Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence




Examination of witnesses (Questions 20-39)

WEDNESDAY 24 JANUARY 2001

RT HON JOHN PRESCOTT, RT HON HILARY ARMSTRONG, RT HON NICK RAYNSFORD AND DR PAUL EVANS

Mrs Ellman

  20. But some decisions on clusters are taken nationally, are they not, and this Committee, when looking at its previous report, identified the importance of concentrations of university based research and development not to stay in the South, as they are now, but to move to the North and, indeed, to the Midlands, yet there is nothing, or very little, in this White Paper which addresses that issue. Why is that?
  (Mr Prescott) The difficulty with clusters is we do not generate them, we do not pick the winners. We see the industries and we want to encourage them to develop, and I mentioned Silverstone and there is the offshore engineering, the electronics in the Thames Valley, in Cambridge computers. With the one at Warrington there was this difficulty of a combination of public and private money where one partner, I think it was Wellcome Trust, said "we want to be down in Oxford rather than up in Warrington" and that made it very difficult when quite clearly all the facilities were there in Warrington. One would like to see the imbalance perhaps between research and development improved between the North and South. Some of the monies given by the DTI, and I can answer for that, have been attempting to put more resources into research and development to counteract this differential between the North and South. Whilst we might try to provide the circumstances for it when you say it is nationally directed, we are not picking winners, we are encouraging and helping where we can. Where we do get nationally involved is where a decision is to be taken and it may require planning, such as Cambridge or those areas where a planning request comes in, because there are judgments to be made about the balances which we are involved in. We do not direct the cluster structure, we try to understand it, we try to assist and develop it, and we use the RDAs to encourage and to help.

  21. That is not quite correct, is it? In the case of Daresbury the decision was taken for whatever reason by the Government, and I agree that Wellcome played a large part in that, and major funds for research and development are in the Research Councils, yet the Research Councils do not have any guidance concerning the regional implications of their decisions in the decisions that are come to. The decisions appear to be made by civil servants and scientists without any consideration for regional implications, and that was the answer I got when I tabled a parliamentary question on this because if was of great concern to me. Do you think it is satisfactory for large amounts of what is public money to be spent in this essential area of research and development where we know there is a regional imbalance without the Government attempting to address that issue?
  (Mr Prescott) I am attempting to address it. Can I just say, and perhaps Hilary will want to come in, you are right in your interpretation and perhaps I did not put enough emphasis on that. I was trying to emphasise we cannot direct it. In that case in relation to Wellcome it was a balance of public and private money and we could have withdrawn ours and they could have withdrawn theirs and we would have got into this kind of situation, so in that sense you are probably right. I am trying to say that I do not think we are directing it, it is very difficult to do so. If we have a certain amount of public money we should have a certain amount of input, but I think we saw from the situation that developed at Warrington that it is not easy.

  22. I wonder if the Minister could tell us what it is you are going to do through your policies to make this change?
  (Hilary Armstrong) What we are trying to do is certainly encourage higher education institutions in the regions to become much more focused and to build the capacity to actually develop R&D in the regions. Yesterday when the DTI announced its 54 million allocation of funding for innovation and enterprise to the regions, they specifically took decisions which took account of levels of R&D as well as levels of unemployment and GDP. Because of that, the two regions that got the highest allocations were the North East and Yorkshire and Humberside because they have the lowest levels of R&D in the country. What the Government is doing is through trying to encourage innovation and enterprise, which has got to have the involvement of higher education, which is part of how you attract research and development, putting the bias specifically towards those regions that do not have R&D within them at the moment. As I said, the two key ones are the North East and Yorkshire and Humberside. It also means that, for example, the North West got more than it would have if you had simply taken the size of the population particularly to compensate for GDP per head. In the way that we are working with RDAs we are seeking to encourage activity in the regions, particularly in those regions that have not been sustainable because they have not got R&D because they have had other structural problems. Obviously this is going to take time. Government cannot tell companies where to go, they simply up and off to elsewhere in the world, it is very easy for them to do so. What we have to do is get the levels of support and activity in each region up so that they are able themselves to actually get that attraction of more R&D and more investment that comes along with successful R&D.

  23. Do you have any plans to address the issue of spending of massive amounts of public money by the Research Councils? Would you look at any possible guidance in that which looks at the regional implications?
  (Hilary Armstrong) We do not have responsibility for the Research Councils but this is something that is taken into account. As the Regions Minister I frequently discuss these issues with colleagues across Government and it is an issue that other ministers are well aware of and are looking to see what they can do. What they have to be also assured of is when they make that investment there is going to be the capacity within the higher education institutions and the surrounding community to actually develop that. That is why the role of the RDAs is absolutely critical, because that can be part of that building block.

