Single Regeneration Budget: Inner Cities

HL Deb 08 February 1995 vol 561 cc221-54

3.20 p.m.

Lord Dubs rose to call attention, in the light of the problems of inner cities, to the working of the single regeneration budget; and to move for Papers.

The noble Lord said: My Lords, I am delighted that I have been asked to open this debate. In order to set the context I shall refer briefly to some of the main problems in our inner cities. I then want to mention the way in which I believe the single regeneration budget operates. Finally, I want to spend most of my time stating what I believe to be the defects of the single regeneration budget. In talking about the problems of inner cities I do not intend to go through all the difficulties—it would take far too long. But it is right that I should at least mention the main problems; it is those problems which government policy ought to address and it is those problems which ought to be alleviated by the single regeneration budget.

The first problem to which I wish to refer is poverty. I possess rather more precise information about the London situation than about the country as a whole. I hope therefore that noble Lords will forgive me if I do not statistically sweep the country. Let me give a few examples.

It is estimated that there are 1 million Londoners living in poverty—that is, people on income support and low pay. A third of the children in London are apparently poor enough to receive free school meals. In some boroughs—Tower Hamlets and Hackney—half the children receive them but even in so-called wealthy Westminster, a quarter of the children are on free school meals. We see signs of homelessness all around us. There are over 30,000 families in London in temporary accommodation who have been accepted as homeless by the local boroughs. Over 13 per cent. of the homes in inner London are unfit. Since 1979 there has been a massive reduction in the building of homes by local authorities throughout the country—perhaps one of the largest of all reductions in government spending over the past 16 years. And we see people sleeping in the streets on a scale which was quite unknown to us before this Government took office.

Let me turn to unemployment, although I am sure that your Lordships will be fully aware of the tragedy and the way in which it affects people throughout the country as well as those in inner city areas, For example, since 1988 over 500,000 jobs have been lost in London. In terms of crime, between 1979 and 1994 recorded crime in London increased by 58 per cent. and violent crime increased by over 15 per cent. on last year. Almost 10 per cent. of the crimes in London are classified as violent, and that is the highest figure in England. The clear-up rate for crime is 16 per cent. in London and 26 per cent. nationally.

When one talks about the health situation in London, we find that one in seven children in London now suffer from asthma —an illness which has increased enormously in recent years. Noble Lords will be aware of the cuts in the National Health Service; the closure of Bart's and Guys hospitals; the crisis facing the London Ambulance Service, and the fact that From July to September last year over 3,700 patients had operations cancelled.

Let me turn to the disadvantages facing ethnic minorities, including refugees. Here I must declare an interest for I am associated with the Refugee Council and we are greatly concerned with, and I hope that we have a reasonable knowledge about, the situation affecting asylum-seekers and refugees. Above all, there is a sense of hopelessness in our inner cities, and all that after 16 years of Conservative government when many people would say that the situation in our inner cities is worse, the differences between rich and poor being much greater than they were in 1979.

What has been done to tackle those problems? It is my assertion that the Government have attempted consistently over the past 15 or 16 years to limit spending in inner cities, especially by local authorities. I referred earlier to the virtual cessation of house-building by local authorities. We have had a series of grants, sometimes related to new structures such as urban development corporations and training and enterprise councils, though they have not had much by way of democratic accountability. Then along came the single regeneration budget. Perhaps I can express my thanks to the many people and organisations who helped me in collecting and assembling some of the material that I am using; for example, the ALA, the LGIU, the staff of the Refugee Council and many other individuals and organisations who gave me information to help in an area where hard facts are difficult to obtain.

The single regeneration budget is an assembly of 20 existing programmes or grants. I believe that five different government departments are involved in the single regeneration budget and there is now a ministerial committee on regeneration. As regards the Civil Service, 10 regional offices have been set up to steer the single regeneration budget along. The concept of partnership has been developed and much mention has been made of training and enterprise councils involving the private sector.

There are clearly some good points in all that; nobody would say that everything is bad. But it may be worth commenting that, given the number of times training and enterprise councils are mentioned, only in recent weeks South Thames Training and Enterprise Council had the receivers called in and will now be abolished—so much for the weight given by the Government to the project when the single regeneration budget was first proposed.

If one studies the proposals carefully, it seems to me, at least as regards London—I am conscious that this debate is not merely about London but is intended to cover the whole country—that the Government have actually been contorting themselves to devise ways to make up for the absence of local government covering London. That is why we have a government office for London and that is why some of the devices used to steer the single regeneration budget along seem to send a signal saying, "Oh dear, what a pity we abolished the GLC. We should not really have done that". That is the message I get.

The main thrust of what I want to say relates to what I see as the disadvantages, difficulties and defects of the single regeneration budget, of which I have quite a long list. The first is that it is a device for reducing the amount of money to be made available. Of course the arithmetic is complicated. What has been happening is that as the individual programmes expired on specific projects, the single regeneration budget took over. The SRB therefore will not start taking over all the 20 programmes in April, but merely the elements of those programmes where specific projects have come to an end. There will be a phasing-in of the SRB as the others are phased out.

Nevertheless, the best estimates that one can make are that over the next five years there will be a 25 per cent. cut in real terms in the money made available under the SRB compared to that available under the 20 different grants which it is replacing. That must be seen in the context of capping of local authority expenditure. That again is a source of money which has been severely limited. My understanding is that at the present time very few local authorities will be allowed to increase their expenditure by more than 0.5 per cent; so if inflation is at 2.5 per cent., it means that there will be a cut in real terms in local government spending of 2 per cent. on top of the cuts that are coming in under the SRB.

Let me say in passing that there is an uneven distribution of money by the Government, whether through local government spending or through the SRB, and sometimes it is a distribution that is difficult to justify. Let me talk about local authorities for a moment. For example, Wandsworth is a borough that I know something about. At the moment it is receiving the lion's share of the non-needs related grant. Wandsworth—a single London borough—is receiving 12 per cent. of the national total of the non-needs related grant. That seems to be a real distortion and suggests political favours being repaid rather than needs being met.

I am reminded of the comment made to me by a councillor from a north of England local authority who said to me—this was at the time of the poll tax but the principle seems to hold good under the new arrangements—that if his city had been given the same level of support from central government as Wandsworth and Westminster received, not only would his city not have had to levy any poll tax, but they could have declared a dividend for every poll tax payer. Such are the inequalities and distortions.

Let me turn to the main thrust of my argument. My second criticism of the SRB is that it seems to have no tangible strategy. It seems to me to be a series of bids; I agree that criteria are laid down, but there seems to be no overall strategy for saying that these are the problems that need to be tackled and how it is intended to tackle them. There is a bit of a hit and miss element about it.

My third criticism is that there seems to have been a change in the balance, and that much more weight is given to economic considerations than to social needs. I am not decrying economic considerations—they are vital—but in terms of the grants that have been replaced, where there was a heavy element of looking into and supporting social needs, it seems to me that this has now changed.

The result has been that places like Bolton, Leicester, Walsall and Nottingham, which have large levels of deprivation, have received nothing under the SRB whereas Bedfordshire, Hertfordshire and Eastbourne, for example, have received nearly £7 million. Hardly anybody would say that Bedfordshire, Hertfordshire and Eastbourne are particularly notable places of deprivation.

If one looks at the situation in London, one can also be rather puzzled at the criteria that have been used. For example, why was the King's Cross scheme turned down alone among major schemes submitted? Why was every scheme from Hammersmith and Fulham rejected whereas schemes in Brent were approved? There is a very odd pattern here which does not seem to make sense in terms of the needs of areas and the problems that are being faced in inner cities.

One of the characteristics of the SRB is that private cash should be injected. Of course, where that is possible it is sensible, and I welcome it. The difficulty is that it is unrealistic to expect private cash for many social projects. Projects for ethnic minorities and refugees typify the types of schemes where it is jolly difficult to persuade the private sector to put up cash. In other types of schemes it is possible, but we have an imbalance resulting from the criteria that have been applied.

My next concern is that there is no ring fencing. Let me briefly explain. Previously there was an ethnic minority grant. That was a small sum of money which was intended to deal with the needs of ethnic minorities. That has now been subsumed into the single regeneration budget and very few ethnic minority grant projects have been supported.

However, there is one exception. Section 11 funding, relating to ethnic minority grants, now comes under two different headings. Some of it still comes from the Home Office and some falls under the single regeneration budget. There is not much logic in having the same grant available under two different headings. Perhaps the Minister would comment on that.

All this highlights not only that the Government do not have an overall strategy for inner cities, but that they do not have a strategy regarding ethnic minority communities. There seems to be an absence of commitment, for example, to target funding to support language teaching, in which Section 11 plays a fairly important part. In fact boroughs have been discouraged from bidding for Section 11-type projects. I understand that several London authorities have been told that the best chance of a successful bid lies in physical regeneration projects rather than Section 11 bids.

This is likely to lead to the dismissal of teachers, to add to the already well publicised difficulties that the Government are facing with school governors because of further cuts in local government spending. The needs in London schools are clear and the language needs are well known. For example, in Kensington and Chelsea 37 per cent. of pupils in schools have English as a second language.

Let me move to my remaining points. I am concerned about accountability. We have localised Civil Service offices—integrated regional offices—but there is not much accountability except to five government departments. I am worried about the inefficiency of the whole process as there have already been 256 losing bids, or losing partnerships, all of which took a lot of time and effort to assemble.

