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Dr. Ladyman: Given that the policy that the right hon. Gentleman espouses would dramatically accelerate the boom in house prices in the south-east, including Hertfordshire, and that the Government of whom he was

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a member scrapped housing allowances for key workers such as the police, where would the key workers live if his policies were implemented in a Tory south-east?

Mr. Lilley: They would live in houses that were not built on the green belt. That is my proposal. They would live in houses built on brown land, or, if there had to be any incursion into greenfield land, it should be greenfield land that is not green belt.

The Government also gave the impression that that was to be their priority when they introduced the planning policy guidance. Meanwhile, in the small print, they were still pressing ahead with concreting over Hertfordshire and other areas. They intended that those proposals should still go ahead. However, they did not realise that they had launched a torpedo that would threaten to sink their proposals to build those massive developments west of Stevenage and elsewhere. It now appears, from the legal advice of Mr. Christopher Lockhart-Mummery, QC, that that is just what they have done.

I wrote to the Minister and received a reply from him. Mr. Lockhart-Mummery considered that reply and wrote:

He went on to say that that reply from the Minister was the "antithesis" of what PPG3 was seeking, and that it was "illogical". He also said:

In short, the Government are on a course of action that runs contrary to the law and to the legally binding advice that they have set out. I hope that North Hertfordshire district council will take a decision tonight that will expose the contradiction between the Government's proclaimed policies and their actions on the ground.

A fourth, very sad event that was announced last week--a tragedy to many local people--was the closure of the Vauxhall plant at Luton, just adjacent to my constituency. If there is no possibility of rescinding that decision, the priority must be streamlining planning processes on the site to ensure that the development of new business is as rapid as possible. I was glad that the Secretary of State for Trade and Industry responded positively when I put that proposal to him. I hope that he has taken it up with the Department of the Environment, Transport and the Regions, and that the Department will include in the remit of the taskforce that is considering the Vauxhall works the question of whether it can streamline the process to ensure the rapid development of new businesses on the site. The site is massive, and if there is any spare land after the first priority of developing new businesses is met, it should be available for housing, which could further remove the need for the development that is proposed only a few miles away, west of Stevenage.

Those four major recent events demonstrate the importance of the issues that we are discussing. They show that the Government are not doing what they are purporting to do, and also demonstrate that the Conservative party is probably speaking for the bulk of people in towns and rural areas when it calls both for more development--focused, above all, on brownfield land and developed areas--and the regeneration of city centres. We would not, as the Government have done, authorise the largest incursion of building on the green belt ever authorised by a Government in living memory.

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8.51 pm

Mr. Hilary Benn (Leeds, Central): In one sense, it is a pleasure to follow the right hon. Member for Hitchin and Harpenden (Mr. Lilley), as I want to devote most of my remarks to the issue of the development of brownfield land.

However, first I want to respond to a comment about neighbourhood renewal made by the hon. Member for Bath (Mr. Foster), who is not in his place at the moment. From my experience, I believe strongly that renewal is about practical action. We must recognise that the Government deserve credit for the initiatives that they have begun. I shall mention two that impact particularly on my constituency, one of which is the neighbourhood warden scheme, to which I referred last week in a debate on the Gracious Speech. The other is excellence in cities. Those are two examples of ways in which money is being targeted specifically on areas on social disadvantage. Indeed, for the first time in 20 years that I can recollect, excellence in cities has meant that schools in inner-city urban areas, which face the biggest challenge, have received additional funds because of that fact.

On the issue of the single regeneration budget and potential underspend, one reason why it takes time to spend money wisely is that, if we are serious about asking people in the local community what they want, it takes time. It is easy to rush ahead and say that we have already got a plan at the centre, but if we ask people what they want, that takes time. On the issue of initiatives, the Government's approach clearly has the advantage of allowing resources to be targeted and encouraging new initiatives. The disadvantage is that it is a challenge to join up all of those.

