Urban Programme (Hansard, 6 April 1982)

§ Mr. Heseltine

In December I announced an experiment with the derelict land programme to boost development by the private sector. I invited bids for a318W limited part of the derelict land programme involving private sector commitment to develop land reclaimed at public expense.

The first indications are that development projects involving £70 million to £100 million of private sector money will be attracted into inner city and other urban areas by the expenditure of just over £10 million of public money for derelict land reclamation. Of that £10 million just under £7 million will fall in 1982–83. I am seeking powers to increase the rate of grant for the private sector from 50 per cent. to 80 per cent. in those areas where local authorities are eligible for 100 per cent. grant for derelict land reclamation, that is, the assisted areas and derelict land clearance areas.

In March I announced the allocation of resources of £5 million under the 1982–83 urban programme for scheme designed to stimulate low-cost home ownership in urban areas. The schemes approved are expected to attract additional private sector finance of some £14 million.

Based on these experiments I have decided to take a further step in 1983–84. I can now announce details of an initiative which will complement this programme in attracting private sector investment into inner city areas and which was foreshadowed in the Budget speech.

I propose to invite local authorities to work up investment projects in co-operation with private interests and to submit them to my Department. To encourage the most imaginative projects to come forward I am placing no restrictions on the type of project that can be submitted for grant. They may be industrial, commercial, housing or recreational schemes, or a combination. The scheme will be competitive against the total resources available. Bids will be assessed by an expert team, including relevant private sector expertise, in my Department. Grant will be payable at the rate of not more than 75 per cent. of the local authority's stake in a project, as with the urban programme. Some projects might be eligible for a package of grants, for example, derelict land grant for land reclamation and this grant towards the cost of the actual development itself. I will be looking for projects which, amongst other things, will make a significant impact on 319W the areas concerned, and which will contribute to improving the local economic base. Detailed criteria will be announced shortly.

In England the invitation will initially be extended to the 43 districts designated under the Inner Urban Areas Act 1978. I am determined to ensure that it has sufficient financial muscle to achieve its objectives. I have therefore earmarked up to £70 million of the provision to be made for the urban programme and for derelict land reclamation in 1983–84 for projects involving participation by the private sector.

In announcing the scheme now I am inviting projects for the initial round of bidding to be submitted by September, to allow time for ideas to be worked up—for a start in 1983–84. Further advice will be issued shortly, following discussion with local authority associations and developers themselves.

I recognise that a quick decision is often critically important to developers and investors institutions. I therefore intend to give a decision on grant within 3 months of the closing date for bids.

I am confident that this proposal will be a further stimulus to the economic regeneration of our inner cities. I would like to pay tribute to the work of the Financial Institutions Group in bringing the scheme forward.

My right hon. Friend the Secretary of State for Wales proposes to introduce a similar scheme for Wales and will shortly be announcing further details and guidelines.

In Scotland, my right hon. Friend the Secretary of State is considering ways of developing the urban programme, and the work of the Scottish Development Agency, in order to bring about a similar increase in private sector participation in the renewal of inner urban areas.