As to housing, the way in which the single regeneration budget is working is a major threat to the housing capital programme. For example, in 1993–94 £80 million was available under estate action funds for new housing schemes, but it is estimated that the single regeneration budget has reduced that to a mere £15 million.

Furthermore, there is a geographical shift in funding away from the former 57 urban priority areas, which themselves were characterised by levels of deprivation which suggested above average needs. Many refugee projects have failed, and the Refugee Council's own project failed under the ethnic minority grant heading. Finally, I am concerned that, in allocation of bids, competition has been the main criterion and not the needs of the area and the viability of the project.

We could do better. I am not arguing that the single regeneration budget cannot be made to work better—I think it can—but it will need a few changes. We must find a proper way of developing strategies for dealing with inner city problems; we need a proper and democratic way of developing local plans and strategies; there probably needs to be some form of ring fencing of the most important areas if setting priorities alone is not sufficient; and the budget needs to be concentrated on high need areas.

As I mentioned earlier, I am not saying that all is wrong with the SRB. Perhaps it is better to have one scheme rather than 20, but there are a number of major defects. There have been some bitter disappointments in inner city areas; some important schemes have failed; and needs which were met in the past are no longer being met.

With some fast movement the Government could salvage something. They could modify pretty radically the SRB, and then we would have the beginnings of a little more help for inner cities; otherwise There is gloom and doom in our inner city areas, and it is the Government's fault. My Lords, I beg to move for Papers.

3.35 p.m.

Lord Gisborough

My Lords, the single regeneration budget was designed to bring together the 20 programmes of six agencies which previously had all been tackling the disadvantage of urban decay within the remits of their own organisation. As a result of bringing all these budgets together into the single regeneration budget, all agencies have come together to work in partnership.

Since people in disadvantaged and run-down areas frequently experience multiple problems, which do not take into account agency functions, the rationale behind all agencies working together is beyond dispute. The SRB from that point of view must be a good thing. Whether the competitive nature of the S RB is also a good thing, is more debatable. Competition may of course lead—and often does—to excellence in all spheres of life. But sometimes it may be a superficial excellence of presentation, or in this particular activity of regeneration it may overlook relative needs between different areas. We now have the 1991 census results and analysis, and these ought to have an important influence on regeneration priorities.

The SRB is also welcome because it puts local government in a central role, whenever that is appropriate, while leaving the freedom for other agencies to lead where circumstances favour that. The time span of the SRB programme, up to seven years, is potentially valuable, enabling hard core problems to be tackled over whatever period is needed. However, there is still only certainty in funding for year one projects, and this needs to be reconsidered.

The geographical spread of the SRB over the whole of England is in many ways a benefit compared with the selectivity of the former Urban Programme and City Challenge. Poverty and disadvantage are not exclusive to large urban areas; they exist for many individuals in small towns and rural areas. But the more widely the jam is spread, the thinner it has to be, and the overriding weakness of the SRB in 1995 and immediately following years is the low level of resource. Although £1.5 billion is being made available for regeneration, there is only £125 million in 1995–96 of uncommitted money available nationally for new initiatives.

What this means—if we take what is for me a local example such as Middlesbrough—is that the approved SRB in 1995–96 is only £440,000. Three years ago this borough, with extensive areas of disadvantage and urban dereliction, was receiving £7.5 million per annum from City Challenge and £5 million from the Urban Programme. The Urban Programme has gone, City Challenge will be gone in two years, and the funding of the Teesside Development Corporation—now at last starting to make an impact on Middlesbrough—will also he gone in two or three years. I do not see Middlesbrough's problems being solved in that time. The 16 per cent. unemployment figure will not disappear that quickly. The running down of City Challenge and the development corporations must not be taken as an excuse for reducing expenditure on regeneration. Those resources should be rechannelled into a greatly expanded SRB. By then the partnerships will have had experience of working together on regeneration, and it is to be hoped that some of the snags and irritations will have been ironed out. There are already stories of excessive bureaucratic requirements being imposed by central government through regional offices. Great wads of forms have to be completed, and expenditure has to be programmed with a precision which is ignorant of how the real world operates. Out there life is not so predictable in public and private sector alike. Flexibility is needed, not sanctions for missing targets in a given quarter.

One example and particular concern for me is the funding for the Learning from Landscape project. This has brought environmental issues to schoolchildren in 20 inner city schools in the area, and could have a dramatic effect on the outlook of youngsters in future to the environment, and indeed to matters such as crime. Funded by City Challenge, it stands to have to wind down when that funding ceases.

Given the experience of the SRB and a revised and more flexible framework from central government, can SRB achieve successful regeneration? The answer, I believe, is yes, but only partially. It has a strong emphasis on bricks and mortar. Up to a point that provides jobs in the building industry during the construction period, but not enough jobs for disadvantaged communities. Should we now consider how we could create more jobs by direct means, in labour intensive programmes, no doubt in the main publicly funded? We need to be creating jobs for people who will never aspire to more than unskilled or semi-skilled work, who form much of the hard core of disadvantaged people, too many of whom turn to crime, and some of whom perhaps could become employable in the private sector given new experience of work.

There is plenty of work out there that needs doing, especially in the environmental sphere. The importance of our town centres can be emphasised. Let us have better cleaning and maintenance and townscape in our public areas. Community forests are in the public mind. Let us have more trees and foresters more rapidly. The Home Energy Conservation Bill is with us. More surveyors would allow a greater number of house installation operatives to be employed.

Perhaps we should now be thinking about a substantial proportion of the future resources for regeneration going into putting unemployed and unemployable people directly into work and regenerating their economic independence and self-respect, and perhaps thereby reducing their temptation and tendency towards crime, rather than putting all the money into bricks and mortar. The SRB is a good programme but needs full commitment from the Government and continued funding.

3.43 p.m.

Lord Tope

My Lords, in what I believe is known as the current climate I think I should start my remarks by declaring an interest, although most definitely not a pecuniary interest. As some noble Lords will know, I am the leader of an outer London borough council. Indeed, it is one of the very few outer London borough councils to be at least partially successful in its bid for the current SRB round, so what I have to say today will not be a whinge from an unsuccessful bidder. I am also aware that my council hopes to be successful in the second round too, so perhaps I need to temper my criticisms today while bearing in mind who may read the report of the debate at a later stage.

I am grateful to the noble Lord, Lord Dubs, for initiating the debate. The SRB is not always the most exciting subject to the general public or perhaps to your Lordships' House. Nevertheless, as the noble Lord so rightly described, it is a subject of enormous importance to the urban areas of this country. Like the noble Lord, my experience is primarily in London and the comments I make must primarily relate to London, although I am sure that they are at least as applicable to other parts of the country.

I want to start on a positive note and say why, overall, I welcome the single regeneration budget. As previous speakers have said, it brings together some 20 previous funding packages which central government allocated to local areas. Many of those packages could be applied for only by particular areas, mostly inner urban areas, and large parts of urban Britain were ineligible even to apply for those funds. My own authority, and other authorities like it, was excluded from programmes such as the Urban Programme, City Challenge, and so on.

Where I start to differ with the noble Lord, Lord Dubs, is on his assumption that areas such as Eastbourne and the one I represent have by definition no needs. That is not so. In among the relatively affluent parts of boroughs like mine there are pockets of quite severe deprivation—as severe as can be found in many parts of the inner cities. Quantitatively they are not as great as can he found in the inner cities, but qualitatively, for the people and families concerned, they are at least as great. Indeed, it could be argued that they are greater, simply because they are not recognised. To be in need and to be invisible is worse than just being in need.

The single regeneration budget, for which all are eligible, gives us an opportunity to start to tackle those problems. Authorities like Sutton know that within its boundaries there are areas of great need. We know that we have the ability to bring our communities together to tackle those needs and we know that we have the flair and the imagination to do so innovatively. With SRB, at least we now have an opportunity to compete for the means to do so.

On a similar positive note, I have no doubt that the existence of the SRB has been an added spur to producing real and meaningful partnerships between local authorities, the private sector and a number of other bodies. It will undoubtedly bring greater private sector funding and resources than would otherwise have been achieved. It means chat local authorities and the private sector each have to learn a different way of working and a different way of working together. All of that is good. It is a great stimulus to developing a coherent local framework for regeneration. But what it does not alone do is to produce anything of a regional basis for regeneration, a regional regeneration strategy.

While I generally welcome the SRB I have some serious concerns both about the concept and the process, many of which have already been mentioned by the noble Lord, Lord Dubs. My first concern is the Government's obsession with competition. It means that bidding for a share in the SRB is like a cross between entering a beauty contest and the National Lottery. The results seem to be as random as the lottery and the winners all too often seem to be those who know best how to appeal to the judge's eye. For instance, it is noticeable that the outer London boroughs have done very much less well than the inner London boroughs. That is partly for the reasons which the noble Lord set out. Nevertheless, I am certain that one of the reasons is that, by and large, the outer London boroughs are very much less experienced at entering these competitions and thus lose out to the experienced entrants who know how to make the best of what they have—just like a beauty contest.

