§ 7.2 p.m.
§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin)
My Lords, I beg to move that this Bill be read a second time. Perhaps I may start by saying a few words about what the Bill does. Like nearly all statutory corporations, the new town corporations in England, Scotland and Wales, are subject to an overall limit on their borrowing from all sources. Currently that limit stands at £4,000 million, and the towns are getting near to it. What the Bill does is to raise the limit to £4,500 million, with power for the Secretary of State to increase it by affirmative order to £5,000 million. This extra £1,000 million should be sufficient to last the towns about two years.
Turning to how this new borrowing will be used, your Lordships will know how much importance the Government place on involving the skills and resources of the private sector, in the development of the new towns. The more we can achieve this, the less the call on scarce public funds, and the towns themselves will be better balanced as a result. This involvement of the private sector is becoming very substantial. We estimate that in 1980–81 the private sector will have invested about £100 million in new houses, and about £75 million in shops, offices and factories, as well as about £60 million in joint venture schemes with the new town corporations—in all, about £250 million.
But we recognise that there are some activities which have to be funded publicly—main roads and other basic infrastructure, to open up land for employment and housing, and advanced factories for towns such as Corby, where the need for new jobs is critical and where the private sector may be reluctant to carry this development risk. It is to tasks such as these that the new public money will go. My honourable friend the Minister for Housing and Construction listed projects in the Second Reading debate in the other place. I will not add to the list now, as many noble Lords are already aware of new town projects currently in hand, and of what towns are planning for the future; and further details can, of course, be found in their annual reports.
What I should like to do now is pick up one or two of the themes from the recent debates in the other place, and look at them a little more closely. First, as my honourable friend said on Second Reading, the Government's policy is to concentrate public resources on the inner cities. New towns are nearing the end of their development programmes, whereas the inner city task is only now getting under way. So it follows that 319 the public resources needed for new towns will fall, in contrast to those for the urban programme.
However, I would deny that there is any conflict or antagonism between the needs of new towns and these of inner urban areas. Instead I would argue that there is a cycle of development and redevelopment embracing both. When we look at the state of our conurbations at the end of the war—and particularly London—it was inevitable that we would have to rebuild them at lower population density. The new towns provided one—and it is only one—of the places to which people went. And those that did built thriving, prosperous new communities: mostly, I am sure, they did not regret their choice. The emphasis now, however, is on the other part of the cycle, with our efforts to revitalise inner cities.
If we look at the new towns closely, we can see that they are doing more than providing new communities on green field sites. At Central Lancashire and Warrington the complete cycle of development and redevelopment is working in the town itself. At first, both those corporations focused on opening up new sites for jobs and homes. But now they are both actively involved in renewing their older urban areas, in conjunction with the local authorities. Those of your Lordships who have seen recent new town developments will, I am sure, agree with me that we can be confident that we are creating the homes and the environment in which people will want to live.
That leads me to another area of concern, to both inner cities and new towns—the remedying of dereliction. The problem of derelict or wasted land in inner cities is now a familiar one, and one that the Government arc tackling vigorously. But new towns also face that problem; indeed, it was a major factor in the setting up of Telford, Warrington and Basildon. At Telford the corporation have had dramatic success in tackling a legacy stretching back to the start of the Industrial Revolution. They have now reclaimed over 2,000 acres of spoil heaps and treated over 1,000 disused mine shafts, and their work continues. At Warrington the corporation have successfully dealt with 900 acres of former ordnance works and are now tackling the residue of a derelict army camp. At Basildon the corporation have cleared and restored large areas of sub-standard urban sprawl.
I hope that these few examples demonstrate the community of interest of new towns and inner cities. And, indeed, the lessons we have learned from successful agencies, such as the new towns, are now being applied in the inner cities through the urban development corporations. I am sure that your Lordships will wish them the same success as the new towns have attained.
I should like now to turn to another area of contention—the sale of assets. I know that the party opposite often try to argue that this is something new, and disastrous. It is neither. Rollover of assets has been a feature of new town life for many years now. And what one must accept is that, without the sales programme, the level of public investment in the towns would have had to be much smaller. The recycling of the receipts from sales—plus the greater use of private sector skills and resources, to which I referred a moment ago—are the things that have kept the momentum in the new town programmes going.
320 The figures illustrate the point. Over the three financial years from 1979–80 to the end of this year, 1981–82, total public capital expenditure in all the towns was some £1,100 million; while over the same period sale proceeds from industrial and commercial property, and from housing, was just over £400 million. So there has been net Exchequer investment of around £700 million.
