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Inner Cities

Volume 100: debated on Wednesday 25 June 1986

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7.

asked the Secretary of State for the Environment what steps he is taking to encourage private sector involvement in the regeneration of the inner cities.

The Housing and Planning Bill will enable assistance to be given to regeneration carried out by the private sector.

I thank my hon. Friend for that reply, albeit ever so brief, but may I encourage him to go further and let us know about the prospects for more urban development corporations, what is to happen on urban regeneration grants and how decisions on that aspect will link with the announcement the other day of our right hon. and learned Friend the Paymaster General about inner cities?

The private sector created most of our great cities, and the private sector has a critical role to play in regenerating our great cities. That is why we are taking powers in the Housing and Planning Bill to pay urban regeneration grants. We are extremely grateful to all the Opposition parties for their support for those grants, which have also been welcomed by the private sector. Of course, urban development corporations are well worth considering, and we should perhaps be considering having more UDCs.

Does the Minister not agree that it might help to stimulate greater private sector investment in the inner cities if the Government looked again at whether VAT ought to be charged on building work in those areas and at the possibility of increasing the derelict land grant? Does the hon. Gentleman, have a word to say about last week's speech by the right hon. Member for Henley (Mr. Heseltine), who said that he was critical of the level of aid being given to inner cities by the Government?

We are spending at record levels on derelict land grants, and substantial amounts of derelict land—about 2,500 acres—are cleared in inner city areas every year. One problem is to make sure that something is put up on that land — houses or industry. We are trying, through urban development grants and the new urban regeneration grants, to attract as much private sector funding as possible. Our experience with the urban development grant shows that for every pound of public sector money put in, we attract between £4 and £5 of private sector money.

Will my hon. Friend confirm that even if the Government doubled the resources presently going into the inner cities that would not begin to meet the size of the problem involved in tackling the necessary works? Therefore, the only way is to attract private investment, and the best way to do that is not merely to consider extending the UDC concept to other parts of inner cities, but actually to create them, and with the same commitment that we had when we created the new town corporations.

I note what my hon. Friend, with his considerable experience of these matters, says. I know of no observer of the inner city scene, be it my right hon. Friend the Member for Henley (Mr. Heseltine) or anybody else, who believes that public money alone will lead to the regeneration of the inner cities. That is why we desperately need to attract private sector money into the inner cities. We are doing so. Urban regeneration grants will help. Urban development corporations may well help. My right hon. Friend the Secretary of State and I listen carefully to what my hon. Friend says.

Will the Minister pursue with the Chancellor of the Exchequer the abolition of the Treasury rule that forbids housing associations from tying in housing association grants with borrowing from the private market for the provision of rented accommodation? Does he agree that this is one of the biggest stumbling blocks to the expansion of housing association rented accommodation during a period of severe restriction on public expenditure? Will he act on that?

I note what the right hon. Gentleman, with his long experience of these matters, has said. We have received some very interesting proposals from the Housing Corporation about these points. Also, from time to time, happily, I have the chance of discussions with my right hon. Friend the Chancellor of the Exchequer.

When my hon. Friend is considering these matters, does he agree with me that the Henley approach is to be preferred to the Chertsey and Walton hypothesis?

I always listen carefully to all that my right hon. and hon. Friends have to say, and the speech of my right hon. Friend the Member for Henley was most thought provoking.

Does the Minister recognise that one very serious inhibition on small private investment in the inner cities is the great difficulty in places such as Brixton and Handsworth of obtaining insurance on business premises? Lambeth and Birmingham recently called a conference on these matters. What are the Government doing about it?

I am happy to say that my right hon. and learned Friend the Paymaster General is already looking at this issue in connection with the eight areas exercise. I think that that will produce some results in the not too distant future, which will be of great help right across the inner city scene.