My other principal criticism is the lack of any clear criteria against which to submit bids or against which the bids will be judged. Early on in the process the Government dropped the idea of regional regeneration statements, which would at least have provided a backcloth against which SRB bids could have been submitted and considered. There is still much confusion about funding and about allocation. The process is less transparent than other schemes, which at least have had fixed judging criteria. One of the results of the lack of clear criteria is that there has been so much overbidding. In total, there were 469 bids, of which in the end only 201 received funding. In London, 182 schemes were submitted at the outline stage; there were 124 final bids and in the end only 49 bids received funding.

Overbidding on this scale represents an enormous amount of wasted time, effort and resources by local authorities and others who are already under severe pressure. It also means the raising of loud expectations which, in reality, are never going to be fulfilled. Some work is being done to try to estimate the cost of preparing the 124 bids in London, but an early guess that others have made is that some £2 million is required in preparing the bids to secure funding of just £35 million in total. That is a waste of time and resources. It need not have been so.

To be fair, the Government Office for London was as helpful as it could be within the limitations of the process. It is significant that 42 of the 49 eventual "winners" were among those given encouragement at the outline stage. But, even so, one still has to ask about the 18 London bids which were similarly encouraged at outline stage, but which were ultimately unsuccessful. They had been encouraged and they put real effort, time and resources into submitting their bids. Local expectations had every cause to be aroused and yet in the end they were unsuccessful. Why?

One of the obvious reasons which has already been alluded to is a lack of resources. There are nowhere near enough resources. As the noble Lord, Lord Dubs, said, it is an illusion to believe that these are new resources. In the main they are not, but existing resources channelled into a different channel and a different name. The late increase from £100 million to £125 million in the current round was certainly welcome and it undoubtedly had the effect of resulting in more successful bids. But that was not new money; it was money taken from the budgets of the urban development corporations, particularly the London Docklands Development Corporation. Indeed, one has to question, therefore, whether London really is any better off overall as a result.

The next problem to which I wish to allude has been of particular concern to my authority, and that is the timescale involved. The lack of clarity in the criteria against which bids were to be judged has been compounded by the very tight timetable for meeting the various stages. Too often the process actually ran faster than the guidance!

Even more important, though, for those who give a high priority to real and meaningful partnership with the voluntary and community sectors, the timescale made that virtually impossible. The voluntary sector generally needs a longer timescale if it is to engage properly with its volunteer members, be they its management committee or the local people with whom h is working. That was just not possible in the timescale allowed and, with the added difficulty for many of those organisations of treading in very unfamiliar territory in making SRB bids, I am sure that that is one of the main reasons why there has been such a low level of voluntary sector involvement in London, at least. Indeed, only three voluntary sector bids were successful in London.

Similarly, an effective regeneration strategy must take the local community with it. The timescale just did not permit meaningful consultation with the local communities affected. The danger then is that those communities feel that they are not part of the process; that sometimes significant changes are being imposed upon them without their consent. The effect can be to increase still further the feeling of alienation within those communities. With time and hard work that can be redressed, but it does sometimes mean that rather than starting off on a very positive note one starts by having to retrieve a situation that need not have arisen in the first place.

In conclusion, I wish to make one or two other points. As regards resources, the Government are inviting bids for the second round this spring for which, they say, £40 million will be available in 1996–97 and £200 million in 1997–98. That is not new money, as has already been said, but money which will become available from the ending of present schemes.

We need more resources, effectively directed, to be really successful, as others have said. If more resources are not to be available, as seems probable under the present Government, at least we need more clarity on the relationship between the single regeneration budget and main programme funding. We need reassurance that the Government will not be giving with one hand—for example, through the SRB—and taking away with the other: for instance, should SRB "winners" expect a cut in their SSAs?

I believe that the Government should revive its original proposals for regional regeneration statements. These should be "bottom up", based on local strategies produced by local authorities with their partners. That would not only give a backcloth against which properly to judge bids, but would also provide the vital local democratic input to the regional strategies.

Finally, I believe that local authorities must be given a clear role in the submission of bids for their areas. They are the only democratically elected bodies which can do so. They are best placed in their local communities to bring all the partners together; they can best ensure genuine community involvement. Above all, they can enable decisions about priorities between competing local bids to be taken locally rather than behind closed doors at the regional office. The single regeneration budget could be a great opportunity: the Government must act now to ensure that it is not a lost opportunity.

3.55 p.m.

Baroness Fisher of Rednal

My Lords, I congratulate my noble friend Lord Dubs on introducing the debate this afternoon. I believe it was a fortnight ago when I spoke in a similar debate and emphasised the SRB and how it affected Birmingham. I shall speak again about Birmingham, but I shall not concentrate on the bid as regards which, to a certain degree, we were successful.

Some of the points which my noble friend Lord Dubs made in opening illustrate the serious disabilities which people living in what we call "downtown areas" or "inner city areas" have to face. Not only is there poverty and deprivation, but there is also ill health. My noble friend mentioned the high figures in relation to asthma. We have the same problem with children in the City of Birmingham. That is put down to the existence of the motorway, although I am not sure that that is right because the downtown area has always had high asthma figures. This afternoon at Question Time I asked a Question about heart failure. Again, the City of Birmingham is one of the areas with the highest incidence of heart failure. There are all kinds of reasons for that, including climatic conditions and deprivation.

Today when people speak about local government they regard it as something which is by the way: it is not of great importance to the Government, but something which has to be put off, and if it were possible to privatise the whole lot, that would solve the Government's problem. Hence local authorities are having to bid, put out their services to the private sector and hope that they can retain those services. Local authorities' pride has been completely diminished by this Government. Perhaps that is one reason why people believe that local authorities are to blame for everything, when more often than not it is government programmes that are causing severe problems for the projects which local authorities would like to put into operation.

At the end of the last century Birmingham pioneered a water scheme to provide pure water for its citizens. It did so for two reasons. First, industry was expanding and needed more water. In addition, there were epidemics due to impure water. The good fathers of that day recognised quite clearly that if an epidemic started in the poorer quarters it would soon spread to the better quarters and everybody would be caught up in it. The good fathers started off with very practical ideas. Just think, at the end of the last century a local authority was ambitious enough to undertake building a scheme which would take a great many years! Fifty years later, Birmingham needed more water and—again, because of the Private Bill procedure—it was able to embark on the Elan Valley scheme. That scheme ensured that the citizens of Birmingham had beautiful water, coming all the way from Wales. I know that my noble friend on the Front Bench will make quite sure that I understand where that water comes from when he replies.

But what happened to all that investment which the ratepayers of Birmingham had made over the years? All our assets and all that we had invested were suddenly taken from us. We now have Severn Trent Water Plc. There is no mention of Birmingham in its title. That water authority has made tremendous profits and pays its people a tremendous amount of money, but it did not contribute in any way to the infrastructure of that undertaking. It could be said that Birmingham's residents should be the main shareholders and that they should receive the dividend when it is distributed rather than the directors of the company.

We are seeing a change in what "local government" means. Birmingham had a municipal bank. When people banked there, the local authority benefited. Again, however, under government legislation that had to go. Instead of being able to embark on such enterprises, which benefit citizens and are part of the ethos of the city, we now find that local government is faced with all the problems that nobody else wants. Local authorities have to pick up the pieces.

The Government have a policy of closing mental hospitals. I do not disagree with that policy, but the health authorities do not say, "Here is all the money that we had for that hospital which we are now closing; look after the patients we are going to send you". It does not work like that. The land on which the mental hospitals used to stand is being sold and a profit is being made on it. Local authorities, including in the Birmingham area, have to provide services on a mere pittance, as well as dealing with all the problems that arise with community care and from trying to help such people. It is not that the local authorities do not want to do that; it is simply that they do not have the finances. Instead of encouraging local authorities to be enterprising, we are giving them the jobs that other people do not want to do.

As I said in our previous debate on this subject, Birmingham was fortunate in its SRB. Although it did not get all that it wanted, it got a fair share. Now, however, we are faced with capping limits and we do not have the urban aid that would enable us to go further in helping our deprived areas.

What is Birmingham trying to do? I began with our history. During the past decade, almost 60,000 jobs have been lost in the city. That decline in employment must be contrasted with the growth in the number of jobs nationally. Most of the jobs that have been lost are manufacturing jobs. The Government, through the Department of Employment and the Department for Trade and Industry, should be considering that loss of manufacturing jobs in Birmingham because, if Birmingham loses the export markets which it has built up over the years, the decline in the country as a whole will be more severe. Birmingham is known as the workshop of the country.

It is important for the Government to realise that such problems are not fully understood. As other noble Lords have said, the bidding is a sort of competition. I suppose that Birmingham presented its case and o its bid successfully. I have read the bid all the way through and it is, indeed, well presented but, as my noble friend Lord Dubs said, other local authorities might not have had the skills or the workforce to enable them to do the same.

If we are to regenerate a city such as Birmingham, we must look at unemployment. Black, Pakistani and Bangladeshi workers are extremely vulnerable. In Birmingham, they experience an unemployment rate that is twice that of white workers. The unemployment problem is deep-seated. In July last year, almost 49 per cent. of the jobless did not come from Birmingham originally. We have to be careful about such figures.

Youth unemployment is growing in the city. My mother used to say that the devil makes work for idle hands. The increase in crime is occurring because of unemployment and deprivation. What do you do to keep up with the rest of the population if you cannot earn a wage? You have to find the money in some other way. It is unfortunate that the local authorities are left to tackle such problems.