Chairman

  24. But there is actually resentment, is there not, from some academics in some of these parts of the country who believe that when they put in first class bids that get the right stars and so on to the Research Councils, for some reason they seem to go to those traditional universities which appear to be in the more physically attractive parts of this country?
  (Hilary Armstrong) Having once been at the edges of academia I know how the jealousies and partialities of different research institutions and so on are seen. What we want to make sure is that every research institution in every region is getting not just its fair share but is actually getting the sort of research that is going to develop into the real opportunities for commercial exploitation, for the development of other economic activity that will then grow and develop out from that.

Mrs Dunwoody

  25. With respect, Minister, at what point do commercial clusters take precedence over the interests of specific R&D programmes within the regions? A blanket decision to decide on a regional basis per GDP how much research goes into a region is not an answer if at the same time you are saying to a commercial cluster, whatever that is, presumably a group of companies—
  (Hilary Armstrong) I have not talked about commercial clusters.

  26. Scientific clusters, let us use the English language precisely, I know how important that is. Can we just make it quite clear at what point your Department draws the differentiation because it seems to me that what you are setting out is a complete dichotomy. You are saying on the one hand that if there is a cluster it should be allowed to develop because that is, of course, a way in which since the Government cannot direct companies, it can only protect companies, we expect them to develop commercially, but on the other hand you saying that if people have not had any R&D in the past then we will give them blanket support across the region based on their GDP.
  (Hilary Armstrong) I am sorry if that is how it appears. That is not what I was saying. What I was saying was in directing money to Regional Development Agencies the DTI, with our very full support, has allocated its money for the next three years for innovation and enterprise on the basis of specifically trying to feed the early stages in the regions where there has been least activity and least ability to attract research and development in the past.

  27. So in planning laws you would say where there is an existing cluster of scientific development that should be allowed to develop, but where there is a general policy of R&D because there has not been sufficient put into it in the past we should encourage by planning laws some development of that kind in the region? Is that what you are saying?
  (Hilary Armstrong) I am saying that what we want to do is get each region able to sustain high levels of research and development and the spin-offs that come from that. We, through our Regional Development Agency policy, are seeking to do that. That does not mean that we are saying to the South East we do not want there to be further development and we only want development in the North East because actually there are some good developments in the South East that there can be spin-offs from in the North East. What I am saying is that in the way we work with Regional Development Agencies we are seeking to support increasing R&D particularly in those regions where there has not been because we know that you need that in order to attract particularly some of the new knowledge economy jobs. The planning issues were issues that Nick was dealing with and I do not think that he was expressing it in that way, but I am sure he can speak for himself.

  28. Let me ask Mr Raynsford, at what point does a planning cluster become too large for the region in which it is being developed? What guidance do you give to the planners in a particular area as to the line that should be drawn between the needs, in planning terms, for development of new scientific industries and the existing interests of "a cluster"?
  (Mr Raynsford) The guidance is set out in our PPG 11, which is the guidance for regional authorities and the development of regional plans, which I referred to earlier. It draws attention to the importance of clusters and their economic significance. It mentions the fact that geographic proximity is a factor and asks for that to be taken very much into account in the development of the regional plan. It also stresses, this is very important, that the plan should facilitate the establishment and the expansion of innovative cluster areas, but also should contain transport and other policies to assist the creation of the necessary physical infrastructure to support that. It is trying to encourage the regions to think in the long-term about the necessary arrangements to foster and develop clusters that may be emerging in their region. It does not address the issue, which is a wider one, of inter-regional decisions on the location of businesses.

Sir Paul Beresford

  29. Secretary of State, if I might ask, I think it is fairly well accepted that in many of the barren city areas we have a high proportion of our socially economically poorest people. From my own small experience of regeneration, and from a report from this Committee before I came here, the Rogers Task Force, etc have pushed towards the success being based, to a large degree, on the creation of mixed communities. Particularly, perhaps, encouraging the middle income groups back into the inner cities. I have certainly seen that in London and it has been extremely successful over the last two decades. What is the White Paper putting forward to encourage that, if you agree those are key factors?
  (Mr Prescott) I certainly agree that the regeneration programmes did have an effect on inner cities, that is attracting the people from outside to come back into the cities. I can think of Hull as a good example where they converted a marina and warehouses into housing. That is not new in many countries outside Britain, where you develop a good facility in the centre and people will come in because it is high quality, a good environment with good living facilities. That has certainly attracted them in. Our view is that you do have to do a lot more in regard to social provision, for example. People are discouraged from living in the city, it may be because of poor education, it might be high crime rates, all sorts of things add to the insecurity of living in as city. A lot more do want to live in cities and not travel from outside into cities. It is to improve that general environment. I think the resources that we have in the local transport plans to improve transport, to have a more sustainable environment, to improve the education and the Health Service, all of these programmes are beginning to have an influence in improving the quality of life and living. It is not just the house, is it? I talk to people who say, "I would like to live in that area but the schooling is lousy and I fear to death that I might get mugged", or things like that. I think that has been true over both administrations. What we are trying to do is correct some of those by putting more resources into them. If we make our cities more attractive, whether it is pedestrianisation, whether it is better housing, whether it is mixed communities, like the Millennium Village in Greenwich, for example, 20 per cent of it is now social, affordable housing living alongside different social mixes, instead of having one big estate. If it is done in a good environment, as we see in the Greenwich Millennium Village, you can get people to come back to live in the cities.