I would also like to say a word about housing. This was covered very thoroughly in the debates in the other place, so I will not add a great deal now. The new towns have an excellent record, both of getting houses built, and, since this Government took office, of pressing ahead with our new initiatives to help the less well-off own their own homes. Sales to sitting tenants, shared ownership, the provision of sites for starter homes—my Lords, the new towns are making great progress on all of these. Where the Government and Opposition differ is in their perception of what people want: the Opposition are fixated by the idea of rental and of councils and new town corporations retaining stock, whereas the Government are concerned to provide all those who want it with a home of their own. The results in the new town constituencies at the last election bear witness to what the people preferred.
I have dealt with one or two contentious issues, but I would not like to close my remarks on that note. Whatever the political differences, noble Lords on all sides do, I am sure, recognise the achievements of the towns over the last 35 years under Governments of both complexions. As towns now move towards the end of their period of planned development and the beginning of their life as "old" towns, I would like to pay tribute to the boards of the corporations and to all their staff who have worked so hard to bring about a real British success story—a success that is admired around the world. Although times arc difficult, I know that everyone involved with the towns will work hard to bring them to a satisfactory completion, just as they worked to get them established. In this Bill the Government demonstrate their commitment to this task. I ask your Lordships to give the Bill a Second Reading.
§ Moved, That the Bill now be read a second time.—(Lord Bellwin.)
§ 7.12 p.m.
§ Baroness David
My Lords, I should like to thank the Minister for his explanation of this short Bill and to say at once that the Opposition gives it support and, indeed, welcomes the billion and the change of heart on the part of the Government. I note with interest that the limits of the public sector borrowing requirement seem to have acquired a degree of flexibility. I think we can be pleased that the Government are learning. When they came to office there was definite suspicion of new town development corporations as Quangos, but today it seems that Ministers are satisfied that the corporations are doing a good job and that they should be given the wherewithal to carry on. Indeed, the Government, in setting up urban development corporations for Docklands and Merseyside, are copying the new town pattern. We know that imitation is the sincerest form of flattery. I would agree with the Minister in what he has just said: that there need be no conflict or competition between the new towns and the UDCs, and we wish them well. 321 There is another change of attitude which I notice. In the Government's early days Ministers suggested that most of the spending in new towns could be funded by private enterprise but now there is recognition—and the noble Lord, Lord Bellwin, mentioned it—that there are some things which private enterprise cannot and will not do. The Minister for Housing and Construction, Mr. Stanley, in the Second Reading debate in another place said, at col. 758 of Hansard of 26th January:Development corporations and the Commission for the New Towns will be seeking to make the maximum use of private finance, but some public funding will still be needed. It will be needed for essential main road schemes—for example, the eastern expressway at Runcorn and the western approach road at Basildon, which clearly cannot be privately financed. Public expenditure will be needed for other essential infrastructure—roads and sewerage in particular—to round off housing, industrial and commercial areas in so far as this infrastructure cannot be financed by developers themselves.Public funding may also be required for a limited programme of advance factories in towns such as Washington and Corby, where the private sector may be unwilling to take the development risk, and where there is an imperative local employment need to have industrial space immediately available for incoming firms. The Bill is, therefore, essential to the orderly and satisfactory completion of the new town programme over the next few years".With that I would wholeheartedly agree. This conversion on the part of the Government is very satisfactory. Reports from Cooper and Lybrands and from the Government's own adviser, David Young, shortly to be chairman of the Manpower Services Commission, showed that in the early years money has to be put in by Government before private enterprise will come in. This pump priming is needed not just for infrastructure and advance factories but also for creating amenities and the recreational facilities that are an essential part of new towns and the full life that the people who have moved there have been promised.
To come to the Bill itself, it was expected that the 1980 Act which increased the borrowing limit for new towns by £750 million would keep them going until the end of 1983. But we are told that this sum will run out in April 1982, one year and nine months earlier than planned. The reason for this is mainly the Government's disastrous policy of high interest rates. High interest rates have also brought new town finances into difficulty, making it many more years than would otherwise have been the case before the investment in new towns can pay a dividend in the way that the early new towns like Crawley are doing. I hope that the Government are now convinced that their best policy is to encourage and enable development corporations to complete their programmes at the fastest possible rate. This is the best way to exploit their success in attracting and generating job growth, in enhancing land and property values to the benefit of the public purse and ensuring that the job is done most economically.
The second reason why there has to be this Bill now to increase the borrowing limit, is that new town assets have not been disposed of at the rate the Government hoped. When the Local Government and Planning (No. 2) Bill was before this House we attempted to make sure that the proceeds from the selling of commercial and industrial assets would be used for investment in the towns rather than for Treasury purposes. Of the £300 million which Mr. Stanley said in the debate in the other place would be realised by the end of this financial year from asset disposals, I understand that 322 between £50 million and £100 million have gone to the Treasury. I am not sure whether the Minister mentioned the amount which has gone to the Treasury. If I missed the amount I apologise. Perhaps the Minister would repeat it, or tell us what it is if he did not mention it.