The City of Birmingham was disappointed that Saltley was the only area to be helped in its regeneration. It has lost out because, under the normal procedures, it would have received urban aid grant. Although Birmingham receives help for Saltley, it has missed out on help for another area and is very disappointed. Although I am sure that everybody in this Parliament building knows about Saltley, it is important to remind your Lordships about the miners' march and the final giving way at the Saltley gasworks. While regeneration is taking place in that area, I must ask the Minister who is to take over the responsibility—and when —for dismantling the gasworks in Saltley. They cover a vast area. That land is contaminated and will blight the city until some decision is made about it. Such a responsibility should not lie at the feet of the local authority. This is an important issue. I understand that gas boards all over the country are dragging their feet about the clearance of their derelict land. It is important for those in the inner cities to know about such problems and when they will be solved.

4.7 p.m.

The Lord Bishop of St. Albans

My Lords, this is an important debate and I join others in welcoming the initiative of the noble Lord, Lord Dubs, in introducing this subject. I have been impressed by the regional expertise of those who have already spoken. From these Benches, I should like to make a much more modest contribution, beginning if I may with a personal reminiscence.

In October 1993 the Children's Society held its annual national service in St. Albans Cathedral and I was invited to preach. We were joined by a group of children from inner city Lambeth who sang a song they had written themselves as part of a church-based research project called Children in the Neighbourhood. The words went like this: I have a place of my own. A place to dream—to sit and stare— I travel fast—I'm anywhere— In distant lands and far off times. I've secrets kept in words and rhymes. I have a place where I go when I am lonely. I have a place I go to be alone. There's peace and quiet there— I can be anywhere. I have a place of my own". The research indicated that the children had a strong sense of what was right and wrong with their neighbourhoods. I was greatly impressed by their creativity, their deep insights and their aspirations for space and peace in the midst of the crowds in which they lived.

I am bishop of a diocese which is relatively prosperous, but it does have areas of urban deprivation in Luton and Bedford —yes, Bedfordshire does have its problems. I speak also on behalf of many of my brother bishops from urban dioceses, and the point I want to make to your Lordships is that regeneration initiatives which fail to place a high value on aspirations such as those will fail to deliver lasting change.

For centuries the churches have provided a focus for community activity, a focus which values local people and which encourages them to hope. A fine example of this is the PECAN project in Peckham, South London. There a group of churches has set up employment preparation courses with the unique feature of recruiting unemployed people by door-to-door visiting on the council estates. The project workers reach out to those who have become demotivated; people who feel they have no hope. The Church of England's Church Urban Fund provided some of the funding for this project—and I am pleased to say that an offshoot in neighbouring Woolwich is now receiving some funding through the Greenwich Council's successful single regeneration budget bid: a good partnership of church and state funding.

It is the duty of a bishop to listen closely to what people living in our most deprived communities have to say. We work on the assumption—nay, the conviction—that each person is made in the image of God and is therefore a person of great potential, creative talent and innate energy. It follows that therefore we need policies that will ensure that this kind of energy can be harnessed in programmes which are stable enough to encourage long-term planning.

We welcome many of the principles that underlie the single regeneration budget. We welcome the co-ordination of effort between different departments responsible for different aspects of multiple deprivation which need to be tackled together if they are to make any lasting impact. We welcome the delegation of responsibility to regions, and within regions, to local consortia responding to local initiatives. We welcome the emphasis on partnership between the public and private sectors and the local community. We commend and welcome the rehabilitation of local government as a lead agency—in many cases, the lead agency—for delivering the programme, while keeping open opportunities for others to take the lead where this is more effective.

We welcome the consultation that goes on throughout the process, including the guidance offered in drafting bids and the on-going dialogue between partnerships and regional offices in the formulation of bids. We also welcome the extension of coverage to all areas of deprivation, both urban and rural, and the flexibility over the scale of projects whether covering small localities or wide areas.

All this is very much to be applauded; but we would want to offer some warnings as well. First, the scale of resources: this is not a plea for spending more money but just an expression of regret that the introduction of the SRB was the occasion for a substantial reduction in overall government resources going into urban regeneration, particularly as the coverage is wider. The noble Lord, Lord Gisborough, is right: the jam has become thinner. In this case the whole was considerably less than the sum of the parts. I am glad that, on current balance, the total resources of the SRB are to be maintained for the next few years even at this reduced level. However, there are still strong arguments for increasing the sums involved so as to allow more new initiatives to be approved alongside the continuing funding of the first-phase projects.

Secondly, I would emphasise that the SRB, on any scale envisaged, is no replacement for the reduction in mainstream programmes affecting inner cities, and particularly those to do with training and housing.

Thirdly, the involvement of the local community must be more than lip service if projects are to have a lasting impact and if local people are not to feel let down. Recent analysis produced by Mr. Greg Clarke on behalf of the NCVO Urban Forum showed that fewer than half of the successful bids even claimed to have involved any sort of voluntary organisation. Even where the voluntary sector has been involved, the closeness of their involvement has sometimes left much to be desired both in the planning and, more importantly, in the implementation of the plan. There is inevitably here a risk of "tokenism". Moreover, one must emphasise that while the involvement of voluntary bodies is to be welcomed, it is not necessarily the same thing as involving the local community, which may be disorganised or inarticulate.

This leads me to my fourth concern, which is the absence from the SRB of any mechanism or resources for initiating, encouraging and building up the confidence and capacity of the local people themselves. If I may speak of the Church's contribution in this regard, the Church Urban Fund's trustees endeavour to respond to people's own vision for their own neighbourhoods. Each application must demonstrate that it is rooted in locally identified needs; but the fund is also aware that it must resource its intention, and so it provides special grants for feasibility studies and for management committee training. It has developed a system of application for grants which support the applicant, thus building confidence.

In the light of our limited experience in this area, I ask Her Majesty's Government whether they would note three things. First, would they please acknowledge and emphasise the importance of medium and long-term development plans and at the same time ensure that local communities are involved in their formation? Secondly, would they not underestimate the damage to hope for local people involved in failed SRB bids and endeavour to develop strategies to redress this? Thirdly, would they ensure that the SRB is seen as only one part in a much wider strategy for cities which involves adequate funding through mainstream programmes?

By the year 2000 those children from Lambeth who came to St. Albans will be reaching adulthood. What can they then expect? Will they have a place of their own; a place to dream? The Church of England and other faith communities are committed to encouraging imagination and hope in our inner cities. I suppose it could be said that we are less concerned with regional regeneration and more concerned with the regeneration of the people in those regions. I ask: will the Government provide the opportunities and the resources for these hopes to be fulfilled?

4.19 p.m.

Lord Ennals

My Lords, I am very privileged to follow the right reverend Prelate. I happen to be, together with the noble Lord, Lord Peyton, the patron of one of the finest inner city projects that I know of in Stepney, the Bromley-by-Bow Church Centre. My purpose in mentioning it now is that it is a church initiative in which the main objective of the church concerned, which does not happen to be the Anglican Church, is not the conversion of souls, though in fact many souls have come as a result of the fact that 500 or 600 people every week of up to 100 races and languages are involved in this activity.

I do not know much about the single regeneration budget, but it is my pleasure to support my noble friend Lord Dubs who set out his case with great clarity. I want to add some perspectives from my own experience, to one of which I have just referred. Of the other two, the first goes back into my dim and distant past as a junior Minister in the Home Office in the 1960s at the time when Section 11 grants were first initiated, and when my noble friend Lord Allen of Abbeydale was the Permanent Under-Secretary. The second is as chairman of the UNED-UK Round Table on Health and the Environment. It has produced a report on sustainable development, commenting on a UN inquiry into governments and their performance. The clear political conclusion of the Round Table, which includes over 30 voluntary organisations, some of them active and widely representative of different disciplines in this country, is: If the UK is to develop strategies to alleviate poverty—including inner city poverty—then the Government must play a full and active role in developing European Union social policy". The Round Table believes that to do that outside the main agreement on social policy places an undue constraint on the role that the UN can play. The UK Government should reverse their decision to opt out, and should now endorse the Social Chapter. Many of us on this side of the House would argue that case. Our report is addressed to the UN Commission on Sustainable Development, following the greatly faulted report to the CSD sent in by Her Majesty's Government.

Perhaps I may make a brief comment on Section 11 grants which, as I said, were introduced in 1967 when I was at the Home Office in my second junior ministerial post. It was an important initiative at that time. As my noble friend Lord Dubs said, Section 11 funding, especially in areas with substantial ethnic communities, was previously available only through the Home Office. Since 1992–93 the Home Office budget available for Section 11 has been dropping steadily. The proportion of Section 11 projects funded by the Home Office was 75 per cent. in 1992–93. That proportion was reduced steadily year by year. We now know that in 1995–96 the Government contribution to Section 11 will drop to as little as 50 per cent. of the total cost of projects: a cumulative cut of 25 per cent. in government support in two years. I hope that when he replies the Minister will justify that reduction, and whether the circumstances in which the grants were made are ones which do not exist, or do not exist as much, in society today.

If boroughs had not struggled to make up the cuts in 1994–95, as many as 650 language teachers could have lost their jobs. The cut in London's funding in 1993–94 alone was £16 million.

