Examination of Witnesses (Questions 340-359)|
TUESDAY 5 MARCH 2002
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
(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.
345. You may know the method, but you do not
know whether it will be done and you do now know whether it is
(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.
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
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 momentwe
are not relying on advice from anywhere elseto 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.
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.
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?
355. Do you have any confidence in the DTLR
State Aid Unit and the DTI in advising and assisting on state
(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
(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
(Ms Hancock) They ask us to sort it out. They expect
us to take the line that John has described.
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.