Urban Development Corporations (Financial Limits) Bill

§ The Parliamentary Under-Secretary of State for the Environment (Mr. David Trippier)

I beg to move, That the Bill be now read a Second time.

This Bill amends paragraph 8 of schedule 31 to the Local Government, Planning and Land Act 1980. Part XVI of that Act contains the provisions under which urban development corporations are established and operate. I know that hon. Members will be familiar with urban development corporations. UDCs are given the task of regenerating their designated areas. Their main functions are to assemble, reclaim and service land to provide infrastructure and to promote development. They can bring a single-minded and co-ordinated approach to the problems of their areas, backed by Exchequer funds.

The beneficial effects of such an approach are apparent in London docklands and on Merseyside, where the first two UDCs were set up in 1981. The proposal to set up a UDC in London docklands was scrutinised by an all-party Select Committee, which said that its members were forcefully struck by the extent of the calamity in docklands and the vastness of the task facing anybody seeking to regenerate the area. The London docklands development corporation took on that vast task, which was an enormous challenge. After only six years, the docks have become a focus for growth. Private sector investment in excess of £2.2 billion has been committed; 12,000 homes have been completed or are under construction; 2.5 million sq ft of non-residential floor space have been completed and 7.5 million sq ft are under construction. The docklands light railway and the London city airport have been built, and 15 miles of new roads provided. More than £10 million have been given to social and community projects. All that, and more, has been achieved on the back of £350 million of Government grant, supplemented by expenditure out of receipts from land sales.

The Merseyside development corporation faced a different, but equally daunting, task and it has responded with major, imaginative projects, most notably the restoration of the Albert dock warehouses, which has converted the area around it into a hive of activity.

Over 200 acres of derelict land have been reclaimed for housing and commecial development and a further 200 acres of land and water have been reclaimed for recreation and public open space.

The five new UDCs set up during this year have only just embarked upon their tasks. But already the response to them has been most encouraging. The areas are already starting to buzz.

I now refer to the role of this modest Bill in those developments. The background is that schedule 31——

§ Mr. Simon Hughes (Southwark and Bermondsey)

At some stage, will the Minister give us the up-to-date position on job progress in the present two UDCs? Will he tell us the net gain or loss of jobs over the six-year 936 period, as well as progress on housing, with the relative number of houses and distribution between the public and private sectors?

§ Mr. Trippier

I shall be happy to deal in detail with those matters in my winding-up speech. The hon. Gentleman may recall that when we previously debated the matter before the House rose for the summer recess, I referred in particular to the importance of training with regard to encouraging local labour to take advantage of the jobs that would be made available. I think that the hon. Gentleman will agree with me that the jobs are not only in the construction industry. Jobs are now being provided, and will continue to be provided, in the development that is being undertaken. of course, it is a major initiative that we are taking with the London Docklands development corporation, with the Manpower Services Commission and, in regard to the construction industry, with the construction industry training board. I shall refer to that again in greater detail, as well as housing, which the hon. Gentleman mentioned.

I said that I would refer to the role of this modest Bill in those developments. The background is that schedule 31 to the 1980 Act covers the financial arrangements of UDCs. Paragraph 3 of schedule 31 enables my right hon. Friend the Secretary of State to pay grants to UDCs. Paragraph 4 provides that UDCs may borrow money either temporarily or longer term. Paragraph 5 enables the Treasury to guarantee the repayment of loans raised from a person or a body other than the Secretary of State. Paragraph 8 of schedule 31 imposes an aggregate financial limit on those grants, borrowing and the guarantees given to them.

The 1980 Act set that aggregate limit at £200 million, with a provision that it could be raised up to a limit of £400 million, by order. An order was duly approved in 1984, raising the limit to £400 million.

Section 12 of the New Towns and Urban Development Corporations Act 1985 amended paragraph 8 by inserting two new limits. It set the statutory limit at £600 million, with a similar power to raise it by order to £800 million. An order raising the limit to £800 million came into effect in July. Therefore, any further increase in the limit will require primary legislation.

When we debated the 1987 order, I told the House that on spending plans for the current financial year the aggregate by the end of the year would get to within £3 million or £4 million of £600 million. Since then my right hon. Friend the Secretary of State has been able to increase the planned spending of UDCs by £7 million in the current financial year, which he could not have done without that order.

I am pleased to say that my right hon. Friend the Chancellor of the Exchequer announced yesterday that the resources available to UDCs next year will be increased substantially. Overall, the spending counting against the limit in paragraph 8 should be rather more than £200 million, in 1988–89, taking aggregate spending through the £800 million limit before the end of that year. Although the limit would not actually be breached until towards the end of the next financial year, the Supply Estimates covering that spending will be laid before the House in the spring. The House could not be asked to vote that Supply, if it exceeded statutory limits. Therefore, it is necessary to amend paragraph 8.

937 My right hon. Friend the Secretary of State might simply have set a higher overall limit, but he has decided instead to revise the way in which the limit is set. It is cumbersome and time-consuming if regular recourse to legislation is required for what are essentially technical adjustments.The limit currently operates primarily on all grants and long-term loans received since the UDCs were established. We are talking about a collection of bodies in different places and with different needs. No two are the same. Their aggregate expenditure since 1980 is of less interest and relevance than what they have spent, and what they intend to spend, individually.

UDCs are already subject to two separate and significant spending controls. The first is the general public expenditure system, by which an overall external financing limit is set annually. That covers both grants and borrowing. The second is the annual supply process by which the grant-in-aid paid to each UDC is annually voted by Parliament. Supply estimates are provided in some detail. This provides for regular scrutiny of expenditure, and provides Parliament with the opportunity to examine the operation of UDCs through the Select Committee system.

These two systems of control seem adequate and more relevant than that provided by paragraph 8.

§ Mr. Simon Hughes

What is the difference between urban development corporations and local authorities? Local authorities receive grant from central funds, and every year Parliament has to decide whether to approve the grant to the various authorities of different types. Local authorities have the same public expenditure accountability as UDCs, yet the Government propose to take away any regular parliamentary approval and scrutiny of grants to UDCs while at the same time retaining it absolutely for local authorities. Why is there this preference for quangos over local government?

§ Mr. Trippier

I do not think that the hon. Gentleman is right. Every year Parliament has to agree the Supply Estimates which cover expenditure via the Department of the Environment on, for example, rate support grant and housing investment programmes. The so-called urban block held by the Department of the Environment covers UDCs, urban development grants and so on, all of which are annually voted. The significant difference is that the Bill governs the problem that we may have with loans, and I shall turn to that in a moment.

As I said, UDCs are already subject to separate and significant spending controls. The two systems to which I referred seem adequate and more relevent than that provided by paragraph 8.

The next question is: what is the most relevant measure of borrowing? At present, paragraph 8 includes all borrowing which is not temporary, ignoring any repayments. This does not seem the most appropriate measure. A more relevant measure is the outstanding principal on any loans. It is consistent also to count any sums paid to honour guarantees provided by the Treasury. In effect, that would be borrowing which could not be repaid. Therefore, the limit in the Bill is confined to outstanding borrowing and Treasury guarantees paid.

Having established a sensible definition of what should count against the financial limit, the next issue is the level at which that limit should be set. When the 1980 Act was 938 passed, it was anticipated that borrowing could be a significant source of finance. In the event, UDCs have borrowed very little. This is because it would be prudent for a UDC to borrow only if it could anticipate an adequate return. If there is likely to be such a return, then, in general, UDCs have found that the private sector will undertake the spending.