The Home Secretary announced subsequently an increase in the Home Office funding available for Section 11: an increase of £15 million nationally, made up of £5 million each from the Home Office, the Department for Education and the Department of Employment. While that increase is welcome—it is helpful that local authority lobbying has had an effect—enormous concerns must remain about the adequacy of funding to meet even previous levels of demand; the absence of a government strategy for work with minority ethnic communities, and, in particular, their commitment to targeting funding to support language teaching. It is appropriate that my noble friend Lord Dubs opened the debate in view of his excellent experience as director of the Refugee Council. He has been able to watch things closely.

At the same time as the Home Office was cutting funding levels for Section 11 projects, 55 per cent. of the total Home Office Section 11 budget (about £60 million) was transferred to the SRB. The initial announcement was that only urban priority boroughs could apply for that element of Section 11 funding through the Government Office for London. That meant that 13 London authorities would not be allowed to bid for Section 11 through the SRB.

I shall move on to other subjects. I am concerned, and the Round Table which I represent is concerned, that we have no definition of poverty in Britain. We pretend that poverty does not exist when in fact poverty, not just in a comparable sense but in a real sense, is without doubt increasing at present. The European Council of Ministers has a worthy definition. It defines poverty as the condition of: persons whose resources (material, cultural and social) are so limited as to exclude them from the minimum acceptable way of life in the Member State in which they live". The Department of Social Security publishes a document entitled Households Below Average Incomes, and the European Commission, the Council of Europe, and major NGOs use the relative poverty line of half the national average income. Using that indicator, the 1994 version gives the following figures for a poverty level as a percentage of actual population. If we look at 1979 which, to many of us, is a significant date in political history, we see that, after housing costs were considered, 9 per cent. were below the poverty line. Even as late as 1990–91, the figure had grown to 24 per cent., and in 1991–92 it was up to 25 per cent. I am sorry that I do not know what the figures are now. In terms of people there are now 12 million people living in poverty in the UK. That is well over double the number in 1979, which was then 5 million. It is a dramatic: and terrible commentary on the political achievements of the past 15 years.

Lord Gisborough

My Lords, while the noble Lord's figures may or may not be true, does he agree that the reason for it is that those who are not living in poverty have done so much better? Previously everyone was at a much lower level.

Lord Ennals

My Lords, that is true. I do not question that, because the figures show it. Ten per cent. of the population has done extremely well, but it has done so at the expense of the lowest section of society.

Lord Gisborough

My Lords, no.

Lord Ennals

My Lords, the noble Lord says "No". It is true. If we look at the levels of remuneration, we see examples day by day of absurd, ludicrous and sickening levels of remuneration at the top while there is a virtual freeze on the pay of those at lower levels. Of course, that is a factor that we must take into account.

A survey undertaken by the Association of London Authorities showed that in 1993 25.1 per cent, of primary school pupils and 18.5 per cent. of secondary school pupils received free meals in London. That is another way of testing poverty. That compares with 17.8 per cent. and 12.4 per cent. in 1991. Again, that is a sad commentary on the state of those whom some would call the lower classes.

If income for 1979 is converted in line with 1992 prices, the poorest 10 per cent. of families with children had an average household income which was £438 per year lower in 1992 than it was in 1979. By contrast, the disposable income of the average household among the richest 10 per cent. rose by £13,900 per year between 1979 and 1992.

I believe that the Government have a great deal to answer for and I hope that we shall hear some positive proposals from the Minister.

4.31 p.m.

Lord Gladwin of Clee

My Lords, I thank my noble friend Lord Dubs for initiating today's debate. It gives the House an opportunity to look at the effect of two government decisions. The first was the bringing together under one roof of the regional activities of four major spending departments; Employment, Environment, Transport, and Trade and Industry. That created the 10 integrated regional offices to which noble Lords have referred.

One of the major tasks of the regional offices has been to administer round one of the single regeneration budget. When the regional offices were created and the SRB was launched they had friends in local industry and commerce and in local government. People heaved a sigh of relief because there appeared at last to be government recognition of the need to co-ordinate activities in the regions. Furthermore the SRB brought together 20 separate funding regimes from five separate government departments.

That pooling of funding and the creation of one vehicle for urban regeneration in England was welcomed. However, doubts were expressed at the time about the total amount of money made available. The Policy Studies Institute stated that the SRB had many welcome features but it expressed concern about the cut in urban spending from £1.6 billion in 1993–94 to £1.3 billion in 1995–96. That concern was well founded. There have been significant cuts in programmes. Those cuts have had a direct impact on urban regeneration. According to the Guardian of 11th January 1995: Figures provided by the Department of the Environment show that there is £6.1 billion reduction over a five year period beginning 1993–94. The cuts amount to a 21.2 per cent. reduction during the period 1993–94 to 1997–98 under the Department of the Environment's heading, 'Housing, Construction and Energy Efficiency' and the 'Urban Regeneration and Countryside' heading". So, instead of providing more resources to meet the undoubted need of urban regeneration, the Government are providing less.

The second reason why the SRB has lost friends is because, having brought together under one roof and one director the regional activities of four major departments, there seems to be no regional framework—no recognisable, let alone agreed, regional strategy against which SRB bids can be considered. Together with other noble Lords, perhaps I may urge the Government to reintroduce the proposal that they made in November 1993, but subsequently dropped, that a regional regeneration statement be drawn up in every region.

Consultation with local authorities, training and enterprise councils, and other interested bodies should take place. As the Minister knows, there have been a number of complaints from unsuccessful bidders for SRB funds. Of course, if you allocate funds by a competitive process there are going to be losers as well as winners. That is understood. But, surely, the winners and the losers should know why they have won or lost. At the moment, it is a lottery or, as one chief executive put it to me, "You never see the ball hit the back of the net".

Let us not forget the amount of time and money spent in bringing together the bidding partnerships by private-sector companies, which are responsible to their shareholders; by voluntary organisations; by training and enterprise councils; and by local authorities. More than 450 bids were made and there were only 200 winners. Among the unsuccessful bids were 192 by local authorities; a lot of money was wasted.

The money was wasted by over-bidding for a relatively small amount of money in a competition where the rules were unclear and the criteria for success unknown. Before round two of the bidding process gets under way, will the Government enter into discussions with the major players—the local authorities and the TECs—to explore ways of making the process more transparent, more cost effective and more relevant to the needs of deprived urban communities, in particular if they expect the private sector to meet the shortfall in public spending on urban regeneration?

My fear is that local industry will begin to walk away from the process. I hope that I am proved wrong but before concluding I wish to draw your Lordships' attention to a speech made two days ago by Howard Davies, director general of the CBI. He said: Although… the establishment of Integrated Regional Offices, are seen as positive developments, companies are not clear that the new 'prefectural' system is right. They are confused as to whom to consult and what criteria they take into account. There is... a growing consensus that a regional focus for decision-making across the public sector needs to be created". I hope that the Government take note of that concern and act accordingly along the lines suggested by noble Lords who have participated in today's debate.

4.38 p.m.

Baroness Hamwee

My Lords, at this stage of a debate it is almost inevitable that there will be a good deal of repetition. Perhaps the only excuse is to emphasise the seriousness of the points already made. All noble Lords have made similar points and I apologise that mine will not be very different, even though each of us may put a slightly different gloss on our analysis of the position. Perhaps another reason for repeating points is to give noble Lords speaking in the next debate the opportunity to get here because we shall finish a little early.

After preparing for today's debate, the question that remains is: what have the Government learnt from the bidding process? I say specifically "from the bidding process" because we shall not know for a little while the success on the ground—"ground" perhaps being the operative word—of the particular projects to be funded. Like other noble Lords I am concerned about a lack of transparency and a lack of clarity in the criteria on which the bids have been judged. I accept that criteria have been published but they have tended to be technical criteria unrelated to the type of project which would be acceptable. I am concerned at how the criteria may he publicised and I am also concerned—this perhaps should have been the first point—at how the Government and all the parties involved consult on establishing those criteria. As many noble Lords, especially the right reverend Prelate, have emphasised, unless the criteria used are based on the communities which the projects are to benefit, they will not be successful.

It should not have taken so much effort to second guess what the Government and the regional offices have been about. There is a great deal of commentary attempting to analyse the process after the event but the parties who should really be explaining the position are not the ones who are doing so. I am not the only one who is relying on newspaper commentary for this afternoon's debate.

The strategic—or, if one likes, the holistic—nature of the assessments made by the regional offices is unclear. That goes along with a lack of accountability. The integrated regional offices' papers are not available even though there is no regional regeneration statement, as has been mentioned by my noble friend Lord Tope and the noble Lord, Lord Gladwin. One must assume that there is some sort of regeneration framework which is capable of being articulated. However, I do not believe any of your Lordships would be able to agree what that is, as we have not been told.

I looked at the Conservative manifesto to see what it had to say on the subject. In promising to bring together resources for targeted inner city programmes into a single budget, it stated: This will mean that funding will go where it is most needed locally rather than according to a set of priorities determined in Whitehall". One must hope that that is so, but how do we know that it is? The integrated regional offices are not a substitute for accountable government, or indeed—as the noble Lord, Lord Gladwin, said—for regional government. I think he described them as co-ordinating central government activities. He did not emphasise the adjective "central" but it is, I think, the apposite term.

