ENGLISH ESTATES (Hansard, 27 July 1988)

§ Lord Young of Graffham

As the White Paper,DTI—the department for Enterprise, Cmnd. 278, made clear, the activities of English Estates are an important instrument of our policies which seek to support economic development and encourage enterprise in the regions and inner cities. The recently launched programme aimed at increasing the supply of managed workspace in the inner cities has added an important new dimension to its role.

In the assisted areas the essential role of English Estates is to seek to ensure that suitable premises and sites are available to meet the needs of new and growing businesses which would not otherwise be met. It does this in a variety of ways, including the development of factories, workshops and offices either in advance of demand or to meet the needs of specific customers. It also actively facilitates provision by private sector developers, investors and owner occupiers.

370WA

Improving economic conditions have enabled English Estates in recent years to achieve successive annual improvements in the amount of floorspace let and sold. There is, nevertheless, an unsatisfied demand for premises which, combined with rising rental levels and the prospect of continuing economic growth, is leading to renewed interest by the private sector in providing industrial and commercial floorspace in some parts of the assisted areas. If the property needs of industry and commerce are to be met, it is essential that this interest should be further encouraged. This requires a suitable response on the part of English Estates. We have, therefore, been considering with the board of the corporation how the planning and execution of its assisted areas programmes should be developed.

On the basis of advice from the board we have concluded that in order to reinforce existing market trends English Estates should adopt fresh approaches designed to secure increased private sector activity wherever possible.

This will affect English Estates' policies towards rental levels and sale prices. Hitherto, the general requirement has been that these should be set at the maximum level the market would bear. For the future, English Estates will have the specific objective of endeavouring to increase rents and sale prices to levels which will make equivalent developments attractive to the private sector.

The emphasis of English Estates' development strategy will also change substantially with the aim of securing increased private sector activity. Thus English Estates' role as a facilitator will assume much greater significance through the marketing of development opportunities, the preparation and disposal of serviced sites, joint ventures and the sale of completed schemes to investors. English Estates will use its own development funding only in the areas and for the products where private sector provision remains inadequate and where it will not impede the return to a properly functioning property market.

Thus, in considering the shape of its future programme in the assisted areas, English Estates will have regard to three categories of area and types of property. In the first, the presumption will be that the private sector will be meeting demand without the involvement of English Estates. In the second, it is likely that English Estates will need to participate in some form of joint venture in some types of development if private sector involvement is to be triggered. We shall consider with English Estates the cost effectiveness of particular arrangements which may be necessary to encourage appropriate private sector provision. In the third, where there is no immediate prospect of private sector provision, English Estates will continue to act as a funder and developer, but on the basis of the rentals and sales policy outlined above.

In future I shall be determining the size of English Estates' annual development programme on the basis of advice from the board about market demand, the likely level of private sector provision and the availability of public sector resources. I shall also take into account the need to balance the demand for 371WA resources between the assisted areas programme and the new inner city managed workspace programme as the latter develops. Decisions about which developments are to be undertaken will remain the responsibility of the board acting within the framework I have just described. I have asked the board to take steps to publish regularly a programme describing the projects planned to be pursued in each region in particular financial years. I shall expect the geographical boundaries of that programme to narrow significantly over time as they take full account of changing rental levels and development costs.