There are, however, certain cases in which a UDC will want to borrow. First, it has powers to lend to others and will need to borrow to finance that lending. Secondly, it may want to undertake, or contribute to, an investment with an adequate return which does not appeal to the private sector. Thirdly, it may want to invest in a project where it is more appropriate for the public sector to take the lead.

The Bill sets a statutory limit of £30 million. That is modest, but it provides some room for manoeuvre. With the seven UDCs we have at present, it implies average borrowing of about £4 million. That is more than the first two UDCs have undertaken—so far they have each borrowed about £1 million—but it is small alongside intended programmes.

We want to provide some leeway —for example, in case significant projects are identified which would best be financed from borrowing. Therefore, the Bill provides for the level of borrowing to be raised to as much as £100 million without further primary legislation. Any increase above £30 million would still require the approval of this House.

This is a sensible measure. It retains a proper degree of parliamentary control over UDCs without requiring regular recourse to primary legislation. I hope that it will have the support of all parties. We had a debate less than four months ago on the order raising the limit to £800 million. In that debate the hon. Member for Bootle (Mr. Roberts) told us: the Opposition usually does not vote against increases in money that might bring some benefit to areas."—[Official Report, 15 July 1987; Vol. 119, c. 1232.] The hon. Member then went on to suggest that the increase in that order — from £600 million to £800 million—was inadequate because there were now seven UDCs. I am certain that the Opposition will welcome the removal of the limit. In fact, the hon. Gentleman was labouring under a misapprehension because, as I hope is clear from my lengthy explanation of this Bill, paragraph 8 of the 1980 Act is not a power to spend money. It simply imposes an overall limit. Under the 1980 Act, that limit can only be raised in stages. Because the Bill proposes that no statutory limit should be placed on total grant-in-aid paid to UDCs, it frees Parliament to vote to each UDC, each year, the resources that it feels are appropriate.

I am delighted that my right hon. Friend the Chancellor of the Exchequer's statement yesterday helps to answer the hon. Member for Bootle's criticism, by making considerably more funds available for this important task of urban regeneration. An amendment to paragraph 8 of the schedule 31 is necessary if UDCs are to continue that important task. The Bill introduces a sensible streamlining of that paragraph, retaining for Parliament the right to vote on significant expansions in borrowing by UDCs but removing from the existing total statutory limit the grant-in-aid that has been voted to all UDCs over the years.

I commend the Bill to the House.

§ Mr. Roland Boyes (Houghton and Washington)

The first two urban development corporations were created by the former Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine), in September 1979. He said that he envisaged that urban development corporations would be modelled on the well-established and, in many ways, successful new towns.

I have said before in this Chamber that the new towns are a social achievement of which the Labour party can be justifiably proud. They were created after the war by the newly elected Labour Administration—in particular by the then Minister, Mr. Lewis Silkin. That gives me an opportunity to place on record how much I miss Mr. John Silkin who, tragically, died earlier this year. On matters relating to new towns, as well as to political matters in general, he was most helpful to me, particularly when I first became a Member of the House. He will be missed in debates such as this by right hon. and hon. Members on both sides of the House.

The urban development corporations were given enormous powers — planning, Iand assembly and disposal for private sector development, industrial and commercial development and promotion, environmental improvement, housing and the provision of infrastructure— authorities--—Labour local to enable them to achieve the regeneration of two areas: the London docklands and the Merseyside dock area.

Five additional urban development corporations have been set up since then. In general, the new UDCs have hardly begun their work. The recruitment of staff is just about completed, and those connected with the UDCs are already excited about the possibilities. However, it will be impossible for some years to judge how successful or otherwise they will be.

To enable the UDCs to satisfy the objectives that I have just quoted, the original UDCs have to complete the regeneration of the defined areas by attracting a great deal of cash from private investment. That applies also to the five new UDCs. In a press notice, the Secretary of State declared that each UDC could spend between £100 million and £150 million over a period of six to seven years. The notice continued: The bulk of expenditure will go on the reclamation of derelict or disused land, and to the provision of access roads and the infrastructure, to pave the way for subsequent development by the private sector for industry or housing. I shall deal with that aspect in relation to the London Docklands development corporation and the Merseyside docklands corporation a little later, because the comparative success of the two corporations is of much interest.

Through a series of orders and legislation, the aggregate sum of cash available to UDCs—mainly for grants and long-term borrowing—was raised from £100 million to £800 million during the last few years. According to changes in a number of economic variables, it will be necessary from time to time to modify the latter figure. I understand that the purpose of the Bill is to allow for revisions to the statutory ceiling by exempting grants from the financial limits that are contained in the regulations.

I shall say no more about the technical financial aspects, because the Minister has, fortunately, put them on record and it is unnecessary for me to repeat them. However, will the Minister say whether the revision of the statutory ceiling will always be upwards?

940 Another factor that will undoubtedly affect the financial limits will be the creation by the Secretary of State of a series of mini UDCs. They were mentioned in the Conservative party's manifesto for the June 1987 election. The Tory party believes that local authorities— Labour local authorities in particular—are an obstacle to inner-city regeneration. I do not intend to go into the merits or otherwise of the mini UDCs, but we cannot consider the financial limits for all UDCs without considering the possibility of the introduction of new UDCs.

The Secretary of State made a speech on 3 June 1987 that, from our point of view, was highly contentious. It demonstrated clearly the Government's negative attitude to local government and, in particular, to democratically elected Labour authorities. Their contempt for local authorities is expressed both in speeches and in legislation by the Prime Minister, the Secretary of State and others that leads to controversy about the nature, role and judgment of the success or failure of the UDCs. It is a subject for another debate, but it is worth stating that this Government's continuing attack on local government is weakening the democratic process. It is not just local government that is at risk; democracy itself is at risk.

As an illustration, the Minister for Local Government, the hon. and learned Member for Folkestone and Hythe (Mr. Howard), who unfortunately is not on the Treasury Bench at the moment, is reported in an editorial in The Guardian on 30 October 1987 as saying: In some high spending areas the local council has virtually no opposition councillors. It may take many years in those areas for the pressures of the ballot box to take effect. In these circumstances we have a duty to ensure that local people are protected from wild extravagance. That says a great deal about the Government's attitude to the electorate. If the political party that controls a local authority is other than the Tory party, the people who elected their local representatives have to be protected against those whom they themselves chose through the ballot box. That is absurd; it is nonsense. What does the Minister mean by the pressures of the ballot box to take effect"? Surely the pressures of the ballot box decide who is to lead a local authority.

There are many people in the north and in Scotland, south Wales and other parts of the country who would like to be protected from the wild extravagance of this Government. The Opposition do not like it, but we accept the democratically determined wishes of the people of this land. Why cannot this Government do the same with regard to local government by keeping their ever-meddling fingers out of local government matters? Why will not the Government accept that local people know what they want and that they are able to express it through the ballot box?

I see that the Secretary of State for the Environment is in his place. This afternoon many accusations have been made against Labour-controlled local authorities. [Interruption.] I do not know whether the Secretary of State wishes to intervene. If he does, I shall give way to him. In an article today in The Guardian, David Hencke clearly demonstrates the inefficiency in the Secretary of State's Department. He says: Sir Gordon Downey, the Comptroller and Auditor General, has refused to approve the Department of the Environment's annual accounts for the second year running 941 because it does not know where £210 million-worth of urban development grant has gone. It is incredible that £210 million can be lost. What would the Secretary of State say to a Labour-controlled local authority in a similar position? We would probably be hearing demands from Tory Members for gaol sentences or for the police to be sent in.

