Grant Clawback (Newcastle) (Hansard, 21 May 2002)

§ Ms Keeble

On 1 May 2001, my right hon. Friend the then Minister of State for Local Government and the Regions (Hilary Armstrong), announced the signing of a local public service agreement with Newcastle city council,Official Report, column 594.

One of the Government commitments made in that local PSA, in return for a commitment from the council to increase the level of regeneration, was to have discussions 224W about alterations to the arrangements for clawback of regeneration grants on change of use or disposal of an asset.

The council have argued that for some older regeneration schemes, where any clawback which might apply would be small, that the costs of delay—administratively and in terms of starting valuable projects—would be disproportionate to the sums that might be recovered. The Government have concluded that for regeneration schemes that are now closed, in respect of transactions where receipts are relatively low (and thus the maximum potential level of clawback is also low), and where Government can have confidence that any receipt which might have been due to the Government is recycled into further regeneration consistent with the Government's regeneration objectives, it can offer value for money to offer a waiver of clawback.

In view of the council's undertaking to achieve the enhanced regeneration objectives set out in the local PSA, the Government undertook to consider what scope there is to assist and encourage the council to achieve its targets by waiving the council's contingent liability to repay grant under certain discontinued grant regimes.

The council was seeking a waiver of my Department's right to clawback in both situations where a liability to repay grant can arise, namely (1) where there is a change of use of an asset constructed or acquired wholly or partly out of funds paid under a relevant grant scheme; and (2) where there is a disposal of such an asset. It was the Council's intention to use any proceeds that might have arisen from the waiver to further its regeneration objectives in the East End and West End Going for Growth areas of Newcastle.

After careful consideration. I have concluded that my Department can waive its entitlement to claw back grant under the terms of the former Urban Programme and City Challenge grant schemes: in order to assist and encourage the council to deliver its regeneration targets under the local PSA; in relation to assets constructed or acquired using grant given for regeneration activities in the East End and West End Going for Growth areas of Newcastle, as defined in the respective regeneration plans published by the council in July 2001; so far as liability to repay grant can arise from a disposal of an asset, including land, only where the potential for grant clawback derived from a disposal is £100,000 or less; so far as liability to repay grant can arise from a change of use of an asset, including land, only where a new use of an asset continues to further the objectives of the grant scheme or wider Government regeneration objectives 2, 3, 4 and 5 published in the DTLR Business Plan 2001; and for disposals agreed or changes of use effected on or after the date that the Council accepts the terms of the waiver and before 31 March 2004 (the date on which the local PSA expires), unless the waiver is withdrawn before that date on the grounds that it is not being applied properly. Accordingly, my Department has written to the council today.

For transactions in which potential clawback could exceed £100,000, a full analysis of whether any clawback is due will continue to be required from the council, together with a calculation of the amount due, and waivers will be considered on a case by case basis.

225W The Government are prepared to consider requests for similar treatment from other local authorities who might propose local PSA targets for regeneration, where it is appropriate in the circumstances of the authority.