Examination of witness (Questions 720
- 739)
WEDNESDAY 12 APRIL 2000
MR STEPHEN
TIMMS
720. It would involve setting up a revolving
fund with public and private sector contributions so that land
assembly and preparing land for development, particularly in difficult
sites, could be brought forward more quickly than otherwise would
be possible, and where the share of profits from the development
are returned to the fund and made available for redevelopment.
There is a current proposal in the Treasury for a city revolving
fund. There is the principle of the Treasury contribution and
supporting a revolving fund.
(Mr Timms) The agencies are already allowed to keep
their receipts from land disposals and to reinvest them. If it
is the principle that you are asking about, I think the principle
is already reflected in the fact that RDAs can do that. Whether
there should be additional Treasury funding to help that process,
additional Treasury support, that is a matter that we shall consider
in the spending review to be completed by the summer. I think
the principle is already accepted, but the extent of financial
support for that is a matter that will be determined in the spending
review.
721. Would you also be willing to look at the
increasing RDAs' ability to be involved more directly in land
assembly on a regional basis, whether through additional funding
or through more flexibility on existing funds? Will that principle
be supported by the Treasury?
(Mr Timms) Yes, I would see that as being considered
to be within the context of what is happening, leading up to the
spending review.
722. We have also received evidence of difficulties
being caused by the ending of GATT funding and the support given
to developers to help to regenerate sites. Can the Treasury offer
any observations on that or, better still, any help?
(Mr Timms) You are referring to the changes and what
has happened in the EU.
723. That is right.
(Mr Timms) I know that the DETR at the moment is looking
at alternative proposals, alternative ways of achieving what was
achieved by the previous GATT funding arrangements. They are working
with the Commission to establish a regeneration framework to ensure
that the regeneration funding does not unfairly distort competition
and so incur EU disapproval. Again, I would expect the proposals
arising from that consideration to be considered within the spending
review for this summer.
724. RDAs and local authorities are concerned
about the impact on their budgets of the need to find matched
funding for the European structural programmes. Will the Treasury
offer additional support to the RDAs and other bodies so that
matched funding can be provided in areas like the objective area
of Merseyside, but not at the expense of other important programmes
in the same part of the region?
(Mr Timms) At the risk of sounding a little repetitive,
I think that is a question that will be resolved within the spending
review for the summer.
725. You expect it to be resolved?
(Mr Timms) It will certainly be addressed. Whether
it will be resolved to everybody's satisfaction is too early to
say.
Chairman
726. I am a little worried about your answer
on GATT funding. You say that it will be all right as long as
it does not distort competition. Is it not intended to distort
competition? It actually makes it easier for an unfavourable site
to compete with a favourable site. That is really distorting competition,
is it not? It is levelling up, but it is distorting competition.
(Mr Timms) Yes. There are ways of achieving that objective
and other parallel objectives that accord with the approach that
is required by the EU. At the moment the purpose of the discussion
between the DETR and the EU is to identify how that can be achieved
without breaching the EU anti-competition rules.
Mr Gray
727. What sort of thing are you talking about?
(Mr Timms) I can think of a number of alternative
proposals. I think it is probably for DETR Ministers to say what
they have in mind.
Mrs Gorman: What degree of attention do you
pay to the comparison between the RDA, local government and even
the lottery type initiatives in the EU as compared with what the
private sector can do? It seems to me that in the past those large
bodies, that receive large dollops of money to do things, have
not had a great success record. Small businesses coming into areas
provide the yeast that does something for them, and that would
bring us on. Instead of these rather grandiose schemes, including
mucking about with GATT, capital gains and stamp duty, we should
look at things like the unified business rate. That often drives
businesses away.
Chairman: Can we have a question?
Mrs Gorman
728. Are you looking at the right factors if
you are talking about urban renewal? I would like to hear more
from you, sometime before you leave, about the role of small businesses
and how we can encourage them and what the Treasury can do there
with regard to things like the unified business rate which you
control. It makes a massive difference as to whether a business
is viable or not.
(Mr Timms) I do not see these two as alternatives.
There is enormous value—certainly that is my experience
in East London—in effective, well-targeted, well-managed
urban regeneration investment. However, I agree with you that
small businesses and small business growth in inner city and urban
areas is enormously important. Yesterday, together with Hilary
Armstrong, I took part in a seminar arranged by the DETR about
the new markets initiative in the US that the Clinton administration
has developed over the past year. They want to focus attention
on the commercial potential in inner city areas for new businesses,
for fast growing businesses and to say to people, "Look,
there are big commercial opportunities here for new business growth
and therefore, as a spin-off from that, for new job creation".