The other matter that I cannot understand—I accept that it is not the Secretary of State's responsibility, but we are talking about the regeneration of inner cities — concerns the article written by David Hencke. Commenting on figures released yesterday by the Department of Employment, he said: More than half the £7 million for inner cities was not spent. With regard to the high levels of unemployment and deprivation in inner cities, it is incredible that the Government have cash to spend on them yet half the £7 million that was allocated was never touched. I hope that the Minister will comment on that point later. The Secretary of State seems reluctant to come to the Dispatch Box and explain it to us.

UDCs and mini UDCs are further examples of the Government's continuing assault on local government. On mini UDCs, the Conservative manifesto said: These will operate on a smaller scale in areas where there is clear economic potential, but where local authorities are failing to tackle the problem. It is true that local authorities do not always tackle these obvious problems. This is not a matter of understanding or of will, but a direct result of the Government's decision to cut the amount of cash that local authorities have available to carry out the many projects that they wish to complete and to provide the services needed by the community.

More than £21 billion has been cut from the rate support grant since 1979. As a percentage of local authority budgets, the RSG has fallen from 61 per cent. to 46 per cent.

The fact that there are problems that cannot be tackled through cash shortage forces Opposition Members to welcome the additional cash that is being channelled through the UDCs into our inner-city areas. To a degree, it demonstrates that the Government recognise that all is not well in many of our inner-city areas, although their response is pretty feeble. Many Opposition Members believe that this increased cash has more to do with changing voting behaviour than with economic regeneration. The available cash is not being dispersed through local authorities or partnerships between local authorities and UDCs, thus leading to strong feelings about the nature of UDCs. I suspect that many different opinions will be voiced by hon. Members about the nature and usefulness of UDCs.

UDCs arouse strong passions because they are unelected bodies and can bypass and ignore the long and short-term strategic decisions of local authorities.

While cash is welcome, it must be put into the context of RSG cuts and the rate-capping penalties that have been introduced in recent years. In the near future the Government will attempt to introduce a poll tax, which, according to public opinion polls, is rejected by a large majority of British people, especially by those in Scotland, where it was tested in the general election. If the Government enact that legislation, it will be because of 942 Rambo Tory Whips uttering threats of muscle to force some unwilling Tory Members through the Lobbies. Many Tory Members are well aware that many of their constituents are against the poll tax.

Even if £1 billion of Government cash is made available to the UDCs, it is small change compared with what has been taken away from local authorities. It is not new cash; it is simply returning a small amount of what local authorities should have had in the past to carry out economic regeneration projects.

Two of the UDCs will be in the north-east. One will be responsible for developing land on the Wear and Tyne riversides. However, in Sunderland one quango is being replaced by another. Was it not the Government's avowed aim to rid the United Kingdom of quangos? Washington development corporation is being wound up in March 1988. It has a good record of job promotion, and it, the local authority, myself and others made representations to the Secretary of State to keep it in existence for the foreseeable future. However, it is not to be. Completed building and other development work must be sold off to add further to the coffers of the Treasury.

The Washington development corporation is located in the borough of Sunderland. The loss of the WDC and its replacement by an urban development corporation can be likened to taking cash out of one pocket and putting it into another. New cash is, therefore, hardly flowing into the borough of Sunderland. As the Minister is aware, my constituency is one of the three that are conterminous with the borough of Sunderland. This robbing-Peter-to-pay-Paul mentality is unacceptable.

UDCs are undemocratic bodies because the people who serve on them are appointed by the Secretary of State. Anyone who has caused him or his Department problems in the past will stand little chance of being appointed. Anyone who is appointed but does not conform in the future has little chance of staying on the board. Leading councillors from the areas concerned have been brought on to the boards, thus providing a conduit from the board to the local authority. However, the local authority representatives cannot vote down a proposition even if they know that it conflicts directly with council strategies and objectives. By definition, no one is elected to the UDC board, nor are local authorities able to elect who they want on or who they want taken off the board.

That limited representation has merit only when the UDC is created in an area where a single council is responsible for the area to be developed by the UDC. It is not always the case that a single authority is involved, and where more than one is it can lead to some local authorities having privileged access to information and decision-making processes. This is particularly important, because the UDC is given powers of planning and economic development—taken from local authorities— that can lead to conflict with the policy of the local authority. The UDCs should operate within the strategic goals of the local authority. That does not imply or mean that a local authority will have a veto over what the UDC can do, but it limits its activities to those that fit in with the objectives of the local authority.

I can envisage tremendous problems in the creation of the new mini UDCs. In his speech on 3 June 1987, the Secretary of State defined mini UDCs as bodies applying the UDC model to areas of land in larger cities and towns where progress has been slow because of the activities of a given local authority. Those mini UDCs will have a 943 budget of between £10 million and £15 million, which will be used to attract private capital. In his speech the Secretary of State said: We have not yet decided the selection of areas and further studies will have to be made. If the Secretary of State has selected those areas, perhaps he will now say so.

The Secretary of State then said something that greatly concerns Opposition Members and, I am sure, many Conservative Members as well: We hope local people will bring to our attention areas of dereliction which they think can benefit from this approach. What does the Secretary of State mean by "local people"? There was no mention of local authorities in this part of his speech, and if he intends to bypass local authorities it will lead to nothing less than tremendous tension.

It is not clear from the Secretary of State's speech whether he will create more than one mini UDC in a given council area. The financing of UDCs reveals some astonishing anomalies.

In an article in the Municipal Journal of 6 February 1987 Mr. Cliff Davis-Colman quotes from an interview with Liverpool's chief executive, Michael Reddington, who said: 'The money that the Development Corporation has is for capital works. If we were to get their money, it would near enough double our spending allocation. They get £30m a year to administer 27 acres, whereas we get £37m—if you take away partnership monies—for housing, social services and everything else for the remaining 236,973 acres'. We agree with the election-night statement by the Prime Minister that something must be done about inner cities. The Labour party is also aware of the problem, but would tackle it in a different way and would not create a proliferation of undemocratic unaccountable, urban development corporations.

It is recognised even by senior people on the LDDC board that the root of the board's problem is that it does not have the relationship with local people that local authorities have. However, it is important to examine in the LDDC the achievements as well as the weaknesses. It is essential that the achievements are neither glossed over nor given inadequate recognition. It is also important to have in the back of one's mind the fact that it is in the interests of the Government and their supporters to exaggerate the position so that their policy of UDC proliferation in Labour areas can be justified.

Employment is important, and the large pool of men and women on the dole is a most important indicator. It appears that job creation results have been mixed. The Department of Employment claims that about 8,000 jobs have been created. This was through a mix of new jobs and a large number, perhaps as many as 5,000, through factory relocation. If a balance sheet were drawn up to show new job creation and job losses in the same period, it would just about balance.

Part of the problem is the ever-increasing land values. That has led to some companies leaving the docklands because it is in their interests to take the cash from property speculators. In addition, the economic policies of the Government have led to job losses. Perhaps the factor that most annoys people in the docklands is the price of housing. It was expected that there would be a housing mix — houses for sale and houses for rent. It was also expected that some of the houses would be priced at a level that would make them accessible to the vast majority of people living in the area.

§ Mr. Trippier

May I take the hon. Gentleman back to the issue of employment? The Labour Government were in power for more than two thirds of the time between 1964 and 1979 and the decline in employment on the east side of London, particularly in the docklands area, proceeded apace. What on earth did the Labour Government do at that time to arrest that decline? That is the question that the hon. Gentleman and his hon. Friends must address.

§ Mr. Boyes

If one compares the level of unemployment during that period with the present level of unemployment, one sees that, despite the Government's horrific advertising campaign for the 1979 election, unemployment now, tragically, is three to four time greater than it was under the Labour Government.