  30. A major factor, and I suspect you will agree, of the success of this would be local government working with you, working in partnership in getting it moved forward. Local government can make it go or local government can totally damn it. What would the reaction be were you to find your programme has been damaged by local government?
  (Mr Prescott) Like everything else, there is good and bad governments and good and bad local authorities. We should ask for the best value and the best standards for that. We have spent a bit of effort in legislation, that you have been involved in yourself, in trying to improve the quality of decision-making and standards in local authorities. Where we found that some local authorities are not actually doing what we think is the best standard to achieve that we have been quite prepared to take several measures out, to intervene with the local authority, to achieve the best standards, to change the local authority structure in some cases, a whole range of measure are involved in that. Local authorities are quite critical to it, I have no doubt about it. We can improve the quality and modernise it, and my ministerial has been very much involved in doing that.

  31. One of criticisms of the best value legislation and that aspect of it that you are talking about—it was effectively supported by certainly two of the members of the Committee when the Bill was going through—is the difficulty with it is that it takes too long. It is too long to act, it is a very slow decision-making process, very slow procedures. How long do you think it would take you to act on local authority that was impeding action under the best value legislation?
  (Mr Prescott) I suspect we are not always able to move as fast as we can. There are difficulties with every idea, from compulsory competitive tendering to best value. By making the structure changes that are now taking place in local government it should make it easier. Perhaps, Hilary Armstrong, who has been working on the results we have seen, some good, some not so good, can reflect on how committed the local authorities are in the best value area.
  (Hilary Armstrong) The legislation on best value only came into power on April 1st and we have already, through that legislation, assisted Hackney. We have not taken formal intervention of powers but what we have done is we have had the inspectorate in and we have had a return corporate inspection. The problems have been identified with the support of that authority. We have sent in through the Improvement and Redevelopment Agency key people in order to, firstly, find out the extent of the problem and now, this week, we have agreed to send in financial managers in order to address that particular issue. It may be slow, but I think if you remember the problems you had with CCT that has been certainly as fast as any CCT process, but I think also think more effective.
  (Mr Prescott) We are also getting quite a bit of criticism, it is not necessarily, "Come on, you say best value, compulsory competitive tender", in some areas they come along and say, "What is the damned difference?" I think there is a difference and we are trying to encourage them

  to be that. It is not an easy option, but it is making a change.

  32. I will continue the other argument on another occasion. On a related matter, going back to my first question, when you walk into many of our big cities you wonder whether they should be bulldozed and rebuilt, so on and so forth, particularly if you are looking towards attracting middle income brackets back into the towns. Are you prepared to bring in the bulldozer into some of these cities and spread it down and start again?
  (Mr Prescott) I will ask Nick to respond to that. I notice tower blocks have got some attention now, there are about 1,600 of them and ten might be knocked down. We have been knocking tower blocks down because they were badly built and badly designed, and we all know that has been the

  difficulty. In my constituency now they actually use the money for the conversion of them and they have redone them and made them up and they are very attractive. People are not leaving them. You would not necessarily knock them down, so it is horses for courses. When I went around that estate in Southwark a few years ago I think my impression was, yes, I would like to come in with a bulldozer.