I agree that the role of small businesses, and some not-so-small
businesses, can promote the growth of existing businesses in inner
city areas and can have a huge beneficial impact. I think that
needs to be at the core of our approach. I do not see it as one
or the other. We need to have well-targeted investment in urban
regeneration matters. There is some thinking taking place on the
point about small business rates. For example, the White Paper
on modern local government proposed that when we introduced local
rates for businesses, we ought to consider introducing measures
to reduce the burden on small businesses, which I think addresses
the point that you made. I entirely agree with you about the importance
of successful small businesses in transforming the economic prospects
in our disadvantages areas.
Mr O'Brien
729. Minister, in your earlier remarks you referred
to the Rogers report. I was impressed by the support that you
give to the report. A lot depends on it in relation to urban regeneration.
We have to decide how we are to fund regeneration. In your memorandum
you refer to PFI schemes. What estimates has the department made
of the sums that may be invested in such projects for regeneration
of town centres and so on?
(Mr Timms) I do not think that we have attempted to
put a figure on that specifically. There is quite a significant
potential role for PFI in projects like new schools—in my
area a new secondary school has been built through PFI—and
improved transport facilities. A number of recent announcements
about that have been welcomed. We need to do all that we can to
use public support to lever in private investment. I do not think
that we have yet attempted to put a figure on precisely what the
PFI contribution is to those investments.
730. In your memorandum you give an example
of the old docks in Hull, where a partnership was introduced to
reinvigorate the run-down area. The Chairman referred to the run-down
areas that we saw last week in town centres. In many urban areas
town centres are deprived areas. What role can PFI play to regenerate
those town centres? Have you made any assessment of that?
(Mr Timms) We have not attempted to put a figure on
it, but qualitatively I think that PFI can make a significant
contribution. To some extent that goes back to the point that
I was making earlier. Increasingly, we need to look at the commercial
opportunities that are available in areas that in the past people
have not tended to look to for commercial opportunities. Because
of the large numbers of people who live in our disadvantaged areas,
there are substantial and potentially very attractive opportunities
there. I think we can use PFI to realise some of those opportunities
on a partnership approach. I cannot give you a figure, but I think
the scale of the potential contribution that PFI can make in that
area is very substantial.
731. Can I press you further? In relation to
the needs of urban regeneration and urban renaissance, do they
feature in the comprehensive spending review that has been announced?
If so, how do they feature and if not, why not?
(Mr Timms) That certainly will feature in the spending
review and will be a significant element of it. There are issues
arising from Lord Rogers' report and a range of the departmental
issues will be considered in the context of the spending review.
By the summer we shall resolve what the amount of funding will
be for each of them. It is a significant element.
732. Do I take it from that that the public
service agreement of the various departments, to which you refer,
will be amended in line with the needs and objectives of the Urban
Task Force in the regeneration of some town centres and urban
areas?
(Mr Timms) Yes. In particular we are working with
the DETR, but also other government departments, on the PSA targets
that they will adopt after the spending review to ensure that
urban regeneration is taken into account properly. That is a significant
element of what we are doing within the spending review.
Chairman
733. The new commitment to regeneration: is
that a nice set of words but pretty useless in practice?
(Mr Timms) No, I do not think so. I think that we
are seeing a new commitment to regeneration. As I said earlier,
I think that Lord Rogers has provided us with a visionary and
inspirational document about the challenge that we face and the
sorts of things that we need to do to meet it. In the Urban
White Paper we shall set out how we shall rise to the challenge
that he has set out. That will lead to significant changes for
the better on the ground.
734. You have not done anything yet? Is it just
pie in the sky for the future?
(Mr Timms) No, I do not think that is true. We have
done a lot.
735. Just give me one example.
(Mr Timms) The announcements in the Budget four weeks
ago about public transport investment: the extension of the Docklands
Light Railway to London City Airport, the tram system extensions
and a number of measures of that kind just in the past month.
Across the area, a great deal has been done. There is the New
Deal for communities. A huge amount has been put in hand.
Mr Gray
736. In your answer to this particular point
you talk about the cross-cutting issue. What is a cross-cutting
issue?
(Mr Timms) A cross-cutting issue is one that needs
to be addressed by a range of departments and not just by one.
737. Joined-up?
(Mr Timms) Yes.
Mr Brake
738. Perhaps I can read something to the Minister
from the Guardian, although I am sure he reads that newspaper?
"Downing Street has intervened to review the country's waste
policy following the Guardian's disclosure of abuses of
the £1 bn landfill tax and of widespread illegal dumping
across Britain". Can you tell the Committee what role you
and Customs and Excise are playing in this review?
(Mr Timms) There were a number of allegations in the
Guardian and on television in relation to abuses of the
landfill tax credit scheme. As you can imagine, we take a pretty
dim view of abuses of that sort and Customs and Excise are investigating
diligently all the allegations that have been made. If abuse is
identified as a result of that, we shall take very firm action
in response.
739. Do you have a timetable for that review
and when the report will be published?
(Mr Timms) I am describing an investigation into allegations
of abuse. I do not know how long that investigation will take.
It will need to be thorough. If we establish that there has been
abuse and fraud, we shall take very stiff action in response.
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