At present the vast majority of houses and flats—at least 75 to 80 per cent.—being built are for sale, but the biggest problem is price. Anyone reading the houses for sale advertisements in the press will immediately see that the price of houses and flats is beyond the reach of all but a minority. One-bedroom flats cost over £50,000 and in some cases the price is as high as £150,000 and rising. This naturally causes resentment among local people.

Although it is vital to get the mix right in terms of tenure, price and location, it is important to recognise that the mix will include some expensive houses. We accept that that is necessary. However, we know that many people are waiting for affordable housing, and housing that people who live in the docklands area can buy ought to be built. If our inner cities are to be regenerated, we must attract the wealth producers. We must attract people, many of them very young, who work in computing, in the media and in the production of videos.

§ Mr. Martin M. Brandon-Bravo (Nottingham, South)

At long last.

§ Mr. Boyes

I and my colleagues have said that many times. I do not mind starting the sentence again as it seems to say something on which we are in agreement. If the hon. Gentleman will allow me to finish the paragraph, he may find that there are other things on which we agree.

As I say, we must attract to the inner cities the people who work in computing, in the media, in the production of videos and in other newly flourishing industries. We must attract people who are making huge salaries, and to do that we need to provide the type of housing that such people demand. We have had to learn this lesson in the north, but we did not need a UDC to bring it to our attention. We had to learn that, if we wanted to attract industry, housing had to be available for the executives and the skilled workers. That is part of the process of creating stable jobs and wealth, both of which are essential in the inner-city areas.

We must also recognise the contribution made by the architects, builders and designers who have transformed old buildings and have been responsible for imaginative and sometimes spectacular productions. There are many examples of such exciting and interesting architecture. I may now be wandering along a path of controversy — although this is a non-political area.

By definition, the LDDC has had to work with those providing finance. This is an essential task for the newly created UDCs. The public and private sectors must work closely together in the interests of our communities. However, if the mechanism for this has to be a UDC, it 945 is essential that all involved are sensitive to the aims, needs and aspirations of local people. If that objective is ignored, the problems created will be at least as great as those to be solved. The economic problems cannot be solved independently of the social and other related problems.

The Government are critical of Labour-controlled authorities for not working closely with the private sector. The LDDC has had much success in this field. There are lessons to be learned, but the very location of the docklands has made this an easier task than it is for other areas. For example, Labour-controlled authorities in the north-east find it very difficult to attract private capital for development and new industry.

The new urban development corporations will not have an easy ride. Martin Laing, who I suspect may be a friend of the Government and who is chairman of John Laing plc and chairman of the national contractors' group of the Building Employers Confederation, said in a letter to The Times on 6 October: The success of London Docklands, which is a uniquely favoured area next to one of the world's major financial centres, should not lead the Government into believing or expecting that £1 of public expenditure will produce the same £4 to £6 of private investment in less favoured areas—certainly not in the early stages, and probably never in some of the more deprived areas in the North.

§ Mr. Trippier

Before the hon. Gentleman leaves that matter, it is essential for me to remind the House that even in areas of the north—perhaps not in the north-east but in the north-west and especially in Salford with the conversion of the Salford quays and the dramatic transformation of the infrastructure and the development there—the leverage is as high as 1:6. That is higher than the average for the whole of the urban bloc. I am not making a political point, but that leverage shows what can be done in a very difficult area in the north-west.

§ Mr. Boyes

Clearly the tenor of my speech is that we must attract private capital to the north and that we want a partnership with private capital because that is the way to regenerate our inner cities. I welcome the fact that other areas have been successful in attracting private capital.

Speaking as an elected representative from the northeast and as someone who has been a councillor and a local government officer, I am well aware of the difficulties that we experience in the north. Indeed, I have before me the letter from Martin Laing, the chairman of John Laing plc, who wrote to The Times forcefully expressing his opinion that we should not expect the ratios in the north to be the same as those that have been obtained, for example, in the London area. I believe that the Minister should look carefully and favourably on the north when he is allocating grants because of our difficulties——

§ Miss Marjorie Mowlam (Redcar)

I am sure that my hon. Friend acknowledges that we want to bring industry to the north-east. It must be made clear to the Government Benches that not one Labour local authority in the northeast—if there is one, I ask the Minister to name it—has turned down an industry that has wanted to come to the north-east. Many industries have done so and we will welcome many more. Indeed, we have gone out of our way to welcome them. It would be wrong to assume that Labour local authorities in the north-east have not and are not working flat out to get industries to the region.

§ Mr. Boyes

I am grateful to my hon. Friend for making that important point in support of the argument. I hope that she is fortunate this evening to catch your eye, Mr. Speaker, so that she can develop the argument that she has just summarised.

With respect to the LDDC, I do not believe that it is right either to praise or to bury it. It is necessary to work with it. Incidentally, that appears to be the positive attitude taken by local authorities in other areas. Councils would have preferred the cash to be made available to them, but, because that has not happened, they will take whatever advantage they can of the present situation to improve their locality. We shall see some interesting developments with the creation of jobs in industry, commerce and tourism. Where the UDC and the local authority work closely together the results will be even better. However, Ministers will crawl in through the back door claiming, "We did it." But the Government will not fool the canny folk of the north-east, any more than the people of other areas.

§ Mr. Simon Hughes

Will the hon. Gentleman confirm what he has just implied? Will he confirm that the Labour party's strong advice to its colleagues who run my borough council, Southwark, is to work at office and member level on a full-time basis with the LDDC? Over the past six years it has not done so and has lost golden opportunities. Will the Opposition Front Bench tell that council to get on with the job even if, in common with me, they would not have created the LDDC in the first place?

§ Mr. Boyes

I strongly object to Government interference with democratically elected local authorities and I certainly will not send any message of the type suggested by the hon. Member. There is not one rule for the Government and one rule for us to break. When we are next in government, I hope that we will allow local authorities to get on with the job and carry out whatever policies they think are appropriate to their areas. That is the tenor of my speech.

I wish to raise one or two specific questions with the Minister. It appears that the Government determine that the key indicators of the success or otherwise of a UDC is the ratio of private capital attraction to public investment. According to the LDDC, the leverage ratio is 8:1. It claims that committed private sector investment exceeds £2 billion. However, according to Hazel Duffy, writing in the Financial Times on 13 May, the experts say that, taking all public costs into account, the ratio is nearer 4:1. Judged by any consideration, that is still a good result. However, Hazel Duffy quoted Mr. Wyndham Thomas, a LDDC board member, who said: Given the substantial powers, the tidal flow of public money and above all the location, we could not possibly have failed". I do not believe that one would get such a quote from a board member of any of the northern UDCs.

The Merseyside development corporation is the only one with which we can make a comparison of UDC achievements. Here the situation is different. The latest figures that I have show that £140 million of Government money has pulled in less than £20 million of private capital—a ratio of 1:7. That is a mirror image of the results claimed by the LDDC. What are the Minister's expectations for his more recent creations? Will he increase public sector investment if, in any of the new UDC areas, the leverage ratios are similar to that achieved on 947 Merseyside? Will he take the opposite course and see such a ratio as a sign of failure and cut off access to Government cash? Has the Minister defined leverage rates that must be achieved?

Earlier I mentioned new towns. My understanding of the funding arrangements—prior to the announcement of the closure date when things get sticky—was that new towns were funded by long-term loans whereas UDCs are funded quite differently—annually, as part of public expenditure. That makes them more dependent on Whitehall. In a press notice on 14 September 1979, the right hon. Member for Henley (Mr. Heseltine) said: The UDCs can be modelled on the New Town Development Corporations". He then gave a list of functions to be carried out by the UDCs and said: They will need to be provided with resources adequate for their task". Why does not the Minister introduce legislation, if required, to fund UDCs in the same way as new towns? If he will not do so, will he explain the nature of the problem preventing him from doing so?