May I also ask him whether he agrees that it is foolish to sell off assets which could be worth a great deal more in a few years' time when the new town is fully developed and been seen to be highly successful, commercially and industrially. For example, sale of a block of shops bringing in a relatively low rental income when the town is half built is unwise. If the state holds on until the town is more nearly complete, the turnover of the shops will be higher, the rents will be higher and the capital value will be higher. Selling off in a depressed market during a recession seems to be particularly unwise. Mr. Stanley said in the debate in another place that the sales must be on a commercially prudent basis. Can we assume that the Government are accepting that and that they will not press hard on sales? I should like to have reassurance on this point.
I understand that the Government are to announce in the summer new policies for the long-term financial problem which comes from accumulating interest charges; that there will be a rescheduling/restructuring of development corporation finances. This is to be welcomed, for, as I said earlier, the high interest rates through the late 1970s were the primary cause of much greater indebtedness being built up by the corporations, then launching very large building programmes. The deficits were substantially increased by new arrangements made by Government for much larger contributions to county councils for new roads, to the water authorities for advance provision of their services, and in some towns to the area health authorities. It is not sensible for the very large deficit so imposed to be a charge on the corporations and on their revenues, which just cannot be large enough to cope with them.
When the Government are considering their new plans would they give consideration to allowing the corporations to borrow for five or seven years for certain commercial and industrial projects which could then be sold out when fully let? The burden of 60 year loans would then be avoided.
I want to make a few comments on the sale of houses in new towns and the virtual end of new housebuilding for rent. I should like to make it clear that the Labour Party is not opposed to selling council houses or new town houses, provided that the sales will not harm the housing stock in the area and deprive people on the waiting list of the chance to get a house at a reasonable rent. Sales are perfectly acceptable in a number of new towns. We are also pleased that private funding is coming in to build houses for sale, offices and some of the factories, shops and shopping centres.
But we have reservations about the ending of new house building for rental. The Minister may say that there is a surplus of housing in some new towns at the moment. There is, but this can be expected. Because of the recession and Government policies, industry is arriving more slowly and new population is not being attracted at as fast a rate as it was earlier. But the new towns must have attractive houses ready for incoming industry that wants to bring in key workers and attract particular skills. Such housing availability has been a 323 traditional part of the attraction of new towns for industry. Newcomers very often want to rent first while they are making sure that they have made the right decision in moving and that the job is permanent; they may want to buy later. This is particularly important in the third generation new towns which still have some way to go before handover.
The Government are stopping or discouraging the building of rented accommodation for old people—bungalows, sheltered housing with wardens and so on—but these are very important for those who moved in early and a changing age structure has to be taken into account. The second generation who were born and brought up in new towns will need rented housing to start with, until they can afford to buy. On 26th January Mr. Stanley in the House of Commons (col. 761, Official Report) spoke of one bedroom starter homes being available for £15,500 in central Lancashire and for £17,000 in Basildon. He said that these prices were certainly within the reach of young couples and single people with modest earnings. I would query that. I was interested to see that in the same debate, the Conservative Member for Buckingham argued strongly for keeping a strong element of public rented housing in third generation new towns. The indiscriminate ending of new building for renting should give way to a real assessment of what is needed, town by town. Can the Minister give an assurance that that will be done?
Again on the subject of housing, has the Minister anything to tell us about progress in settling claims for design building defects in new town housing which has been transferred? With claims under Section 51 of the New Towns Act 1981, formerly Section 10 of the New Towns (Amendment) Act 1976, there have been long delays which have caused considerable difficulties for some new towns and councils which have taken over responsibility for housing. Peterlee and Easington District Council are probably the worst sufferers. When can they expect help? Another worrying factor is, do the Government intend to do anything to help the bad unemployment which some towns are suffering, particularly in Scotland? I believe it would be fair to say that unemployment, which stands at 17.9 per cent. in Strathclyde, would be very much worse, were it not for the new industry which Cumbernauld, East Kilbride and Irvine have brought in. I believe that to be true of England, too. The success of the new towns has been partly in being able to attract high technology business and industry, not only from Britain but also from Europe and the USA. Scores of modern foreign companies have come here.
I said that the Opposition supports this Bill, but I would like to say that I personally am an enthusiast for new towns. I believe that they have been a real success story. They have provided a new environment of high quality in which people can live a very different sort of life from that in the areas from which they came, with opportunities for all kinds of recreation, sport and arts. The lives of the locals have been enriched too. Much dereliction has been cleared in towns such as Irvine and Telford, as the noble Lord mentioned when introducing the Bill. The unique relationship between development corporations and local authority members has ensured quick decision and quick action. New towns 324 are often outstanding growth points for industry with the advantages they have for rapid communications. But new towns—particularly Mark III new towns—need the funds to complete their plans and development. I am glad that this Bill is being brought forward to provide those funds.
