strategic economic and industrial policy. I can assure him that Scottish Enterprise will continue that policy. It purchased some £10.3 million-worth of strategic land and buildings from the new towns in 1993–94, and further acquisitions are planned in this financial year; those will include Eliburn West and Rosebank in relation to Livingston.

That kind of transfer will enable Scottish Enterprise, together with the local enterprise bodies and Locate in Scotland, to maintain the momentum of economic development in the new towns.

The hon. Member was also right to refer to the fact that what is important is not just the transfer of physical assets but the personnel and expertise of the staff of the development corporations. It is encouraging that, in relation to Fife, the regional council, the development corporation and the local enterprise company have reached an agreement on the transfers for the future of the organisation Invest in Fife.

The hon. Gentleman rightly pointed out that the possibility of establishing a local development company for Livingston was not being pursued. I can tell him that the board is considering the options, and that we look forward to receiving its specific proposals by 31 October.

One of the hon. Gentleman's main points concerned housing. He will know that, in Livingston, the home ownership rate is close to 55 per cent., and that tenants in the new towns have taken substantial advantage of the right-to-buy and rent-to-mortgage schemes; he will also know that, in the past year, Livingston spent some £3.5 million on repairs and maintenance of stock, and some £6.5 million on modernisation, particularly in Craigshill. I emphasise those figures because they show a continuing commitment to the improvement of housing stock in the development corporations.

As for the future, and the hon. Gentleman's specific point about my commitment on "trickle transfer", I can tell him that it means that those on the waiting list have the option of moving to housing owned by housing associations, and therefore have the rights of housing association tenants. That is in no way incompatible with the policy that I announced. I am grateful to the hon. Gentleman for praising the policy, if that is not putting it too strongly, of giving existing tenants of corporation housing stock the right to choose the successor at wind-up, which they can do by means of a secret ballot.

We want an effective choice between local authorities and housing associations. I think that in the new towns and, more broadly, in Scotland, housing associations represent a genuine choice for those who wish to remain in tenanted accommodation.

Mr. Robin Cook

I do not object to the choice; indeed, I accept, as a reasonable challenge, that we should persuade tenants to opt for the district council, given the choice between that and a housing association. What I object to is that the fact that people who have been on the waiting list for two years and are on the way to securing a tenancy now do not have that choice; they have only the option of a housing association tenancy, with no future opportunity of opting for the district council. Why not suspend the trickle transfer, so that those people can also have the choice that the Minister is holding out?

Mr. Stewart

I am saying what I have always said—that the choice is at the point of wind-up. I am also saying that I think it right to encourage diversification of tenure in the new towns, as elsewhere, in the period leading to wind-up.

The hon. Gentleman asked me about the resources available to local authorities in a number of contexts. I hope that I can reassure him on housing: the Government will provide local authorities that are successful in the ballot of tenants with additional borrowing consent up to the level of the purchase price.

Hon. Members also raised the question of staff and the present dispute, which I regret very much. For a long time, I have had the highest respect for the staff of Scotland's new towns.

I remind the House of what the Public Accounts Committee said in its report on the Development Board for Rural Wales. It said that substantial payments in lieu of notice should be avoided. That view was accepted by the Government. The Treasury response said: Payments in lieu of notice should be made only where it has not been feasible for the employer to give the employee appropriate notice of termination of employment or to allow him or her to work until the end of the period of notice. That is the background to the present dispute. It follows precisely the recommendations of the Public Accounts Committee. We are taking legal advice—

The motion having been made after Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at fifteen minutes past Twelve midnight.