In view of the fact that the Minister is seeking approval this evening to raise aggregate limits without parliamentary approval, I should be glad if he would inform the House how much cash each UDC will have access to in the next five years and, particularly, how much is available for each UDC this year. In addition, will he inform the House what criteria are used to determine the amount of cash to which a UDC has access in its first operational year? My understanding of the way UDCs must operate is that, each autumn, they submit to the Department of the Environment a corporate plan — a three-year rolling programme. When a project is proposed, the Secretary of State determines, before freeing the cash, whether the project is good value. How does he determine that? What is his definition of good value?

There may be further questions that I wish to raise towards the end of the debate if I am able to catch your eye again, Mr. Deputy Speaker. However, I hope that my hon. Friend the Member for Normanton (Mr. O'Brien) will be able to raise those questions on my behalf if he has the opportunity to speak.

In conclusion, I wish to make the Labour party's position on UDCs clear. We shall work with them until the next general election, although recognising the nature of them and the real reason for their creation. That strategy is no reflection on the people, the officials and board members of the UDCs, because the chairmen that I have met are setting about their tasks with enthusiasm and a desire to get things rolling.

After the next general election, the Labour Government will make a review of all development corporations. We shall decide our policy towards them according to predetermined criteria. In the meantime, we aim to give maximum support to those already set up and support their efforts to improve the environment, attract industry and create jobs.

Our inner cities have tremendous problems and only Labour in Parliament and Labour-controlled local authorities have the policies and the will to succeed in regenerating our inner cities and bringing them back to the standards desired by the people who live in those areas.

§ Mr. Deputy Speaker (Mr. Harold Walker)

I must remind the hon. Member for Houghton and Washington (Mr. Boyes) that he will need the unanimous leave of the House to speak again in this debate.

§ Mr. Churchill (Davyhulme)

I warmly welcome the Bill and, above all, the increased funding provision for urban development corporations. I congratulate the Under-Secretary of State on the able way in which he introduced the Bill. I appreciate the close interest that he takes in the Trafford Park development corporation. He knows the back streets of Trafford Park, not only by day but by night, from his former training as a Royal Marines reserve officer.

It is noteworthy and sad that fewer than half a dozen Labour Members, including the Front Bench, are in their places on this occasion. For a party that claims to be concerned about our industrial areas, that is a disgrace. It was equally disappointing to listen to the attitude of the Labour party to this whole question as enunciated by their Front Bench spokesman, the hon. Member for Houghton and Washington (Mr. Boyes). He adopted a lukewarm attitude when he said that all the UDCs would be under threat should a Labour Government ever return to power. He said that they would pick up the roots to see whether they were worth keeping or whether they should be got rid of. That does not lend to stability and confidence for the future. Fortunately, there seems to be very little prospect that that will materialise given that, if the Labour party persists in its present course, it will have no chance whatever of coming to power.

§ Mr. Boyes

rose——

§ Mr. Churchill

I shall give way shortly.

The hon. Gentleman seemed to perpetuate the attitude of "us" and "them" as between the rights of local authorities, as the Labour party conceives them, and the UDCs, which, above all, exist to cut a swathe through the red tape and bureaucracy that exists in many local authority areas. That seems to be the only way of getting on with the job and attracting business and industry to an area. The hon. Gentleman should come to Trafford Park and see the sort of co-operation that exists across party boundaries between the Labour local authority in Salford and the Labour-dominated local authority in Trafford which are warmly enthusiastic and determined to see the Trafford Park-Salford development corporation succeed. But, clearly, the Labour party in this House seems to be adopting a lukewarm attitude.

§ Mr. Boyes

I shall be extremely pleased to visit the Trafford Park UDC and to talk to management, people and councillors in the area. The hon. Gentleman seems to be basing his whole argument on the fact that the Labour party will review the UDCs. But surely that is what his own Government have been doing over the last eight years with regard to new town development corporations. Indeed, since I have come into the House, they have been under review twice. Once we managed to get a stay of execution, and now the Washington new town development corporation is being wound up altogether. Surely it is natural and normal for any Government to review its quangos from time to time.

§ Mr. Churchill

I am very glad that some new town policies have been looked at once again. In the area that 949 I represent—a large industrial chunk of the west side of Manchester—the new town policy pursued over many years by successive Governments has been an unmitigated disaster. It has drained into greenfield sites desperately needed resources that are required for the regeneration of industry in the traditional industrial areas as well as housing resources needed to maintain the quality and standard of the housing stock in the traditional urban areas. That has been an extremely damaging policy and in my view is in no way comparable with the UDC strategy which is already bearing significant fruit in those areas where it has been established.

§ Mr. Simon Hughes

At the time when the UDC in Trafford Park was created, how many people lived within that area? In terms of planning strategy, there may be a substantial difference between areas in which no one is living and areas in which a lot of people live. I do not know the answer, and it would be helpful if the hon. Gentleman could tell us.

§ Mr. Churchill

Virtually no people are currently resident in Trafford Park. There used to be a considerable community, but the houses were bulldozed during the last decade and the population moved.

The hon. Member for Houghton and Washington used figures in relation to the London Docklands development corporation and said that the very special circumstances of London docklands resulted in a gearing ratio of 4:1 or 5:1 of private capital compared with Government investment. The view of the chairman of the Trafford Park development corporation and his board members is that Trafford Park will achieve an even higher ratio, even though it does not have the advantage of a large financial services area, as is the case with London docklands. Indeed, we are aiming at a 7:1 gearing ratio, which would effectively mean that the £160 million committed by Government will make this a £1 billion project. That is tremendous and I welcome it enormously.

I thank the Government for their imaginative initiative. They are the first Government in the post-war era to tackle the regeneration of British industry in its traditional heartlands. I especially thank my right hon. Friend the Secretary of State for the attention and understanding with which he considered the representations made to him by the major manuacturers in Trafford Park over a two-year period, backed up by the Trafford district council and my own representations. At the end of the day, he decided on Trafford Park as the site for one of the UDCs. We greatly appreciate the close personal interest that he continues to take in the launching and success of this venture.

The Trafford Park UDC is the key to the future prosperity of Trafford Park, which remains the major centre of industrial manufacturing in western Europe. It has been many years since Trafford Park employed 80,000 people, as it did at the height of war-time production. That figure came down drastically, with the arrival of peace after the war, to around the 50,000 mark. But even today there are 650 firms in Trafford Park of every size, including some of the largest in the country. The added stimulus that will be provided by the UDC will enable this area to be regenerated on a scale never before contemplated. It will enable us to look towards the 21st century with every confidence.

950 This positive attitude by the Conservative Government is in stark contrast to the attitude of successive Labour Governments when, in spite of pleadings by the local authority, local industries and myself as the Member of Parliament, we got no sympathy whatever. Indeed, the reverse was the case. There was positive discrimination against Trafford Park as one of the established industrial areas.

I cite but one example. When Kelloggs—which makes and distributes the country's cereals in Trafford Park—applied in the mid-1970s for industrial planning permission, the then Labour Government denied the company an industrial development certificate, and said: "This is already an industrial area. You have to go somewhere else." When the management of Kelloggs asked, "Where do you want us to go?", the reply was, "We think that Huyton would be a rather good place." I wonder whose constituency that was.

Although thousands of jobs were lost under the Labour Government during the late 1960s, there was absolutely no move to bring about the regeneration of industry in that traditional area. Indeed, all efforts to bring back industry were geared towards new towns. Big inducements were given to manufacturers to go to green field sites while traditional industrial areas were allowed to decline and decay. Over the past 17 years, I have seen the constant erosion of employment in that area. The clear prospect that is offered by the development corporation means that we shall be able to bring back about 16,000 new jobs. That will return employment levels in Trafford Park to around the 40,000 mark, where they were more than 20 years ago. On behalf of my constituents, I cannot welcome that move too strongly.

