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Regional Development Agency

4.39 pm

Mr. Parmjit Dhanda (Gloucester) (Lab): It is a pleasure to serve under your chairmanship, Mr. O’Hara. At a time when Westminster is under such scrutiny, it is good, as a Member of Parliament, to be able to focus on trying to get tens of millions if not hundreds of millions of pounds of investment into my constituency. All Members of Parliament try to do that in their day-to-day lives.

What a story we have to tell in Gloucester of what has happened over the years, but before I do that, I welcome my hon. Friend the Minister. I know that she is standing in for another Minister, who is on paternity leave. As the father of a nine-week-old child myself, I find that entirely understandable and I wish him the best of luck. As a reward at the end of his paternity leave, I invite him to come to Gloucester to visit the projects I am talking about and to meet representatives of the Gloucester Heritage Urban Regeneration Company to talk through some of the issues I shall describe in the debate.

We have done very well out of the regional development agency in recent years. We must not forget that a Labour Government created the RDAs. The Conservatives want to do away with them because they see them as among those quangos that are unimportant. We have also done very well out of the creation of an urban regeneration company. Some of the gratitude and tributes deserve to go to a gentleman named Ian Knight, who works for the RDA. I remember having a chat with him back in 2001, soon after my election to the House, when he talked about urban regeneration companies generally. I said, “Wouldn’t it be a good idea to have one in our area?” We agreed on that, and my very first question at Prime Minister’s questions was to Tony Blair, urging him to set up an urban regeneration company. I am proud to have been one of the founding members of the urban regeneration company, which has gone on to do great work, with the backing of the RDA.

Since 2002, we have had £17.3 million in capital funding through the RDA. We have had a further £9.5 million in revenue funding. Before 2002, we had £9.2 million of funding. We have therefore had about £35 million through the RDA. Much of the funding is now channelled through the urban regeneration company. This is not all down to Government. There is a partnership involving local and national Government, but also the private sector. Through the creation of RDAs and urban regeneration companies, the Government have created an environment that has got the private sector to invest.

In my constituency, we are, we hope, looking overall at a picture of £1 billion of investment. Already, £300 million has been levered in through the private sector. I know that the people from the private sector are delighted to be partners, because they will make a good deal of money out of this themselves. I am delighted that in just a few days’ time, a gentleman by the name of Gok Wan will open the new retail designer outlet centre. If there are any young viewers of this Adjournment debate in Westminster, they will be aware who he is; not everyone in this place will be, but you may be, Mr. O’Hara. We are talking about 100 units—100 retail designer shops—in
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the Gloucester docks. There has been £120 million of investment. Just the other side of the docks, the new Sainsbury’s is due to open as well. Some 1,000 jobs are being created in the heart of the Gloucester docks area. Sitting opposite is the further education college, Gloucestershire college, where there has been £35 million of investment. I am delighted to say that the urban regeneration company was involved in that as well. It was driven largely by the hard work of a gentleman named Greg Smith, principal of the college and chair of the company, who did sterling work to help to ensure that it happened.

What we need in Gloucester is the opportunity to finish what we have more than started. That is what we want. I accept that there are real difficulties at a time of economic downturn and recession, and that new challenges face regeneration companies and particularly RDAs. RDAs across the south and east of the country are somewhat under the cosh at the moment. Understandably, the Government have looked at their budgets and dipped into them for important measures to fight the recession—to keep people in their homes and to create jobs. We understand and respect that, but let me just explain the situation with regard to the South West of England Regional Development Agency.

SWRDA spends £180 million a year and it expects £26 million of its budgets to be raided in the course of two years for some of the recession-busting projects. That will hit the agency particularly hard in 2010-11, when it will lose £20 million for some of the other measures—largely the HomeBuy Direct scheme, which is focused on trying to keep people in their homes. I understand that £6 million will go to support small businesses as well. I say to the Minister that we understand that—it is important to do that at a time of recession—but let us balance it. It needs to be balanced with those priority areas, which Gloucester is in the south-west and the urban regeneration company is in my constituency, where a great deal of investment is beginning. Some agreements have been made involving the public and private sectors and local government, and we are making real headway. Let us ensure that when the RDA board meets on 18 May, it is in a position to continue the investment in the key projects. I shall describe those in a moment.