  33. I think you will find that we did consult.
  (Mr Prescott) Yes, you did consult. We have seen areas where we have knocked them down, but it is not the total solution. We do believe you can make changes. It may be that you have to have less density in housing, less concrete. I am not a fan of concrete buildings, but a good quality environment shows in some areas you can achieve a good combination that attracts people in, both in the private and public sector. Our social mix is geared to achieve that.
  (Mr Raynsford) Could I stress that there are two separate dimensions but both of which are equally important. One is the physical dimension. There are some areas where the physical state of the stock is so bad that the right decision is to clear it and to start again. That does not mean going back to the policies of wholesale mass clearance that were adopted in the 1950s and 1960s and lasted through until the 1970s, which often destroyed communities. Although they may have created better housing—sometimes they did not but sometimes they did—they were usually very damaging to communities. A more selective approach is removing housing which is past its sell-by date which clearly has to be replaced but doing it very much with the community in mind. That takes me on to the second point, which is a sensitivity to both protecting and preserving existing communities but also creating mixed developments where people can live together whether they are owners or renting. The division between areas exclusively of owner occupation and exclusively of renting, which was very much a creation of the 20th Century, has not been a happy one in our view and it has led to social polarisation and social exclusion. We believe that new developments should contain a mix of housing, that is very much part of our PPG3 policy, which is why we have been prepared to intervene where some authorities have not been as assiduous as they should have been in seeking an element of affordable housing as part of developments but equally why we have been quite clear about new affordable housing to be developed as part of mixed communities rather than creating just ghettos of social housing.

  34. I agree with you that single tenure social housing in inner cities in the past in many areas was a disaster. The Deputy Prime Minister mentioned Southwark and Southwark used to have an extremely high proportion of social housing. Are you prepared in inner cities, despite the local authorities, to go beyond just low cost home ownership as an addition to social housing recognising that if you are going to get the mix that the Deputy Prime Minister is talking about you are going to have to get quality housing?
  (Mr Raynsford) Yes, and that is very clear in our Planning Policy Guidance PPG3 which talks about providing a range of housing to meet a range of needs, different income needs, and a mix of housing tenure, so there will be outright owner occupation, low cost owner occupation and affordable rented housing.

  35. How is that tackled in the White Paper?
  (Mr Raynsford) That is all tackled in PPG3 which was issued before the White Paper and the White Paper endorsed the policies which had already been put in place. There was a bit of a debate about whether we were implementing Lord Rogers' report. One of the points we made was that when PPG3 was published before the White Paper, 17 of the Rogers' recommendations were given effect, or were put into effect, by the recommendations of PPG3. It is absolutely integral to the White paper and it preceded it.

Chairman

  36. A New Commitment to Neighbourhood Renewal, that was launched last week and that really addressed this area. I think there was some disappointment last week that there was not any money. Can you tell us any more about this?
  (Mr Prescott) Since it was 800 million I do not know whether you think that is no money but over three years I think that is a fair share of money and it was certainly welcomed by them. You are right to point out that the answer is not necessarily just to go and knock it all down, we can redevelop. I think what we are trying to do with the National Strategy for Neighbourhood Renewal is, in fact, to bring those social factors together to develop it as a community and deal with the very real social factors about jobs, about education, about health, all those things to make them more into a living community. What we announced last week, of course, was 800 million for this neighbourhood renewal of working areas. That is picking something like 88 of the worst areas of deprivation that we have in this country and then to say that these will now be in a three year programme, although I think it is a ten year involvement but a three year commitment of resources announced by the Chancellor in his last statement that the Neighbourhood Renewal Fund would be 800 million. They welcomed the money, of course, they do very much so in these communities, and the commitments, but what they said was the way it is spread out it will be 100 million in the first year, something like 300 million in the second year and 400 million in the third year and the concern was "Can we get off to a fast start? Can you not give us a little bit more money than you have given us there or can you spread it a little differently?" We listened to what was said about that when we had the exchanges last week and, indeed, I am able to say today that there will be an announcement made today for the first time to this Committee, of course, and there will be an announcement made to the House today in written form that we have listened to that and we are announcing another 100 million in the first year. So that should allow in these 88 areas more money to get off to a quicker start, so perhaps we can have an even better response. Instead of 100 million in the first year starting April 2001 it will now be 200 and it lifts the overall total from 800 million to 900 million, getting on for a billion, which is a fair whack of money.