Of the new generation of urban development corporations, the one in Trafford Park has been the first to get off the ground. Our chairman, Mr. Peter Hadfield, was appointed within 24 hours of the development corporation being established by the House in February of this year. Plans are already well advanced, land acquisition is moving ahead rapidly, and the corporation is about to move into the development phase. That is exciting.

One of the factors for the early success of the development corporation has been the tremendous support that it has received across political boundaries from Trafford and Salford local authorities. I pay tribute to their constructive and supportive attitude.

The Trafford Park development corporation is up and running. We appreciate the excellent support that it is getting from the Department of the Environment, at both Civil Service and Government level. Inevitably, one of the key elements in the success of such a venture rests in the ability of the development corporation to acquire a lot of land at an early stage before prices escalate as a result of development corporation-generated improvements. Any delay in the flow of funds to support the early acquisition of land would undoubtedly, in the longer term, involve false economy. I draw the attention of my hon. Friend the Minister to the very fact that, although the Trafford Park development corporation applied for about £12.5 million funding in the current year, thus far it has been accorded only £9.5 million. We can put the extra £3 million that we requested to excellent use, should my hon. Friend be able to furnish us with it.

Although, in the first few months, we are inevitably only in the planning phase, we receive many inquiries from 951 firms which are eager to move into the area. We intend to make a success of Trafford Park and to rebuild employment levels to those which obtained 20 or more years ago. There will be jobs not in warehousing but in industrial manufacturing and high tech. I hope that the concept of development corporations will be used more widely to regenerate the industrial heartland of the United Kingdom.

§ Mr. Peter Shore (Bethnal Green and Stepney)

I welcome, as I am sure other hon. Members do, the opportunity to discuss the Government's strategy on inner cities, particularly with reference to the proposal to extend the role and financing of urban development corporations.

In regard to the Minister's proposed changes in financial provisions for UDCs, I wonder whether we shall have as many occasions in the next few years—we have not had many in the past six years—specifically to discuss urban development corporation policy. I also wonder whether the refurbishment of loan funds, when it tops the £30 million mark, may not occur at some considerable time in the future. That would rob us of the specific opportunity—I know that we shall compete with others in discussing Estimates—to discuss urban development policy.

One of the principal reasons why people, particularly those in built-up areas in which UDCs have been imposed, feel strongly is that they have no opportunity to hold appointed board members to account. That places an additional obligation upon the hon. Members who represent such areas to raise their constituents' problems in relation to urban policy and the urban development corporation institution whenever they can.

It would be silly to proceed without understanding each other's approach to UDCs. They are not necessarily controversial when they are imposed on areas of simple industrial dereliction. As the hon. Member for Davyhulme (Mr. Churchill) said, the Trafford Park area is not residential; it is simply derelict and definitely needs to be cleared up.

The considerations that apply to such areas do not apply to areas with settled populations, as is the case with the London dockland development area. I do not know whether they apply to other areas which have recently been designated, such as Teesside, Tyne and Wear, the black country, the west midlands, and the Cardiff port. It seems that, where there are substantial residential populations, a rather different approach is needed. We do not necessarily have to rule out the possibility of a development corporation, but the approach and the efforts that are made to obtain the consent of the local authority in the relevant area are bound to be crucial.

I remind the House of the way in which we proceeded in the past, not with the green field site new town corporations after 1945, because they were green field sites —there was no real problem about people in the areas —but in the third generation of new towns. We were dealing with massive developments such as Warrington, where we established a new town in the north-west, and the expansion of Northampton and Peterborough. The new town corporation was set up only at the end of a substantial period of negotiation with the relevant local authority, which won its consent and led to a genuine partnership between the existing local authority and the 952 new corporation that was set up to undertake the additional development work, which it could do better than the local authority could. That was consent.

How much consent has the Minister received so far in regard to his proposals to local authorities in Tyne and Wear, Teesside, the black country, the west midlands generally, and so on? It makes a great difference, for the obvious reason that, if there is a population and a local authority is alienated, it is extremely difficult to get the necessary interlock between a local authority's planning functions and the development corporation which is adjacent to it or in the middle of it. They must work together if there is to be success.

It is a great pity that so much of the Government's approach begins with a feeling of hostility and antagonism towards local authorities. Of course there will be some friction and clashing, but we must have more faith in our fellow countrymen and in local government institutions. We must believe that they are capable, particularly with a good deal of ministerial effort and persuasion, of being brought into the general wish to redevelop their areas in their own interests. It is not terribly difficult to persuade people to do that.

My basic approach to UDCs is that they should go ahead only with the consent of the local authorities If there is no real co-operation from them, it will he very difficult to achieve any success. The Government should consider that problem in the light of our experience in the largest of all urban development corporations, the London Docklands development corporation.

A great deal of development has taken place in docklands. Anyone who saw the area in 1979 and looks at it again today could not fail to recognise that there has been an enormous amount of activity. I consider that much of that activity would have happened with or without the LDDC. [HON. MEMBERS:"Oh.!"] I have strong reasons for believing that; there was an enormous amount happening after 1977 with the Inner Urban Areas Act 1978, the 100 per cent. derelict land grant, and the inner-city partnerships which we established in Manchester, Salford and the dockland areas in Newcastle, Gateshead and other areas. We provided special and separate budgets for those areas and for the development of the statutory docklands joint development committee. I know better than most people that there was an enormous amount going on. I am not denying that progress has been substantial in the past eight years. However, the issue is not simply about development, but about development for whom and for what purpose.

§ Mr. Ron Leighton (Newham, North-East)

Does my right hon. Friend agree that one of the difficulties of the joint development committee was that it was not able to get access to land? The land was owned by the public utilities, the Port of London Authority and the gas board and was not made available. Nor was the committee able to get Government money. The LDDC had compulsory purchase powers. It had the land and was given the money.

§ Mr. Shore

There is something in that, but the joint development committee was given a considerable budget. The London dock was bought by Tower Hamlets council in 1977 for about £3 million—for 100 acres. It was going ahead. It had the land and the resources.

The greatest problem for people living in the LDDC area is that they do not feel that these developments have 953 any direct benefits for them. That can be broken down into many headings, but I choose two. One is jobs. Most of the jobs have been imported—people have come with their jobs when firms have moved there. The greater part of Fleet street moved to docklands; people came with their jobs. One would hope that when replacement jobs arise there will be greater opportunities for the people who live in the area.

The great movement of jobs, particularly to the Isle of Dogs enterprise zone, has been in office developments and warehouses. There has been no obvious increase in employment among the people of the boroughs of Tower Hamlets and Southwark—perhaps we shall hear more about that later-and there is not much evidence of it in the borough of Newham. That is not surprising. There is high unemployment in those boroughs — in Tower Hamlets and Southwark it is well over 20 per cent.— and they have existed next to the City of London for many years, but unless great efforts are made to integrate the education and training of the people living in those boroughs with the job prospects available in the City, and now in the extension of the City into the docklands, they will not be recruited — they will simply miss out. Therefore, a great effort must be made if success is to be achieved in recruiting local labour and reducing unemployment in the docklands boroughs.