I hope that, in time, as we learn from the experience of the initiatives, we will allow local authorities, especially the strategic partnerships that we are now encouraging, to come to the Government and say, "We want to achieve the same objectives as you. We have some ideas about ways in which we might be able to combine the pots of money that you have made available to achieve those objectives and, in effect, we want to bid to take on those programmes and join them together in ways that make the most sense on the ground." In doing so, we could focus more on the outcomes that we want to achieve, rather than the outputs.

I wanted principally to address what I regard as the most serious problem facing our inner cities prospects for regeneration, especially on brownfield land: the decision of the EU Commission, which was mentioned by my hon. Friend the Member for Denton and Reddish (Mr. Bennett), who chairs the Environment Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs. It strikes me as deeply ironic that, between the publication of Lord Rogers' visionary report on our cities and the Government's White Paper earlier this year, the EU Commission should have taken a decision that does more to threaten successful urban regeneration than anything else.

All hon. Members understand why gap funding developed. It did so for the simple reason that the free market works well in some places, but not in others. Where it does not work well, it fails to provide for wider social and economic need and intervention is required. Gap funding was created because of the failure of the free market, and it has now been banned because of the philosophy of the free market. We know how

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successful it has been. Indeed, it is an example of a public-private partnership of which every hon. Member is strongly in favour. One cannot say that about all forms of PPP.

The partnership investment programme made possible the development of the waterfront in Leeds. In the past 15 years, the decaying mill buildings that lined the river like spectres from Leeds' industrial past have been transformed into living buildings containing homes and offices. The Victoria quays scheme was the first such development and was the catalyst for the others. Anybody who remembers the Leeds riverside of old and who visits now is amazed. It is estimated that the riverside regeneration and its knock-on effect have created some 15,000 jobs in the inner city. That is what I call urban regeneration. The development is a success that makes it all the more inexplicable that the source of practical support that made it possible is being brought to an end.

Mr. John M. Taylor: The hon. Gentleman has described some good developments on the riverside in his constituency. Does he believe that there might be something to learn from the London docklands experience, which suggests that it is necessary for the local planning authority to be pretty broad minded and willing to say yes?

Mr. Benn: I agree with the hon. Gentleman. In a moment, I shall comment on the success of Leeds city council in taking precisely the approach that he describes.

In May, members of the Environment Sub-Committee met European Commission representatives in Brussels. It was clear that the Commission had not understood the implications of the decision that it took when it took that decision. However, we left it in no doubt of the consequences, and others--especially my right hon. Friend the Minister--have done the same. The Commission has also come to realise that one of the reasons why it did not understand what it was doing was that the United Kingdom has evolved a very different system for dealing with regeneration. Our system principally involves partnership between the public and private sectors, while the rest of Europe has a much greater reliance on public development, partly because so many of its city centres are publicly owned.

I realise that the Commission is responsible under the treaties to act as guardian of the rules. It is, however, worth reminding ourselves precisely of what article 92(1) of the treaty of Rome says. My hon. Friend the Member for South Thanet (Dr. Ladyman) referred to the thrust of that article, but the crucial wording states that

The words

are crucial to the argument.

Not for want of a lot of trying, I cannot fathom how the Commission has reached its decision. It seemed to have three concerns: first, that a windfall payment could be made to the owner of land; secondly, that a subsidy could be provided to a developer; and thirdly, that a subsidy could be given to the organisation that rented the new premises. Let us consider those concerns in turn. First, the Sub- Committee asked about windfall. The Commission gave

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one example involving a car manufacturer, and we were told that a complaint had been made. If that happened, why did not the Commission use its powers to say that the project could not go ahead? Secondly, subsidies are the point of gap funding. Local authorities will sometimes have to deal with a single developer that owns the land. If the problem is that developers should have an equal chance to compete, why cannot the Commission deal with the matter under its public procurement rules?

