Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 340-359)




  340. Let's take a practical example. We had last week this sad story about Manningham Mills. When is Manningham Mills going to be sorted out?
  (Ms Hancock) Well, I am hoping that we will have agreed with Urban Splash, the local authority and English Heritage by April a way of resolving Manningham Mills.

  341. A way of doing it?
  (Ms Hancock) Well, then it can happen.

  342. Then it can happen. So someone could be on site in July or almost?
  (Ms Hancock) I do not want to speak for Tom Bloxham about when he will have someone on the site.

  343. But you think that you can sort those problems out?
  (Ms Hancock) I think it is very difficult to resolve Manningham Mills because the level of gap funding that is required on that scheme is so great. It is probably £10 million plus.

  344. But you are still saying that it can be done by April?
  (Ms Hancock) I am saying that we will know how to resolve it by April.

Mrs Dunwoody

  345. You may know the method, but you do not know whether it will be done and you do now know whether it is likely?
  (Ms Hancock) I think there is a willingness from all the players involved to fix the problem and I think that by April we will know how to fix the problem, but then whatever the legal process should be, whether we need to find some additional resources from another party, whatever, I do not know the answer to that.


  346. It is a bit like I know how I could climb Everest but physically doing it is pretty well impossible.
  (Ms Hancock) If Manningham Mills were easy, if we knew all those answers, we would not be having this discussion now. It is a very difficult project.

  347. But Manningham Mills would have been easy under the old gap arrangements.
  (Ms Hancock) It would have been easier. Whether the level of investment that is required would still have been judged as appropriate out of the overall budget available is a question we cannot answer.
  (Mr Edwards) We are in danger of mixing up a couple of things up here. There is a problem undoubtedly with the successor programme to the PIP scheme. It is not as flexible as the old approach. If we had it, it would still, as Heather said, continue in delivering priorities in the regional economic strategy. To use your example, Chairman, what would be the first move you would make to climb Everest? It would take that first step. The danger at the moment with the successor PIP programmes and all the state aid complications (which apply to all that we do, not just to land development and land reclamation) is that we have to be prepared to take that first step. It is a bit like moving through a minefield. There is no one person who can give you a definitive statement on whether a project or a scheme or an idea will conflict with state aids. You have to work it up and then test it all the way so you can find a way through state aids.

Mrs Dunwoody

  348. So the answer to the question that was put to you ten minutes ago is that, no, you do not know?
  (Mr Edwards) We know what the scheme says it will do but we need to test those principles and see whether they can deliver.

  349. Nor is that information readily available.
  (Mr Edwards) The information is available from RDAs about what they can do and what their powers are.


  350. So the Stoke scheme, the canal side scheme?
  (Mr Edwards) The Townscape Heritage Initiative? We were the ones that identified that there was a potential state aid problem with this. We are taking our own advice at the moment—we are not relying on advice from anywhere else—to see if we can find a way through it.

  351. So you have tripped them up but at the moment you have not found a way of getting back?
  (Mr Edwards) We have caught it before they have hit the ground, Chairman.

Dr Pugh

  352. Surely the problem is if you have to develop a project in some appreciable way before you know whether the project itself is a runner, that is going to deter a lot of people? What they need to know is whether a project falls within the parameters or whether it does not and they were recording the fact last week that generally they did not and the brochures did not particularly help and the information they were getting did not particularly help. What you seem to be saying is that they can have a long and sustained conversation and debate and by that time the developer has spent an awful lot of money and maybe to no end.
  (Mr Edwards) The old PIP programme, although on the face of it it had quite simple guidelines, took quite a considerable amount of time for a project to work its way through the appraisal process. What we are saying is let's have that discussion up-front about what it is you wish to do as a developer and let's find a way of delivering that solution. We do not have one key element that was available to our predecessor organisation, which was a more flexible gap funding regime, and we have to use what we have got in the best possible way to deliver the sorts of benefits the region is looking for from us. It will involve long and tortuous discussions and negotiations.

  353. You are offering a tool kit really?
  (Mr Edwards) Yes.

Ms King

  354. I am trying to skip some questions here so I am not sure if they make sense in that case. Following on your experience of new schemes, are you going to be able to use them to provide low rent guarantees?
  (Ms Hancock) No we cannot, and I think that is a failing.

  Chairman: Thank you very much. Louise Ellman?

Mrs Ellman

  355. Do you have any confidence in the DTLR State Aid Unit and the DTI in advising and assisting on state aid issues?
  (Mr Edwards) I will deal with the state aids issue first, if I may. The DTI State Aids Unit is overwhelmed at the moment with inquiries from regional development agencies and other organisations, asking if a particular proposal is state aid compliant or not. What we are doing is, as I said, is taking our own advice and we are presenting to the DTI what we believe is a state aid compliant case if there is a state aid issue, so we are saying to them, "We have sorted this particular problem out. This is a solution. Would you agree with that?" State aid is a genuine minefield for all of us at the moment. As far as DTLR are concerned, I think the question is best posed to the DTLR about how they feel about their capability to deal with—


  356. Do you think they trust you to sort it out?
  (Mr Edwards) Do they trust us to sort it out?

  357. Do they trust your advice?
  (Mr Edwards) You had better ask them if they trust our advice.
  (Ms Hancock) They ask us to sort it out. They expect us to take the line that John has described.

Mrs Ellman

  358. Are there examples where you have presented a solution which has been accepted?
  (Mr Edwards) I cannot quote the case but I can give you a particular example that we are working up at the moment, which is the acquisition of a site in Wolverhampton and the potential lease on to a company, where we have taken advice from our solicitors who have told us that provided we do it in the way we are proposing to do it, it is not a state aid issue and it complies with what is known as the "market economy investor principle", in other words it is what a developer would do and therefore there is no state aid attached to it, and we believe the Department are agreeing with us on that.

  359. Do you find it surprising that you found the answer and they have not found it?
  (Mr Edwards) Not necessarily because we know the scheme that we are dealing with and we can work through that scheme with our advisers and produce a solution for the Department. I think it would be helpful to have greater clarity around state aids, but it is bit like trying to knit fog. It is very difficult to get a very clear statement about state aids, so we are trying to find solutions ourselves which we can then present as a coherent package to whether it is the DTI or the DTLR.
  (Mr Piper) The State Aids Unit in the DTI tends to very familiar with the principles but less familiar then with the application to a specific project, and that is where we have to take specific advice because each project is totally different and has a different set of circumstances and quite often the solution to it will be different. That is why we would generally take specialist advice on a project-by-project basis before we would refer anything to the DTI.

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