The other problem that SWRDA is dealing with—this is not the fault of the Government or anyone else—relates to the £30 million that it gains from receipts. Land value going down has had a huge impact on the capital receipts that it can claim. RDAs are very good at buying land, investing in it and getting housing on areas of derelict land, and as a consequence, they gain capital receipts. The estimation in the south-west is that the expected £30 million of receipts for 2010-11 is now likely to be only £14 million. The rest may well be recovered later, when the market turns around and land values change, but at this time there is a significant additional pressure on our RDA and possibly, as a consequence, on our urban regeneration companies as well. Hence we have had a letter from the chief executive of SWRDA. Indeed, all urban regeneration companies have received a letter, asking them to focus on their priorities. I shall say a little about the priorities in Gloucester.

There are four particularly key schemes that my local authority and the urban regeneration company have written to SWRDA about. I want to elaborate on the
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importance of those schemes. The Minister will be right, when she responds to the debate, to refer to the importance of the work that Departments want to do to keep people in their homes and in work, but all these projects make a difference. That is why I hope that SWRDA will prioritise the projects, ensure that the money keeps coming in, and work with the Government to ensure that the money is available for it to continue to do that. As I said, the Labour Government have a very proud record of having done that in recent years, after having created the RDAs in the first place.

The first very important project is on economic linkages—linkages between the Gloucester quays development and our town centre. For many years, people have been coming up to me and saying, “Parmjit, what’s going on in the docks is fantastic. We’re really pleased with what you’ve been doing to help drive things forward there. It’ll be really good for us. But what about the town centre? Will it die as a consequence of that?” It will not, but one of the provisos is that we get the £7.4 million that SWRDA had promised in order to help ensure that we have good, strong public realm linkages from the town centre to Gloucester docks. That will mean that people come in on the train or bus. They can go to Gloucester cathedral, to the docks, visit the new designer outlet centre and use Kings square and the other shops in the town centre.

It is important to get the linkages right. As a result of the project and the economic linkages, we will be getting 4,000 sq m of improved public realm works; 10,000 sq m of new office floor space; 1,900 sq m of new retail floor space; 9,000 sq m of improved public realm in the Kimbrose triangle and Southgate street area; and 1,900 sq m of refurbished A3 units. An estimated 100 jobs will emanate from that development.

The second key project is Kings square, a 1960s-style piece of architecture that I think Prince Charles might describe as a carbuncle. It is in the heart of our city. I probably receive more complaints about the state of Kings square than about any other site in the city. Local authorities may try to cover themselves in glory by making pledges just before local elections that they will bring in the JCBs to do the work within a few weeks, but it never happens.

However, the project will materialise with the support of £1.75 million from SWRDA. That money has been earmarked to help us redevelop Kings square, turning it into a top-notch, top-quality square, with many new retail opportunities. There will be 29,500 sq m of retail floor space, 257 new residential units and a new bus station. The old bus station is dilapidated. The Gloucestershire women’s institute was here yesterday to complain about it, and they were right to do so.

If we get Kings square right by turning it into a modern, popular square, people will want to use it and visit it with their families. Making a pleasant place in the heart of our city for people to sit and spend their time, as well as improving the bus station, will make a huge difference.

The third priority is Blackfriars. It is on the site of a special Dominican priory—the best-preserved priory in the country. It is a wonderful historic quarter and a very peaceful part of the city. However, it is also a large area that needs work to be done on it. At present, it is not much better than a concrete car park. It is in the heart of the city, and links the docks area with the city centre.