It is beginning to be clear that there is an over-emphasis, in the acceptance of bids, on the leverage of the private sector. I understand that the Government's press release on the successful bids showed a ratio of £1 SRB money to £4 private and other public sector moneys. Like other noble Lords, I welcome the partnership that is being fostered by the process. The process is not all bad. I welcome the opportunities that are being given for each of the partners to talk to one another and understand one another. I have a little experience of this myself—in what is certainly not "son of strategic London government"—in London First, which, I suggest, is quite far related from any sort of democratic government. However, it has been fascinating to see how difficult it is for those who represent industry and business to understand the processes undertaken by local government, which naturally moves at a slow pace because it is concerned to ensure that all those to whom it is responsible so far as possible are taken along and are part of the process. Those who are responsible to a small group of people for their decisions are able to take those decisions much more quickly. They find it difficult to understand the slow and consultative processes both of local government and of the voluntary organisations. On the other hand, it has been salutary for those in local government to see the frustrations of those in the private sector when they experience the snail's pace at which local government sometimes moves.

The question of competition has been referred to. I agree with those noble Lords who say that competition is not the right way to approach strategic matters and in particular is not suitable for tackling deprivation. I suggest that urban deprivation should not be a matter for the market. The costs of bidding have also been referred to. It costs about £2 million to prepare bids for an allocation of some £36 million. The right reverend Prelate was right to comment on the raised expectations and of course the sense of anti-climax among those who undoubtedly put an enormous amount of effort into what turn out to be unsuccessful bids. I hope that the lessons learnt can be spread among those who need to understand them as to why some bids, encouraged at the outline stage, eventually failed.

There are certain policy areas which concern me. The noble Lord, Lord Gladwin, and the noble Lord, Lord Dubs, referred to housing and cuts amounting to a figure which I believe the noble Lord, Lord Gladwin, said amounted to over 20 per cent. during the period 1993–94 to 1997–98 in budgets under the DoE heading of housing, construction and energy efficiency, urban regeneration and countryside. Those are real cuts.

The noble Baroness, Lady Fisher, referred to air quality. That is a matter to which noble Lords will return tomorrow in the context of the Environment Bill. It would be helpful if the Government, today or tomorrow—preferably both—indicated their concern for our deteriorating air quality and the need for real steps to be taken to improve it.

There is also, of course, the question of education which one might describe as being investment in people. In the context of the current protests by school governors and others we must all be concerned about the fact that education may well have been a loser in this exercise. The noble Lord, Lord Ennals, referred to Section 11 funding. I will not repeat the figures he gave but I would endorse the concern he expressed.

We have all talked about clarity. The relationship between Section 11 funding and the SRB is one that needs to be much better understood so that boroughs bid in the right budget. I understand that they have been discouraged in many cases from bidding for Section 11 projects because, although the SRB may now be the vehicle, they have been told that their best chance of success from the SRB is physical regeneration rather than thematic Section 11-style bids. I believe, too, that central government argues that the SRB has been very popular with regard to Section 11-type bids and that the evidence given in support of this view is that a large number of bids have been received. That seems a somewhat circular point but it perhaps emphasises if anything the need and anxieties concerning Section 11 funding.

Noble Lords will be familiar with the needs. Indeed, many have been involved at an individual level in promoting the sort of undertakings which have addressed those needs. I shall give just two figures. A recent survey showed that 198 languages are spoken by pupils in London schools. In the borough of Kensington and Chelsea 37 per cent. of pupils in schools had English as a second language, 23 per cent. of pupils were not fluent in English and a total of 92 first languages other than English were spoken in the borough.

Sadly, given that physical regeneration seems to have been, by a long way, the priority in the recent round of successful bids, I have come to the conclusion that PR and the public impact of the announcements must have been at least as important as tackling deprivation and regeneration. Are the Government going for big splashes in the form of physical regeneration and new buildings to which they can point and say, "Look, we did that"? That is much easier to identify than investment in people through education and training which will have an important long-term benefit. I do not deny that physical regeneration in itself is important. It is important not least in giving people a feeling of well-being and confidence in themselves and as an expression of their own concern for their surroundings, but it should be part of a total package.

I make that comment bearing in mind a completely different area of expenditure, the National Lottery. I do not mean the big prizes but the Millennium Fund and the good causes that will benefit. Again, those are important PR items rather than mainstream funding. I agree with the right reverend Prelate that that must not be a substitute for mainstream funding. If the mainstream funding suffers we must look at the budgets together.

I believe that we must look at long-term integrated programmes and tackle the root causes of deprivation. I conclude as I began by asking what the Government have learnt. I hope that the Minister can assure us that they are more concerned with investment than PR.

4.52 p.m.

Lord Williams of Elvel

My Lords, I have to declare an interest, like many noble Lords. I am unpaid President of the Federation of Economic Development Authorities, many of whose members have been involved in bidding for funding under the single regeneration budget.

Secondly, I should like to congratulate my noble friend Lord Dubs on both initiating the debate and also on the way he introduced it with great clarity and conviction. The debate comes at a very opportune moment since the Government are now reviewing the first round of the SRB and are preparing guidance to be issued for the second round. This is therefore the right time for your Lordships to be debating the matter, in the hope—which I hope is not entirely vain—that the Government may actually listen to what your Lordships say and take account of your Lordships' views in formulating the future approach to the SRB.

Many noble Lords concentrated on the problems of inner cities. My noble friend Lord Dubs and the noble Lord, Lord Tope, spoke about the areas of London that they know well. The noble Lord, Lord Gisborough, talked about Middlesbrough in a very moving manner. My noble friend Lady Fisher talked about Birmingham, bringing in not only deprivation, homelessness, unemployment and poverty but the ill health that follows from those. I am glad that my noble friend did not accuse the water that Birmingham gets from mid-Wales as being responsible for that ill health! My noble friend Lord Ennals, at a different level, spoke of the problems of ethnic minorities in the inner cities. All these are matters which are still with us and will no doubt remain with us for many years to come. Therefore, we have to ask ourselves how effective the single regeneration budget is and how effective it could be. I propose to concentrate my remarks on those two questions.

In our view the introduction of the single regeneration budget was potentially an extremely significant step in improving the way in which regeneration strategies were formulated and implemented. As many noble Lords have said, before it was introduced there was widespread criticism of the variety of funding schemes—some 20 in all—and of the way in which they operated. Therefore, bringing them together was potentially a sensible move. Furthermore, the new arrangements at least allowed the possibility that funding would be allocated in a way which would truly reflect local needs and priorities rather than centrally imposed rules and regulations.

I have used the word "potentially" because, like other noble Lords, we do not believe that the SRB has yet achieved anything like the results that it should. I propose to set out to your Lordships what we believe has gone wrong and what needs to be done if we are to avoid those mistakes in the future.

Before I do so, I want to make one thing clear. I am not going to go into the level of resources that are available, although like other noble Lords I regret the overall cut in inner city programme funding illustrated with great clarity by my noble friend Lord Gladwin of Clee. I accept that the overall funding must be a function of the overall financial situation of the country at the time. But I hope that when the noble Earl replies we will be spared the kind of specious double counting to which we have been treated in the past. If we are told that nearly £4 billion will be spent under the SRB I shall have to point out that of that total only £800 million will be available for new projects over the five years, and that organisations submitting bids in the second round later this year will be competing for a meagre £40 million in 1996–97. It is even doubtful whether that is new money. That is thin gruel, and I hope that the noble Earl will not try to fool your Lordships by dressing it up as the richest gravy.

So what mistakes have been made in the first round? I put first the way in which the bidding was conducted. I know, as the noble Baroness, Lady Hamwee, said, that Ministers have boasted about the number of bids received. Of 469 bids submitted last September 201 were successful. However, there is nothing to boast about. In the majority of cases those who were successful, like Birmingham, received substantially less than they asked for.

Although the number of bids sounds good, there are two problems of which I have become aware as President of FEDA. The first, as other noble Lords have said, is that the awards seem to many bidders to be something of a lottery. That is particularly true of those who submitted preliminary bids in June, were encouraged to work out full bids for the deadline of 7th September (thus in many cases having to cancel annual holidays) and then lost.

The second problem, which was mentioned by the noble Lord, Lord Tope, is cost. I can supplement some of the figures which the noble Lord gave. One bidder reported to FEDA that it had cost some £75,000 to put together a bid. That bidder was successful and is not complaining. However, the 250 losers also spent similar amounts—a total of over £15 million of taxpayers' and council tax payers' money—which have gone down the drain. Think, my Lords, too of the morale of those who have spent the money and, after initial encouragement, have had their hopes dashed.

Furthermore, the key point of contact between bidders and the Government has been through regional offices. I am advised that the various regional offices have adopted significantly different approaches to the administration of the budget, both in the indications to prospective bidders on the level of resources available and, even more important, in the nature and extent of contact between the offices and bidders once the preliminary bids were in. Regional offices have also varied in the amount of regional interpretation that they have put on the national criteria, and the indications that they have given of the size of bid which they would favour. Some favour large bids; others try to spread their resources more thinly and more widely.

As the noble Lord, Lord Gisborough, pointed out, even if you win it is a hard task because you then have to submit a delivery plan. In that delivery plan you then have to provide milestones. As a successful bidder, you can only draw quarterly in arrears. If you fail on the milestones, you do not obtain your money. That is a pretty tough programme for bidders to achieve. Many bidders now—I speak of many members of the federation—find it extremely difficult to put together exact timetables in the way that regional offices require simply because firms outside are unable to bid within the time-frame required; and that is another problem.

In the light of the experience of the first round, I suggest that there are three objectives for the second round. Having slated them, I shall suggest how they could be met.