Thirdly, I do not understand the Commission's concern about potential subsidy to the end user. Much of the riverside development in Leeds has consisted of flats. Unless I have missed something, a flat cannot be regarded as a tradeable commodity. A person cannot pick up a flat from Holbeck, put it down in Hamburg and say that he or she has traded it. The suggestion is nonsense. Such events would not occur, any more than the head of a company that is occupying business or retail space in Milan would suddenly say, "Gosh, cheaper premises are available for rent in the centre of Leeds and we'll move the whole business, lock, stock and barrel." It simply will not happen. An ideological sledgehammer has been used to crack the hard nut of trying to regenerate our inner-city areas and it has smashed it to pieces.

I shall give three quick examples of what is now at risk in the centre of Leeds. In Leeds, we feel strongly about the matter for the reasons to which I have referred. The city council, together with business through the Leeds initiative, has successfully regenerated the city, although Leeds is the first to acknowledge that parts of the city and large parts of my constituency have not benefited from that regeneration.

There is a great contrast between the successful and unsuccessful parts of Leeds. The best measure of that is relative house prices--the most sensitive index that we have developed as a society for measuring the quality of life in the areas in which we choose to live. Two weeks ago, the Yorkshire Evening Post highlighted the difference between a £725,000 penthouse flat that was for sale in the centre of Leeds and a four-bedroom house with front and back gardens that was on sale for £7,250, which will come as something of a shock to hon. Members who represent seats in the south-east.

The first thing at risk is Holbeck urban village-- 50 acres of old mills and factory buildings, 17 of which are listed. They are of great historical significance and hold the key to regenerating an area between the centre of the city and Holbeck, one of the most deprived parts of my constituency. Regeneration could bring 1,000 jobs to the area, but parts of that development are at risk because of the ban on gap funding.

Secondly, a large bit of land in the Aire valley has potential for industrial development and has been earmarked for that in the plan. To open it up, issues of contamination and land access need to be addressed. I am glad to say that last week, in their transport announcement, the Government said that they would fund their share of the east Leeds link road, but that leaves the city council to raise the funds for its matching contribution.

One of the sources that the city council wants to look to are the owners of that land. They are a bit reluctant to put the money up front because they are not sure what will happen. Gap funding would have met not just the

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funding gap, but the timing gap, by allowing the investment to go in first, opening up the land and then possibly leading to a situation where all the money could be clawed back from the owners of the land after successful development. That has come to an end.

On the issue of funding from regional development agencies, I understand that it is Conservative party policy to abolish the RDAs. It would be helpful if the Opposition Front-Bench spokesman made clear what would happen to that funding, which at the moment is the only game in town in relation to regeneration because of the decision on gap funding.

Thirdly, Mount St. Mary's church is on the east bank, which overlooks the city. It is a grade II listed, unused Catholic church, which the Mount St. Mary's trust, working with a developer and a housing association, wants to convert into housing. It has secured single regeneration funding, but Yorkshire Forward and English Partnerships have now said that they cannot help because they no longer have access to gap funding.

That is a tragedy. If we apply the three Commission concerns, we realise how ridiculous it is. There is no windfall for anyone to benefit from. How could the developer, which is a housing association with a development company, get an unfair advantage? The flats cannot be exported. It is nonsense. As a result, a piece of Leeds history that commands a magnificent view over the city lies idle and provides homes for pigeons, rather than for people. It is almost as though the Commission has reversed that old conundrum about theory and practice and said about gap funding, "That is all very well in practice, but how might it affect trade in theory?" That seems to have been its thought process.

As hon. Members will gather, I find it hard to detect any common sense. What the Commission has done is actively to discourage the bringing forward of the brownfield land that every hon. Member in the Chamber agrees should be the focus of development, a subject I notice is dear to the heart even of the right hon. Member for Hitchin and Harpenden. I wish the Minister all good speed and success in her discussions with the Commission, although, based on our discussions with it, I do not know whether it will act terribly quickly. However, I hope that she will continue to impress on the Commission the urgency of agreeing a new framework. It is what we desperately need in places such as Leeds if we are to carry on successfully with urban regeneration.

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