§ 7.24 p.m.
§ Lord Bellwin
My Lords, the noble Baroness, Lady David, professed her support for the Bill, but I must admit that she could have fooled me at times, although I believe I grasped the underlying gist of what she was saying. I shall do the best I can to respond to some of the points she made. First, the noble Baroness asked me to assure her that, in the matter of the disposal of assets, sales were not being made that were unwise. Assurances were given in 1980 that no sales would be made against the best professional advice and this still holds good. That is the position. I understand the philosophical difference between the parties in their attitudes towards the sale of assets and I suppose one would simply have to agree to disagree to that. So far as the Government are concerned, we are satisfied not only that this is right but, as I said when introducing the Bill, it is enabling the Government to give the kind of support needed to allow new towns to do much of what they are wanting to do.
§ Baroness David
My Lords, if the noble Lord will allow me to intervene, we are not against the sale of assets; what we are against is selling them prematurely, when their value might be greater later.
§ Lord Bellwin
My Lords, that is the argument which is always given because there is little doubt that if one waits long enough, inflation being what it is, the chances are that one would get more. But what really matters, surely, is what one does with the money one gets for the sales and how one disposes of that money. If that money can be used in one way or another to regenerate additional assets or to make greater savings, then that is a complete answer to the argument that one should not sell now but should wait until later.
As to the point about how much money goes back to the Treasury, I understand that the figures are some £40 millions in tax and £24 millions in other ways. But whenever one looks at this matter of the amount of money that comes from the Treasury, one has to come back to the total amount of investment in the new towns, where the figures far outweigh anything that comes from the sales, as I mentioned when introducing the Bill.
As to the other points that the noble Baroness made about the sale of houses, one can speak as much as one likes and, my goodness! in this House we have had some hours of debate on the arguments for and against the sale of council houses. I am sure that the noble Baroness would not thank me for embarking on that again now; dearly though I would like to do so, I will resist the temptation. On that point I will say only that, with regard to the policy of not building accommodation for renting in the new towns, just a few figures would perhaps be helpful to illustrate what the position really is. 325 In 1980 the programme for rented house construction in the English new towns was reduced to 1,000 dwellings. We then decided that no further rented housing should be started by development corporations unless there were really convincing reasons for doing so in special cases. Instead, new towns are to concentrate on shared ownership and on the provision of sites for the private sector, including starter homes. All new rented housing by new town corporations therefore requires specific approval. The current programme includes some 300 rented dwellings in Washington—rounding off a previous development—and 240 in Central Lancashire New Town. There are also some 60 rented houses being built at Basildon to meet the special needs of the elderly and the disabled. Despite the switch to shared ownership and private site provision there has not been any shortage of housing in the new towns to meet the needs of incoming population. In fact, it has been quite the opposite.
In September 1981, some 6,800 rented dwellings were vacant in the 11 English new towns which retained their housing—some 6 per cent. of their total stock. I would certainly agree that some of these dwellings are unoccupied for quite valid reasons, such as the need for repair or because they are being sold. Nevertheless, there are considerable numbers of vacant dwellings immediately available for rental in nearly all the new towns. For example, there are more than 800 in Telford, another 800 in Peterborough, and over 480 in Northampton. So it really cannot be maintained that the emphasis towards home ownership has resulted in any shortage of houses for rental in the new towns. As for the other point the noble Baroness made, I would say that we are making progress towards the settlement of authorities' claims for grant under Section 51 of the New Towns Act towards the cost of remedial work to former new town houses. She will probably know that we commissioned the National Building Agency to advise us on these claims, and the work is due to be completed by the end of May by a company established by former staff of the agency. We aim to take the final decision on the extent of assistance to be made available as soon as possible after we have received their report and after we have held any necessary further discussions with the authorities concerned and the ADC. I hope that, after this lapse of time, it will be possible to reach an equitable settlement, and meanwhile we have made it clear to authorities that they can carry out any urgent work without prejudicing their claims.
On the point the noble Baroness raised about the possibility of short-term loans, my honourable friend said in another place that he would reconsider short-term loans from the Exchequer, and this, as I understand it, is what is happening at the present time.
So, without making much ado of the whole matter, I think the parties and indeed everyone in your Lordships' House can unite in our appreciation of what the new towns have achieved and indeed that we can send our best wishes to them as they move towards the end of their lives as new towns and towards what we all hope will be their very successful lives as normal towns. I think they are continuing to do an excellent job. This Bill will enable them to press on in the task of bringing their work to completion. I would ask your Lordships to give the Bill a Second Reading.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.