The first objective should be to reduce wasteful overbidding. That will be particularly important if 469 bidders will again bid, but this time for only £40 million. The way to meet that objective must be to involve local authorities at an early stage in the co-ordination of bids so that decisions between competing bids for the same area could be taken earlier, and locally rather than by the regional office. It was one of the great virtues of City Challenge that local authorities were invited to co-ordinate the preparation and submission of bids for City Challenge designation. That role has been lost in the transition to SRB and should be restored.

The second objective should be to remove what the noble Lord, Lord Tope, called the beauty contest element inherent in the current competitive process. It is absurd and wasteful. It is right—indeed it is desirable—to preserve regional diversity, but it cannot be right for regional offices of London departments—after all, they are only satrapies of Whitehall—to decide unilaterally what the features of that diversity should be.

This brings me to my third objective: to build on the regional office concept in a way which involves to the full local authorities and other organisations in the regions. I believe that this is the key to the matter, since if that can be done my second objective would be met. The key to strengthening the regional offices in the way that I suggest is, as the noble Lord, Lord Tope, suggested, and others have confirmed, to revive the notion of regional regeneration statements which were mentioned in the original announcement of November 1993. Those statements should be drawn up by regional offices and local authorities in partnership and would serve—as the original plan intended—as a policy context within which the SRB would be administered. Regional statements, once agreed between regional offices and their local partners, would be submitted for ministerial approval. Once that was given they would provide a framework, endorsed politically both locally and nationally, within which the SRB could be administered, more tightly, by the regional office.

The Association of Metropolitan Authorities and other local authority associations support that approach. I hope that the noble Earl will give us his assurance and that the Government will see its merit and go back to the plan announced in February 1993. If there is to be a genuine truce in the war which the Government started between central government and local government, this is the way to start. It is only if the lessons of City Challenge are learnt and not cast aside—that there must be partnership between local authorities and central government—that we shall make progress. Only in that way will there be a resurgence of hope in our inner cities, to which the right reverend Prelate the Bishop of St. Albans referred. It is only if we can recreate hope that the single regeneration budget scheme will achieve the success which we believe it should.

5.5 p.m.

The Earl of Lindsay

My Lords, I begin by thanking the noble Lord, Lord Dubs, for bringing to the attention of the House the important issues concerning the condition of our inner cities and the role of the single regeneration budget. As the noble Lord, Lord Williams, said, the debate comes at an opportune time.

We have bad a number of speeches from noble Lords with a great regional expertise and experience in inner city matters—not least from the noble Lord, Lord Dubs. Although it will not be possible for me to comment in detail on all the individual issues raised, I welcome this opportunity to underline the Government's determination and commitment to tackling the problems of the inner cities.

The most important factor in regenerating our inner cities is a healthy national economy. It is for this reason that the Government are determined to bear down on inflation, control public expenditure and raise standards of education and training. At the same time, the Government recognise that special measures may need to be taken to ensure that our inner cities benefit from overall economic recovery.

The type of measure applied depends very much on the individual circumstances of cities; there is no single-club solution. We should therefore make no apology for introducing a range of tailored measures to address inner city problems. Indeed, Lord Pitt (whose knowledge and insight on inner city matters is greatly missed) said in the House when we debated inner cities nearly two years ago: The problem requires local participation, support, and flexibility so that different methods can be adopted in different areas".—[Official Report, 24/3/93, col. 356.] The single regeneration budget is crucially important. It is thus that we wish to learn from and feed off the rich experience of inner city initiatives. It was for that reason that the Secretary of State for the Environment announced in November 1993 the formation of the SRB. From April 1994 that has brought together, as many noble Lords said, no fewer than 20 separate programmes, each with its own rules and methods of working.

The noble Lord, Lord Dubs, referred to the casualties of the SRB, in terms of the number of individual programmes which were brought together at one stage. Government policy had been criticised for being too fragmented. For, example, the Audit Commission reported in 1989 that the programmes were seen as being "a patchwork quilt" which encouraged compartmentalised policy approaches rather than a coherent strategy. A report by the Association of District Councils in 1993 stated that what is required is a strategic approach which encompasses all relevant objectives. Therefore the general welcome to the SRB was legitimate. The criticism of the "patchwork quilt" had to be, and was, answered by the formation of the SRB.

It places the initiative with local communities to come up with solutions tailored to their needs and priorities. It recognises that although the most deep-seated problems are focused in our inner cities, there are other areas with pockets of need which require a flexible approach. The noble Lord, Lord Tope, and the right reverend Prelate recognised that point. That approach recognises that regeneration cannot be brought about by an edict from Whitehall or by any single local player alone. Thus a condition of success in competing for single regeneration budget resources is the formation of a broadly-based and active local partnership. That partnership should not simply be a talking shop. Those taking part in single regeneration budget projects have a genuine responsibility and a clear stake in the activities which are being promoted.

Many noble Lords today have questioned the concept of competition for resources. The noble Lord, Lord Dubs, suspected that it might have been the main criterion on which the SRB was being run. I stress to noble Lords that the competitive mechanism was the methodology and had nothing to do with the criteria on which schemes were assessed. The Government are convinced that the very process of competition improves the standards of projects which are brought forward and, even in the case of unsuccessful bids for resources, managed to promote effective local partnerships which might not previously have existed. This is not the Government's view alone; local authorities, TECs and the private sector have all acknowledged the strengths of the competitive approach. Competition produces judgment by merit (I stress to the noble Baroness, Lady Hamwee) and has already proved successful with programmes such as City Challenge, of which my noble friend Lord Gisborough thoroughly approved.

In this process, various noble Lords have questioned the role—or the lack of role—allocated to local authorities, but I stress that local authorities are at the very centre of the Government's urban policies. Within the SRB bidding Round 1, they led in 53 per cent. of the bids and were involved in 90 per cent. of bids. They quite clearly had an important role. That role was laid down and anticipated by the bidding guidance. I stress to the right reverend Prelate that through the involvement of local authorities and the creation of local partnerships, it is a genuine objective of the SRB to create local sensitivity and local confidence.

Some noble Lords have maintained that the single regeneration budget is a cover for cuts in public expenditure. I ask the noble Lord, Lord Williams, to be patient while I explain how the finances work, because he will no doubt recognise some of the figures that I am about to set out.

The Chancellor of the Exchequer's Autumn Statement preserved the baseline for the single regeneration budget at more than £1.3 billion per annum over the next three years, adding up to almost £4 billion in total. These resources will go to support ongoing investment in housing and other regeneration initiatives. In particular, more than £1 billion of the £4 billion will be spent on estate action and housing action trust commitments.

On top of meeting commitments, over £800 million will be available for new regeneration projects over the next three years, with more to come in later years. This £800 million will support both the first bidding round, and the initial years of the second bidding round announced by my right honourable friend the Secretary of State for the Environment on 5th December 1994. I should add that we have been able to secure, within the overall baseline for the single regeneration budget, an additional £25 million per annum for each of the years of the public expenditure survey to boost the resources available for the first bidding round.

The first single regeneration bidding round has been outstandingly successful; local people have risen to the challenge—

Lord Williams of Elvel

My Lords, is the noble Earl about to read the figures, or will he come back to them?

The Earl of Lindsay

My Lords, if the noble Lord will be patient, I will return to the figures in the later stages of what I have to say.

The 201 successful bids stand to attract some £1.1 billion in single regeneration budget support over their projected lifetime—that is up to seven years. The right reverend Prelate inquired about that point in wondering whether the medium term and the long term were being looked after. That £1.1 billion is expected to attract a further £2.9 billion in private investment, and a further £1.8 billion in other public investment. This is another important feature of the single regeneration budget: the extent to which it levers in or attracts resources from other contributors. Of this very substantial investment, some two-thirds will be directed into our cities.

The 201 projects which were successful in the first SRB bidding round will produce substantial benefits on the ground. I congratulate the noble Lord, Lord Tope, on his involvement as one of the successful first round winners. On bidders' current estimates, during their lifetime of up to seven years the projects will improve some 75,000 homes, support over 7,500 voluntary groups and support some 60,000 new businesses.

The noble Baroness, Lady Hamwee, suspected that the Government were seeking big splashes and that the glossily presented applications would stand a better chance than those which did not have a glossy format. I can assure the noble Baroness on both counts that that is not the case. I can also assure her that physical regeneration is not an overriding priority of the Round I budget. I have here the figures as they break down across the different objectives: 95 per cent. are directed to employment and training; 72 per cent. to business support; 35 per cent. to housing; 35 per cent. to ethnic minorities; 47 per cent. to crime prevention; 50 per cent. to environmental projects, and so forth. Physical regeneration is not being pursued at the expense of all other objectives.

Baroness Hamwee

My Lords, I am grateful to the noble Earl. I am very interested in those figures, but I wonder whether he can tell the House if the objectives were made clear to bidders and potential bidders beforehand.

The Earl of Lindsay

My Lords, I am about to come to the criteria for the bidding.

These figures relate simply to the first round of the SRB, which will start from April this year. The second bidding round will be launched later this year—once again, I hope that the noble Lord, Lord Tope, is as successful the second time as he was the first time—with £40 million available for the early approval of bids in 1996–97, and £200 million in 1997–98. The second round will produce further substantial benefits to local communities. It will also ease some of the problems of timescale that noble Lords mentioned in relation to first round applicants, who found that the timescale had been a little too fast for them. Many of the first round losers are returning to bid. The Government offices of the regions are giving them all the advice that they need to complete their second round applications.