The second and most seriously worrying feature of docklands is the failure of the LDDC to deal with the problem of housing and homelessness in the London boroughs. That is not a specious point. The LDDC has 12,000 homes either completed or under construction. Although rather more are under construction than completed, it is nevertheless a substantial number. Yet while that has been happening in docklands, since the Local Government, Planning and Land Act 1980 set up the LDDC, the housing problems in the three most affected boroughs — Southwark, Tower Hamlets and Newham — have become considerably worse. The number of homeless people has increased, the number on the waiting list has grown and the general condition of housing has deteriorated.

Who has benefited by the new houses in those areas? At the beginning, the LDDC made an effort to adopt a policy of what it called affordable housing. It deliberately tailored the price of houses to what it thought were the purses of those who lived in the area. But the boroughs are not rich and, on the whole, the people living in them have below, or even well below, average income for the London area as a whole. They could not afford the houses. As the years have gone by, house prices have zoomed higher in docklands and its neighbouring boroughs than in any other part of London. Anyone who lives in London knows what has happened to house prices in London generally during the past few years. The advertisement columns of The Observer and its supplement and of The Sunday Times and its supplement show that a new one-bedroom pied a terre in docklands costs about £70,000 to £80,000——

§ Mr. Boyes

That is cheap.

§ Mr. Shore

That is for a one-bedroom pied a terre. I know of a three-bedroom family house on the Isle of Dogs that was sold recently for £120,000. Such prices have no possible relevance to those living in Tower Hamlets, Southwark and Newham. Indeed, it is cruel for them, 954 because they are among the worst-housed people in London and, when the docklands area at last became free when the port of London moved down to the river mouth, they thought that it was a remarkable and long-awaited opportunity to have decent housing at rents or prices that they could afford. That was a natural ambition for people who lived, as their parents had before them, in squalid housing conditions.

I do not wish to weary the House, but I must give it just a snatch of the housing position in Tower Hamlets. The whole of the docklands area that the council acquired in 1977–78 had to be handed over to the LDDC. The whole of that housing land was transferred, at the stroke of a pen, by a vesting order in 1981. All hope was then lost that houses with gardens could at last be built, rather than the masses of flats, often high rise, in the borough.

§ Mr. David Gilroy Bevan (Birmingham, Yardley)

I am sure that the right hon. Gentleman would not wish to mislead the House. He would surely give credence to the fact that of the 12,000 homes that have been built on LDDC land, more than 60 per cent. have been priced at less than £40,000.

§ Mr. Simon Hughes

That is not true.

§ Mr. Bevan

It is true and it can be substantiated. Of those houses, 40 per cent. have been bought by residents of the three docklands boroughs concerned. I am sure that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) will concede those statistics.

§ Mr. Shore

I am always impressed by statistics, but there are statistics and statistics. I do not believe that those given by the hon. Gentleman are necessarily a complete picture of the sale of houses in docklands. Certainly they do not reflect the position in Tower Hamlets. It is possible that the position in Newham was easier to begin with because it had more housing land and a greater tradition of owner-occupation than other docklands boroughs. I would not accept the hon. Gentleman's figures without first seriously examining them.

Tower Hamlets has 62,000 flats and houses, of which 6,700 are officially classified as unfit for human habitation, 3,600 lack an absolutely basic amenity such as an indoor loo, bathroom or shower and 20,000 need renovation because they are damp, lack central heating or have other defects. In addition, 10,000 people are on the housing waiting list and, to add to the misery, 1,200 families are in bed-and-breakfast accommodation. That is an unbelievable position. I am sure that my hon. Friend the Member for Newham, North-East (Mr. Leighton) and the hon. Member for Southwark and Bermondsey (Mr. Hughes) could relate problems of a similar magnitude in their boroughs.

If money for the boroughs to continue their housing programmes had been sustained on the same scale as money is made available to the LDDC, there would be far less reason for complaint. However, the people in those boroughs know that their housing money has been reduced to about one third of its level a few years ago and that all the new housing developments are taking place in the docklands where only a tiny percentage of people can afford to buy the houses. What kind of friction does anyone expect to arise in such circumstances? There is bitterness and a strong feeling of being deprived and cheated.

955 Our total housing investment programme allocation for the past year was less than the local authority must pay to house its 1,000 homeless families in bed-and-breakfast accommodation. It receives HIP funds of £17 million, but spends £22 million on bed-and-breakfast accommodation. Yet even with that appalling problem, the borough has not been able to build a single new home during the past three years. Therefore, what sort of reception does the LDDC expect in that borough? It is an absolute disgrace.

I feel strongly that there should and must be new thinking in the Department of the Environment. It cannot possibly be said that the only way to renew, revive and restore an inner-city area is to establish a high living colony — a kind of cantonment — on the edge of an urban area and leave the remainder to wallow in misery and squalor. That is not the way to revive our cities.

The Government would do well not merely to consider the policies they are pursuing towards adjacent local authorities but to examine again the LDDC parent legislation to see what changes are needed to make it possible for homes to be built in the boroughs in the docklands area to rent at prices that the people can afford and to see whether they can find ways of bringing the LDDC into a much more equal and open relationship with the boroughs in which it is placed. I hope that the Minister will turn his mind to that.

§ Mr. Hugo Summerson (Walthamstow)

Thank you very much, M r. Deputy Speaker, for giving me the opportunity to make my maiden speech.

My constituency is Walthamstow. I have found that many people do not know exactly where Walthamstow is. I recommend that they get on the Victoria line northbound and stay on the train until it stops and they will find themselves in Walthamstow. It is an area with a very interesting history. It is mentioned in the Domesday Book as having a population of 82. In the 16th century it had six fisheries on the River Lea. It also employed a royal forester with an annual salary of £72 which for those days was very generous; he was also permitted to take 20 loads of dead wood and a buck and a doe annually.

In the last century Walthamstow was developed. The Warner estate now covers about 25 per cent. of my constituency. It grew rapidly with the coming of the railways. Large areas which had provided vegetables for the London market and which had grown grass to feed bullocks, also for the London market, went under bricks and mortar.

Walthamstow is part of the London borough of Waltham Forest. To the north I have the constituency of Chingford and to the south the constituency of Leyton. To the east is Epping Forest—alas, no more with deer. The odd fox and the odd rabbit are all that it can boast. To the west are reservoirs in the Lea valley. In those reservoirs I am happy to say that we still have coarse and trout fishing which prove popular for the people of north-east London.

Walthamstow has an interesting political history as well. It used to be two constituencies, East and West. Since the war Walthamstow, West has always been a Labour-held seat. Indeed, from 1950 to 1955 it was Clem Attlee's seat. Walthamstow, East was normally a Tory-held seat. In 1967 Walthamstow, West went Conservative in a by-election. East went Conservative in a by-election in 1969. They both went back to Labour in 1970. In 1970 Walthamstow, West returned Eric Deakins. In 1974 956 Walthamstow, East and West were amalgamated to form one constituency and Eric Deakins then represented the constituency until June of this year.

I know that it is customary to say a few words of appreciation about one's predecessor. Fortunately, in this case I am happy to do so and I do not have to do it through gritted teeth. I met Eric Deakins on several occasions. I always thought that he was an extremely pleasant man. More than that, he worked assiduously for his constituents. I have also heard from people who knew him in the House how pleasant and popular he was. I am very glad to take this opportunity to pay that tribute to him.

Walthamstow is an area which is becoming increasingly prosperous for various reasons. The wholescale development of east and north-east London, London docklands, the M11, the M25 and Stansted airport are all factors.

Another is that housing in Walthamstow is still comparatively cheap. I am looking for a flat there myself. The firm of mortgage brokers that I am using tells me that at present it is getting more inquiries from people wanting to live in Walthamstow than anywhere else in London. That is not surprising when one considers that we have the Victoria line and overground railway lines into Liverpool street. Communications are excellent.

