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The Minister for Local Government and the Regions (Ms Hilary Armstrong): We have had a wide-ranging and interesting debate. However, may I begin by thanking my hon. Friend the Member for South Thanet (Dr. Ladyman) for reminding the House of the tragic death of a policeman in Margate last night? We all join my hon. Friend in offering our deepest sympathies to the policeman's family and to the people of Thanet who, as my hon. Friend made clear, have been so distressed by this incident.

Several Members concentrated on the issue of urban regeneration in its widest form. The hon. Member for Bath (Mr. Foster), the right hon. Member for Skipton and Ripon (Mr. Curry) and the hon. Member for East Worthing and Shoreham (Mr. Loughton) mainly concentrated on issues other than the cancellation of the partnership investment programme. However, my hon. Friends the Members for Liverpool, Riverside (Mrs. Ellman), for South Thanet and for Leeds, Central (Mr. Benn) covered that programme as well as other issues.

The hon. Member for Solihull (Mr. Taylor) made some interesting points about the metropolitan counties that we no longer have. He also reminded us about suburbs, which were an important aspect of the urban White Paper. I hope that he will take the opportunity to consider the ideas in the White Paper and examine how we have given local authorities and regional development agencies the framework within which to deal with the issues that he raised. We continue to consider the involvement of the private sector as central.

The cancellation of the partnership investment programme has meant that the private sector has woken up to how useful it was. It is now engaged much more fully with regional development agencies and local authorities to examine how it can contribute much more effectively to regeneration and how it can develop an effective replacement to the programme.

I talked to someone from a major financial institution and I was impressed that, because of the Government's work and the commitment that was in the urban White Paper, urban regeneration has become a central part of that institution's corporate strategy. It now seeks to be much more engaged in regeneration, and I hope that the House will be pleased to hear that.

The hon. Member for Bath raised a whole range of issues and, clearly, I cannot respond to all of them this evening. I want to set out the way in which the Government approach urban renaissance. Urban regeneration and rural development go together, and that is important. The work of the urban taskforce was the foundation of the urban White Paper and we have set a clear strategic framework that identifies priorities and does so at a regional and local level.

I was struck by the exchanges on the Floor of the House about empty properties and I noticed that everyone who contributed to the exchanges represented a southern constituency. The issue is different in different parts of the country and those exchanges had nothing to say to those people who deal not with empty properties that have not been renovated quickly enough, but with abandoned properties and properties that are impossible to let or sell.

Mr. Don Foster: I hope that the Minister will accept that the figures show that empty homes are a problem

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throughout the country, but she is right to say that there are different approaches to dealing with it, not least in the role of registered social landlords.

Ms Armstrong: Of course I accept the general thrust of the hon. Gentleman's point, but we too often take a one-dimensional view of the problem which does not reflect differences in the country. That is precisely why a regional approach is so important. Having set out a strategic approach, we now have a much more clearly focused neighbourhood approach, with far greater involvement of local people.

I point out to the hon. Gentleman and others that some of the money was not spent in the first year because we involved local people in a way, they say, in which they had never been involved before. That was so important to them that they asked us to delay the timetable so that they could have more time to get things right. We were happy to do so because we did not want them to be constrained by our timetable; rather, we wanted to be energised by their timetable so that our actions would be effective.

I want to make only one more point on wider regeneration because I cannot respond to every point that was made. We seek to ensure that mainstream programmes work more effectively. The neighbourhood renewal fund, which will provide investment of £800 million over the next three years, is geared to that. We want to ensure that no area has an educational or health profile that does not reach the targets that have been set. I thought it interesting that the right hon. Member for Skipton and Ripon mentioned education so often, because this Government have put education at the centre of urban regeneration, and our development of the urban renewal fund demonstrates that fully.

I turn now to the main debate, which concerned the partnership investment programme. I congratulate my hon. Friend the Member for Denton and Reddish (Mr. Bennett), the Chairman of the Environment Sub-Committee, on his relentless pursuit of the issue. Other colleagues mentioned the benefits that the scheme has brought to their constituencies and the problems that they now face because of the scheme's removal. The Commission's decision on the PIP was clearly a blow, and many hon. Members have spoken of how urban regeneration, in their constituencies and more widely, will suffer. The PIP was an extremely cost-effective way of delivering regeneration, and apart from reducing the call on public funds, it enabled us fully to harness private sector skills.