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SWRDA has earmarked £8.865 million for that project, which will deliver a lot. There will be a new concert hall and conference and exhibition area, with space for 200 people; a new city centre police station; a 150-bedroomed four-star hotel, and all the jobs that will go with it; 650 sq m of business incubator space; a 450-space multi-storey car park; 12,000 sq m of office or residential floor space; and 2,600 sq m of specialist retail floor space. It is an important project. I know that the university of Gloucestershire is interested in using the old priory as a place for learning, and it would be a wonderful opportunity to tie that work in with higher education. The RDA is behind that important project; we do not want to lose it because of changes to the funding allocations.

Regeneration should not be only about steel and glass and beautiful buildings. There must also be a social aspect. The Westgate ward in my constituency is one of the poorest areas in the south-west. Considering all the indicators, it is the poorest ward in Gloucestershire. We want to build the Four Gates centre there. It will be community focused and will provide crèche facilities; it will also provide training facilities for unemployed local people. It will be a real community hub that will also be able to provide medical facilities. It is an important project, and I know that SWRDA was thinking of putting some £2.8 million towards it.

Having heard a little about those projects, I hope that my hon. Friend will persuade the Minister responsible for these matters to visit them, and that she will actively encourage SWRDA, at its board meeting on 18 May, to ensure that the tap is not turned off and that the money continues to pour in for those projects. It is important to Gloucester for that to happen.

I have two questions for my hon. Friend. I hope that she can respond, but I know that it is not her area of expertise. If she cannot respond now, it would help if she responded in writing. First, I would like the Department for Business, Enterprise and Regulatory Reform to work with other Departments to consider closely the consequences of dipping into the RDA budgets. We do not want a counter-productive measure that involves taking money out and then realising that big projects such as those in the new designer outlook centre at the Gloucester quays will create hundreds of jobs. Those projects will also create hundreds of construction jobs, and many housing projects are entwined within them.

Creating homes and jobs are the priorities of the urban regeneration company. We do not want to lose money to other projects, worthy though they may be. We have to strike a balance. A key part of that is the meeting on 18 May. I would be interested to hear what my hon. Friend has to say on the matter, but it is imperative to continue what we have begun—and more than begun—by maintaining investment through the RDA for the coming comprehensive spending review.

My final question is on the role of the new Homes and Communities Agency. If there are gaps that cannot be filled or are not filled by the RDA, we need to see more joint ventures. We need the HCA, with its huge budget, to step in and say, “We appreciate that there are other priorities and projects, and other things that the Government have to do at this time of recession, but we
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will work more closely with the RDA to support the priority projects of urban regeneration companies across the country”—including in my constituency.

I would be interested to know what my hon. Friend’s officials think. She might need to grab one or two of them by the scruff of the neck; I recognise some of them, as I worked with them when I was a Minister. They are good, but I want them to work closely with Department for Communities and Local Government in order to ensure a good link between the RDAs and the HCA.

People used to say that it would never happen, but during my time in Gloucester I have been lucky enough to see the regeneration of so many aspects of my city. We will have a £30 million new hospital, with another £30 million for a new birthing unit and women’s centre at the hospital; university status, with a £20 million campus; £35 million for the further education college that I mentioned earlier; and £20 million for the new police headquarters.

On top of that, we will be able to build on some of the regeneration sites—places that have remained dilapidated for generations. That will be more than icing on the cake. It will help people such as, Chris Oldershaw, the excellent chief executive of the urban regeneration company, to deliver the projects. Together, the urban regeneration company, SWRDA, the local authorities and I, the local MP, will work to create a city that is worthy of and fit for the 21st century.

4.58 pm

The Vice-Chamberlain of Her Majesty's Household (Claire Ward): I congratulate my hon. Friend the Member for Gloucester (Mr. Dhanda) on securing this Adjournment debate. I credit him for his efforts in support of his constituents. He is an assiduous Member, who always fights for more investment in Gloucester. The detail that he has given today shows how much his constituents have benefited—not only from having a Labour Government, but from having a Labour Member of Parliament.

My hon. Friend referred to the fact that I am standing in for the Minister for Employment Relations and Postal Affairs, my right hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), who commences his paternity leave today, and we all wish him well.