The noble Baroness, Lady Hamwee, suggested that there was a lack of clarity and consultation, and a complete lack of guidance on the type of projects that would be acceptable. That is not true at all. The bidding guidance was subject to full consultation. There were 11 regional seminars. The guidance is not technical; it is not frightening. It is a commonsense checklist to guide bidders on how bids will be assessed. The guidance also goes into types of projects which will be acceptable, and into the size, the cost and so forth.

The noble Lord, Lord Gladwin, and others sought assurances about whether the Government would consult the local authorities and the TECs before going into Round 2 of the SRB. We are taking stock of the first round of the SRB by talking to such organisations. We are co-operating on research and meeting with the TEC national council and the National Council for Voluntary Organisations. I hope that that gives the noble Lord some assurance.

The role of the government offices has attracted some comment both in the press and briefly in the House tonight. But I stress that the new arrangements for those offices were widely welcomed by the local authorities, business and the Opposition when they were introduced in April 1994. They have been used to advise Ministers on the basis of the bidding criteria set out in the national bidding guidance and so forth. For noble Lords' information, I should say that Ministers then collectively take decisions on the bids, and also in consultation with the recently created ministerial committee on regeneration.

Employment has been a regular concern of many speakers today. The right reverend Prelate and the noble Baroness, Lady Fisher, both mentioned specifically some of the problems in this area. The noble Baroness mentioned that the Devil makes work for idle hands. I was glad that the very next speaker was the right reverend Prelate so that we had some balance between Satan and the good Lord.

We announced following the Autumn Statement proposals to pilot a new in-work benefit for people without children on low earnings. The Budget also announced an extra £10 in family credit for full-time working families. In addition the jobseekers' agreement will be tailored to individual need; a back-to-work bonus will encourage part-time work with up to a £1,000 lump sum on transition to full-time work. In all, the package of work incentive measures announced following the Budget will help three-quarters of a million people to be better off in work.

Possibly more important than employment is housing. The noble Lord, Lord Dubs, among others, mentioned that single issue. Providing decent and affordable housing is at the heart of making our cities more attractive and competitive. We expect to exceed comfortably our 1992 commitment to supporting the provision of 153,000 housing association homes in the first three years of this Parliament. We now estimate that around 60,000 are being provided by associations this year, bringing the three-year total up to over 180,000. Over the next three years, Housing Corporation funding for housing associations should provide around 135,000 new lettings; taken together with outputs funded by local authorities and by regeneration programmes, we estimate that the grand total of new social lettings over the next three years will be around 180,000.

Our investment in social housing and local authorities' efforts to tackle the problem of homelessness are bearing fruit. The third quarter of 1994 was the 10th in succession to show a drop in the number of households needing to be rehoused by local authorities through the statutory homelessness provisions. The use of bed and breakfast accommodation is dropping even more sharply: it's down by 24 per cent. over the past year. Bed and breakfast now accounts for only 10 per cent. of all households in temporary accommodation. We hope to see that progress continue.

The noble Lord, Lord Dubs, referred specifically to the position of ethnic minority communities in inner city areas. I know that that is an issue of great interest to other noble Lords in the Chamber. Well over a third of the successful bids in the first single regeneration bidding round have as a significant objective the support of ethnic minority communities. The type of support ranges from funding for business starts to specific health and housing initiatives and the provision of community facilities. The extent of support for ethnic minority communities varies from region to region. For example, in London 83 bids were received which embodied the specific objective of supporting members of ethnic minority communities. Of those 83, 35 were successful. This means that 35 of the total of 49 successful bids in London contained measures of specific benefit to ethnic minority communities. This support through new SRB funding is in addition to the continuing funding of ethnic minority community initiatives arising through existing commitments on programmes such as Section 11, the ethnic minority business initiative and ethnic minority grant. It is worth pointing out that even where a project does not have the support of ethnic minority. communities as a specific objective, two-thirds of SRB resources will be targeted to the urban areas where there are above average concentrations of ethnic minority communities.

We are determined that SRB resources should benefit the communities for which they are intended. For this reason, the government offices for the regions require SRB partnerships to make effective arrangements to ensure that those sections of the community intended to benefit from support do so. The guidance on the preparation of delivery plans specifically lays down that practical steps should be taken to ensure that co-operation with the voluntary sector and priority to work with ethnic minority communities are, where appropriate, carried through into practical action on the ground.

Two or three noble Lords have expressed concern about the fate of Section 11-funded projects. It may help if I give some background. Funding has been cut. In November 1992 the then Home Secretary was driven to conclude, with regret, that due to the general economic situation, in particular the Exchequer deficit and the consequent need for further control of public expenditure, it would not be possible to sustain the level of Section 11 expenditure that had been planned. But local authorities were given over 16 months' notice before any reduction would need to take effect in 1994–95 in order to consider how to react to the changed funding situation. In practice, we are pleased to see that over 60 per cent. of authorities have been able to make good the shortfall in funding to enable projects to continue at their original level. The Home Secretary hopes to announce the results of the Section 11 bidding round by the end of this month. Resources for the Section 11 bidding round have been doubled from £15 million to £30 million as a result of additional funds being contributed by the Home Office, the Department for Education and the Department of the Environment.

Health has been a recurring theme in this afternoon's debate. The noble Lord, Lord Dubs, and the noble Baronesses, Lady Fisher and Lady Hamwee, have mentioned air pollution and asthma. As many of your Lordships know at first hand, the special circumstances of inner cities and their residents call for special measures. The Department of Health has produced guidance for local authorities to draw attention to the need to take account of the problems of living in the inner cities when assessing needs in relation to community care plans. This year the Department of Health is organising a conference on the causes of asthma and what can be done to alleviate its effects. Consequently, there is sensitivity to the specific needs of inner cities through the guidance documents.

Primary health care is also a crucial issue in inner cities. For this reason, from April 1990 the GP contract has provided for payments related to patients in deprived areas and more assistance for the improvement of surgeries. The ethnic minority communities also have particular health care needs. The Race Equality Unit, which is funded by the Department of Health, advises social services departments on good practice to ensure that ethnic minority needs are taken into account in the planning and delivery of both health and personal social services. Inner city areas have special problems relating to drug and alcohol misusers. Local authorities may apply for a specific grant to provide 70 per cent. of support to voluntary organisations to assist drug and alcohol misusers who tend to drift to inner city areas.

In view of the fact that in particular the noble Lord, Lord Dubs, the noble Baroness, Lady Fisher, and others from London are here, I should add that our urban policy is very much geared towards encouraging cities to come forward with their own prescription for success. It was for this reason that in November 1993 the Secretary of State for the Environment invited civic and business leaders in three cities—Birmingham, London and Manchester—to draw up what was known as a city pride prospectus setting out a vision for their cities over the next 10–15 years and the practical steps needed to achieve that vision. The three cities are now well advanced with their plans. The London pride partnership chaired by my noble friend Lord Sheppard published their prospectus on 23rd January. At the core of the city pride vision is the need for cities to compete internationally and to raise the living standards of their citizens. It is still early days, but the early success of city pride is yet another demonstration of the determination of cities themselves to shape their future.

The single regeneration budget has released a sense of commitment and partnership at local level which is truly astonishing. The hundreds of local partnerships which the first two rounds will support will play a major part in the regeneration of our cities and other areas into the next century.

I am grateful to all noble Lords who have taken part in the debate.

Lord Williams of Elve1

My Lords, the Minister said nothing about regional regeneration statements about which the noble Lord, Lord Tope, and I talked a great deal. Perhaps I may ask the noble Earl whether or not the Government have ruled those out completely.

The Earl of Lindsay

My Lords, they have not. The government offices fully intend when drawing up local assessments and criteria that there will be maximum consultation with local authorities and exposure to local development plans. Therefore, to an extent they will provide a less formal version of what the noble Lord seeks. The danger of regional regeneration statements is that they set out prescriptive policies for the regions. The SRB has been trying to get away From imposed solutions. One must be wary of that danger.

5.28 p.m.

Lord Dubs

My Lords, I thank all noble Lords who have taken pan in what has been a very interesting debate. With the exception of the Minister, every noble Lord on all sides of the House has had criticisms to make of the SRB. I welcome the fact that there is a broad consensus that the SRB is not a bad thing but has faults. I hope that the Government will take it to heart, even though the Minister in his speech has not given an indication that the Government will change their policy.

In reply to the criticisms about competition being the basis of SRB bids, the Minister said that it was a matter of methodology and not criteria. I put it to him and to the House that, when people and partnerships bid, inevitably they will be influenced by the kind of bid that is likely to be successful. Therefore, bids that may be more important in terms of inner cities but which are likely to be less successful will not be made, because the more successful bids will, as it were, have priority. The fact that there is competition will have an effect on influencing the types of bids that come forward.

I still believe that the losers have been the voluntary sector, particularly ethnic minority bids. The Minister said that one-third of the bids had an ethnic minority element. Of course, that is so. One of the criteria put out by the Government was precisely the needs of ethnic minority communities. It is all too easy to claim that a bid is in the interests of an ethnic minority community when its effect may be marginal rather than central to the particular community. Nevertheless, I believe that it has been a very useful debate. I hope that the Government will think again about the criticisms that have been made. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.