When the Commission considered the scheme I argued strongly that the PIP was not illegal state aid because the grant given was the absolute minimum necessary to bridge the gap between the development costs and the market value of the regeneration site. The scheme did not give an unfair competition advantage to the developer because any undertaking could apply for assistance under the PIP, and all costs and values were assessed at open market rates. There was negligible, if any, intra- Community trade in the development of derelict land and buildings.

Despite that, the Commission decided that the PIP breached the state rules for reasons that have been given in the debate. Obviously, we were disappointed, but that decision was logical under a very strict interpretation of the rules. The hon. Member for Reigate (Mr. Blunt) asked

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why we did not pursue the matter in the European Court. Once the decision was made, that was that, and we had to live with the consequences. We could have decided to argue, but that would have brought great uncertainty to the market, including developers, regional development agencies and local authorities. We took the view that we should get on with the transition and with agreeing new schemes that could be implemented. Once the PIP had finished, we could not operate it--even if we had appealed--without having made an agreement in the way that we did on the transition scheme. A legal challenge would have been lengthy and there was no guarantee that it would have succeeded.

What have we done? First, we were successful in negotiating a deal with the Commission to allow more than 300 projects already in the pipeline to come to fruition, despite the adverse ruling. We are working closely with English Partnerships and regional development agencies to ensure that these projects come on stream as quickly as possible.

Mr. Blunt: Will the right hon. Lady give way?

Ms Armstrong: I am sorry, no. I do not have time.

Secondly, we provided extra resources to ensure that the projects which previously would have been funded under the PIP could continue. We have made an extra £60 million available this year, which will rise to £150 million next year. That, together with the other money that we have made available to English Partnerships and the RDAs, brings the total for their land and property budgets to £351 million in 2001 and £379 million in 2001-02.

Thirdly, we have begun the important work of developing a new framework by notifying the Commission of five new schemes that will partially replace the PIP. Two of the schemes will provide gap funding in the assisted areas for bespoke and speculative projects. The three other schemes, which will operate anywhere in England, cover direct development, neighbourhood renewal and environmental regeneration. I am confident that all of these schemes will be approved shortly.

More widely, we underpinned the Government's total commitment to the regeneration of our towns and cities and to addressing the decline in social cohesion in the country when we published the urban White Paper. This sets out our vision for an urban renaissance and builds on the work of the Rogers taskforce.

The White Paper contains a wide range of proposals that is designed to stimulate the regeneration of our urban areas. The proposals include the fiscal incentives, to which hon. Members have referred, to encourage the clean-up of brownfield land, up to 12 new urban regeneration companies and five more millennium villages, new planning policy guidance to put urban renaissance at the heart of the urban planning system, and a new £100 million public-private partnership for the English cities fund, subsequently rising to £250 million. Together with our work on tackling social exclusion and neighbourhood renewal in addressing the problems of the most deprived areas, this represents the most comprehensive set of measures that has been designed to regenerate our towns and cities.

We believe that we have good arguments that support the need for a regeneration framework. Physical regeneration serves community objectives by improving

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the standard of living and quality of life, for example. None of the existing frameworks serves regeneration goals. Regeneration is a horizontal rather than a sectoral issue, and can apply across the range of economic sectors. The hon. Member for Vale of York (Miss McIntosh) understands these terms because they are used by the Commission. If the right hon. Member for Bromley and Chislehurst (Mr. Forth) had been in the Chamber all evening, he would know that they represent the issues that we have been discussing.

All existing and future member states would benefit from the existence of a framework for furthering regeneration objectives. Having a regeneration framework in place will, in our view, help those countries that are hoping to join the Community by giving them a range of delivery mechanisms to make regeneration work.

We are working with the Commission and examining the scope for creating a new regeneration framework under which state aid would be permitted for the physical regeneration of derelict and disused sites throughout England and the rest of the Community. We are actively engaged in a dialogue with the Commission, and I am optimistic that it will be possible to negotiate a new framework.

Those of us in the House who wish to see the effective enlargement of the EU will want the framework to be in place as soon as possible. The seminar will be held next year. We have engaged with other member states, and they are interested. I believe that we can make progress. I am sure that all sensible people who support regeneration will welcome the proposal.

It being Ten o'clock, Mr. Speaker proceeded to put forthwith the Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54(4) and (5) (Consideration of Estimates).

The House divided: Ayes 301, Noes 9.

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