The subject of this debate is very important, both in the context of the current economic climate and in reflecting the challenges faced by businesses and communities up and down the country. Over the past decade, Gloucester and its hinterlands have made a significant contribution to boosting and underpinning economic growth in the south-west region. It has led the way in developing a high valued-added, advanced technology and manufacturing base, which has driven up skill levels and provided well-paid jobs for the local community.

I recognise that Gloucester—in particular, its advanced manufacturing sector—has been hit particularly hard by the economic downturn and recession, and my hon. Friend has worked closely with many businesses to help them through these difficult times. It is vital that the Government and their economic development agencies do as much as possible to help to mitigate the
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immediate problems faced by local businesses and individuals and to secure the skills base that has been developed so successfully. For example, several high-tech firms—in aerospace engineering and motor manufacturing, for instance—in the county are being impacted on through the supply chains.

The situation is being monitored closely by the regional economic taskforce, led by the Minister for the South West and including the RDA. Gloucestershire First, too, has set up an economic taskforce to deal with the business issues associated with the downturn, and the local authority has undertaken work to support local people affected by the downturn. The focus is on better information. The Federation of Small Businesses will survey banks in Gloucester to ensure that they are following the national criteria. The support packages announced by the Government will ensure that the national measures are working on the ground and that the information is getting out through the banks and various agencies. We all hope that that will happen in all our constituencies.

I cannot pretend that there are any easy solutions or quick fixes to these significant problems. The global downturn requires global solutions, and I am proud of the way in which the Government have led the way in developing ideas and practical actions aimed at mitigating the effects of the recession and preparing for the recovery. The current economic climate means tough choices on public spending. Like other parts of government, businesses and households, RDAs nationally have had to face budget reductions and declining capital receipts.

SWRDA must work within its financial allocation, and re-prioritise its investment plans and existing financial commitments, to ensure that funding is directed in the most efficient and effective way, to help the regional economy and businesses to survive and recover. The agency is re-prioritising its spending programmes and looking for further efficiencies in its own operations. Inevitably, that will impact on some of the work that it has planned. It has informed its partners and stakeholders in the region that it will make announcements about the outcome of its re-prioritisation exercise in June, after its board meeting later this month, and it will consider recommendations. I am sure that officials will draw attention to the strong case that my hon. Friend has made on behalf of his constituents, businesses and developments in his constituency.

Naturally, concerns have been raised locally, but SWRDA has been extremely responsible in keeping its partners and stakeholders informed of its plans. However, it has signalled that, as part of its refreshed corporate plan, priorities will include planning for a sustainable recovery and longer-term economic prosperity; supporting businesses through the recession; and setting the foundations for a low-carbon economy. SWRDA is playing a key role as part of the Government response to the recession, as set out in its publication, “First Steps: Action for Recovery”, launched in November 2008. The Government have worked with, and through, the RDAs to give help to businesses in the south-west. I shall return to that a little later.

Nationally, supporting businesses is at the heart of the package of measures developed to support what are, in effect, the lifeblood of our economy—small and medium-sized businesses—through this difficult period. The package of support, delivered through the RDA-run
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Business Link networks, provides practical solutions to help businesses to secure credit and finance, to plan for managing day-to-day operations through these difficult times and to plan for future investment priorities. That includes several different schemes.

Under the enterprise finance guarantee scheme, the Government have provided £1 billion of guarantees to support up to £1.3 billion of bank lending to smaller firms. Under the working capital scheme, the Government have provided banks with up to £10 billion of guarantees, covering 50 per cent. of the risk. That will secure up to £20 billion of working capital credit lines for companies and free up capital that the banks will use for new lending. Under the capital for enterprise scheme, we have set up a new £75 million fund—£50 million of Government funding and £25 million from the banks. Professional fund managers are providing equity investment, which can be used to pay off existing debt, to free up capital for day-to-day cash flow and for future investment for viable companies.

Working with the European Investment Bank, the Government have helped UK banks to negotiate credit lines of more than £4 billion to provide loans to small and medium-sized businesses.

5.5 pm

Sitting suspended for a Division in the House.

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