  37. Do you think it is going to be spent in that time?
  (Mr Prescott) Hilary has been very much involved in developing these programmes. You will remember when we had the New Deal communities, of which there is one in my constituency in Hull, there was a tendency to say "there is the money" and that was 800 million over a ten year plan but a three year commitment on the 800 million, and that was directly for doing specific things, developing the housing, etc. I know your Committee has looked at some of the criticism made of whether we co-ordinate our activities with different departments, with education, different programmes being done by different departments, so we had an analysis done of that and thought that it was not as effective, did not really take into account a lot of these social provisions and we did not co-ordinate it and did not get the best effect and there was some confusion. This National Strategy for Neighbourhood Renewal develops on the Social Exclusion Committee that has been set up to co-ordinate its development. Perhaps I can ask Hilary to fill you in on how far we are on that. It is based on developing local partnership strategies with the community itself to make those decisions and then it is a matter of checking how this money is actually used to achieve the objectives and targets which are set for them.
  (Hilary Armstrong) The 88 authorities—they all know who they are—are setting up what are called Local Strategic Partnerships and are seeking to use the money with their partners to achieve what we call floor targets, in other words minimum standards in every area in terms of crime reduction, improvement in housing, improvement in educational standards, improvement in health standards. The money certainly will be used. It is being addressed as mainstream money because what we want to do, and this is what the Spending Review came up with, is if we are really going to turn around our most deprived areas then we have to make sure that public services in those areas work most effectively. The new money that was announced last week is money that will be specifically for community groups to make sure that they are able to participate, along with the public authorities, the health authority, the local authority and so on, so that they can really get their say in the way things happen. Over the next three years we really want to work hard in those 88 areas. There is a new Neighbourhood Renewal Unit within the Department being set up and that will work closely with the 88 areas to actually see how, through this additional mainstream money, we really can improve opportunities in each of those areas.

  38. Thank you. Is there not a tension between the Rural White Paper and the Urban one? The more attractive you make it to live in the countryside under the rural one, the harder it is going to be to get people to come back into the towns, is it not?
  (Mr Prescott) The presumption is that people want to get out of towns because they prefer to live in the rural areas but examination we have done on that shows that clearly people want to move into suburban areas, and that has happened, but a lot of them have been getting out for the other reasons I was referring to, that they do not think the quality of public services in towns are good enough and they want to leave them or, for example, they cannot get the type of housing they want in their area so they have sought it outside. To that extent, therefore, both the urban and the rural areas have this common problem of many people coming from the suburbs into the cities and to a certain extent we see some of that economic development and social movement between the market towns and the villages. What we have tried to do is say let us work on both. The needs of the people in the rural communities for housing are as desperate as they are in some of our cities and many of them are leaving rural areas simply because they cannot get a house. I think that is quite an important factor. Social housing in the rural areas is equally as important a factor as in the cities and towns. One reason might be about refurbishment, and it varies from town to town. In my City of Hull there are 5,000 empty houses. Population movement has made for considerable difficulties in the cities and no doubt if they move down to London they will find housing a very difficult thing to deal with. It is horses for courses. We still need to deal with the provision of social services that need to be guaranteed in the rural areas that perhaps discourage, if you like, people who want to live in the rural areas. I do believe that the majority of people like living in cities as long as it is a good life, good quality, good built environment, and if we can achieve that I believe we can affect those flows that way. I do not think there is a tension between the two but we need to direct our policies at both those rural and urban. That was why we did two separate papers and I think that has been generally welcomed and accepted.

Chairman

  39. You just talked about the number of empty houses in Hull. You can take that in most of the northern cities, take Manchester as an example. On the north side of Manchester you have some Edwardian terraced houses which are identical to ones on the south side. On the south side of Manchester they are going for very considerable sums of money, not quite London prices, the identical houses on the north side of Manchester are unsalable. They are within ten or 15 miles of each other. Would it not be a good idea for the government to put some floor into the market for those sort of properties, so if somebody buys it this year there is a chance in three years' time they can sell it.
  (Mr Prescott) To guarantee the price? I will leave Nick Raynsford to make a judgement about a floor. I can see great difficulties with that. Can I just give a response to 15 miles, I think in some areas you can be within a mile or so, where areas are very attractive and others are not so. If I can refer you to the Manchester, since you said Manchester, and I look at the areas that have been developed in the City of Manchester, they did not want to touch some of the housing, we see a massive almost renaissance in the bulk of the city centres. There is no doubt about it, people are flooding back to live in those areas. The house prices are going, up could have bought something for ten per cent of that a few years ago. People do want to go if we provide high quality living for them. Whether it is to be found in the mechanism, as you are suggesting, I am not sure about the consequences of that.
  (Mr Raynsford) I would be very doubtful about the government intervening to put a floor on house prices in any area. In PPG 3 we have put a presumption against new greenfield developments in areas where there is a brownfield alternative. In that particular location the impact of PPG 3 should be encouraging all new development in the brownfield areas and getting empty properties back into use. Secondly, by targeting money for the improvement of existing council housing, which we are doing, very considerable increases and investment, and encouraging new investment by registered social landlords in regeneration work, we can help to build confidence in those areas. That will, hopefully, lead to a rise in house prices over a period of time. Beyond that it does depend on wider planning policies that make areas attractive. John Prescott is absolutely right in stressing we will not be encouraging people to come back unless the wider issues of education, crime and the quality of life are all addressed. That is what we are keen to do.

 


 
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