However, a spoke was put in the wheel of burgeoning prosperity in my constituency by my local council. The London borough of Waltham Forest returned a Labour-controlled council last year. Throughout the year there were rumours of an enormous rates increase. As the prospective Tory candidate, I simply could not believe that such a thing would happen, but it did. Three months before the general election, the Labour council in the London borough of Waltham Forest put up the rates by 62 per cent. There was a popular explosion, with enormous demonstrations at Walthamstow town hall. Over 5,000 people attended to demonstrate, month after month after month. It was not surprising that in those circumstances the people of Walthamstow decided not to return a Labour Member.

There are, of course, more problems than just the rates. There is the effect that high rates have on businesses. My largest local employer, which employs 600 to 700 people, has to increase its turnover by £1.5 million a year to generate enough increased profit merely to pay the increase in its rates bill. My local hospital, Whipps Cross, now has to find over £200,000 a year extra to pay its enormous rates bill. So the council is not doing its bit to help with the regeneration of Waltham Forest. In fact, that name is a misnomer. It implies leafy suburbs. That may be so in Chingford but not in the rest of the borough. The council has made many errors and the people call it to account.

I want to turn to planning, another factor in inner-city regeneration which too many councils seem to use as a weapon against those who want to bring in private enterprise. The way that so many councils administer planning law is a national disgrace. In far too many cases, when someone puts in an application it sits on a teetering heap for weeks. It is supposed to be determined within two months but it seldom is. It may be taken to appeal but one will find that with written representations that can take six months. A public inquiry can take up to a year.

All the time, the areas of dereliction in inner cities are waiting undeveloped. Some of them have been undeveloped for decades. That is why I welcome the urban development corporations. They can clear up all the 957 derelict areas which for far too long have been the subject of the misguided efforts of local authorities. They can cut through all the red tape. They can once more bring to these areas a prosperity which has been sadly lacking. I hope to see public finance and private endeavour in a powerful partnership for the future which will bring prosperity to all the people.

§ Mr. Simon Hughes (Southwark and Bermondsey)

We welcome the hon. Member for Walthamstow (Mr. Summerson) to the House. I shared a platform with him recently and heard him make a maiden speech, as it were, outside this House. He appreciates the balance of interests represented by his constituency between the city and the suburbs. Older hon. Members — or those who are younger in age, but older in service — will wish to associate themselves with the tribute that he paid to his predecessor, Eric Deakins, who was a warmly appreciated colleague. Eric did an assiduous job on many issues, including overseas matters. Although his defeat was not in one sense surprising—as the hon. Gentleman explained— it was much regretted. We hope that the hon. Gentleman will live up to the high standards of his predecessor. I am sure that he intends to try to do so.

I see that the hon. Gentleman's majority was about as small as Eric's, so life will be lived fairly sharply on a knife edge for the remaining four years. It is interesting to note that the massive rate rise implemented by Waltham Forest council was a major factor in the hon. Gentleman's success, yet his party now proposes to abolish the mechanism which led to his election, and reduce local authorities' power to do such politically dangerous things. I warn him, gently and kindly, that external forces may not provide such help in the future, so may he profit while he can.

I am uneasy about the Bill for two reasons. The Bill represents a break with tradition which is wrong, and treats corporations differently from local authorities. It deals with two aspects of the financing of urban development corporations, of which there are two up and running — London and Merseyside — and four in the pipeline, about which we are hearing more and more. The hon. Member for Davyhulme (Mr. Churchill), for example, spoke about Trafford Park. The Bill proposes a new limit for loans and removes the limits on the powers of UDCs to obtain grants. The Minister said that the Bill deals substantially with loans, but it also deals substantially with grants. I find it unacceptable that, when the Bill is enacted, UDCs will be treated differently in this respect from local government.

Under the Local Government, Planning and Land Act 1980, which my colleagues and Labour Members opposed—I was not an hon. Member at that time—the Government must lay an order before the House if they need to raise the financial limit. We then debate that order and decide whether to raise the limit. We have had two such debates—the last one was in July—and, in both cases, the orders were approved. We also raised the limit in the New Towns and Urban Corporations Act 1985, but none of these debates has led to a change in the system. This Bill changes the system. UDCs may obtain 958 Government grants from the common allocation of moneys without parliamentary approval, no matter what the limit.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) was right when he said that we shall have less constitutional opportunity to debate the financing of UDCs because the Government will be able to increase the grant power without consulting the House. Although we will have a general power of debate in the annual Supply Estimates debates and other general allocation debates, there will be no specific development corporation debates. However, we must debate and approve the rate support grant orders every year. This is an unacceptable difference of treatment.

That is why I was surprised that the hon. Member for Houghton and Washington (Mr. Boyes) did not put on record the Labour party's opposition to the Bill. Labour colleagues in my area oppose the idea that local government must come cap in hand to Government and have their finances debated in the House, yet the Government give a quango the power to obtain money as and when it wants, without obtaining any parliamentary approval. It is paradoxical that the Labour party here will not declare its opposition to the Bill. I declare my opposition to it, and, if it is not amended, I and my colleagues will vote against its Third Reading—[HON. MEMBERS: "Where are they?"] The weekly parliamentary meeting started at 5.30 pm, so that is exactly where they are. I hope that the Labour party will therefore join me in trying to amend the Bill.

Why have the Government changed their attitude? Why did we originally have limits on grants if limits are not needed now? Did the Government make a mistake? Did they have second thoughts or did pressure come from somewhere? The Minister did not adequately explain the Government's change of policy. Why have they changed their policy since July 1987? We had no idea during that debate that the Bill would be introduced, and there was nothing about it in the Queen's Speech or the Conservative party manifesto. Do the Government agree that the scrutiny exercised by the House is an important part of monitoring the activities of urban development corporations? Whatever view of UDCs we might have, it is an important exercise. There is no other way to monitor them. They are quangos appointed by the Secretary of State. They meet in secret, except for rare occasions. The Bill will remove some fundamental constitutional rights.

The Bill would increase the limit in relation to loans from £30 million to £100 million. In relative terms, that increase is much greater than the previous upgradings. Borrowing will have to increase more than three times before a further order, in relation to that part of the financing of urban development corporations, must be placed before Parliament.

Unless the Government suddenly agree to provide much more money, we are unlikely to have frequent debates on the matter. My fear — this is the general political point—is that the Government are opening the door for more direct funding of undemocratic authorities. To be fair, they have been doing it since the right hon. Member for Henley (Mr. Heseltine) announced the new urban policy in 1979. We now are to have mini urban development corporations, and housing action trusts which are unaccountable, non-partnership agencies.

I do not dispute the fact that the Government have a role to play and that they take an interest in the matter, 959 but the best mechanism to help urban areas would be to set up partnership agencies to work with local government. There have been some good examples of that. I should be interested to hear from the Minister whether the initiatives taken in Sheffield, Birmingham and elsewhere, together with the the enterprise boards, do not confirm that the partnership model in practice is much more acceptable than these proposals.

§ Mr. Trippier

That might have been in the Liberal party's manifesto; it could even have been in the SDP manifesto. We might have thought it was a good idea to put it in our manifesto, but we did not. We said in our manifesto that we would have more urban development corporations. We were open with the electorate about what we wanted, and we were elected on that platform. As a result, we will create more mini urban development corporations which will mean more money — another major reason for introducing this legislation.

§ Mr. Hughes

I am not against more money being made available — [HON. MEMBERS: "Oh."] No one is against more money being made available for urban regeneration. It is certainly needed, and it is not before time. We all accept that the Government have the constitutional authority to do it, even though they went to the country and lost popular support as a percentage of the total vote. We should not forget that they have been to the country twice and their popular support has decreased each time.