Development losses of pounds 67m 'a scandal'

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The Independent Online
URBAN development corporations were criticised yesterday for losing more than pounds 67m on property deals, the very activity on which most of their efforts have been concentrated.

Calling for an investigation by the National Audit Office, the Whitehall spending watchdog, Stephen Byers, Labour MP for Wallsend, who extracted information about the transactions from ministerial replies to Parliamentary questions, said the losses were a scandal.

About pounds 2bn of public money has been pumped into the 10 English UDCs over the past five years. An analysis of the Government answers shows six of them losing out on purchases and sales of land since their creation in the late 1980s. The Black Country, which received pounds 46.2m in grant aid last year, shows a loss on property deals, based on values as at March this year, of pounds 26.5m. Last year, Bristol, Central Manchester, Leeds, Trafford Park and Tyne & Wear received grants of, respectively, pounds 19.1m, pounds 16m, pounds 13.6m, pounds 28.1m and pounds 40.5m. Their losses on land transactions total pounds 12.9m, pounds 8.3m, pounds 3.4m, pounds 10m and pounds 6.3m.

The revelations could speed the demise of the corporations, which have already been told to draw up 'exit strategies'. John Redwood, Minister of State at the Department of the Environment, one of Mr Byers' respondents, is known to not favour them and is likely to view the figures as a further nail to drive into the UDC coffin.

Labour has long attacked the UDC system for its concentration on property development, claiming that public money could be better used to help manufacturing industry and create jobs. The corporations were given wide powers to encourage investment and development by the private sector in designated areas removed from local authority control.

The continuing crisis in the property market also raises questions over the planned Urban Development Corporation, to be headed by Lord Walker of Worcester, formerly Peter Walker, a former Secretary of State for Energy. A Tory manifesto commitment, its stated aim too is to bring derelict and under-used land back to productive use.

Mr Byers, whose constituency covers part of the Tyne & Wear UDC, said the corporations had not created jobs for local people. 'Money that should have been used to regenerate our manufacturing and industrial base has been lost due to an over-concentration by the UDCs on retail, residential and office development. If a local authority had lost money in this way, the councillors concerned would have been surcharged and dismissed from office.'

Despite problems of finding tenants for offices, Merseyside and London Docklands, created much earlier than the other UDCs, have managed a profit from buying and selling land for pounds 26.8m and pounds 54.4m. The others, Mr Byers said, had 'bought when the market was at its peak and are now suffering the decline'.

----------------------------------------------------------------- URBAN DEVELOPMENT CORPORATIONS' LOSSES ON LAND ----------------------------------------------------------------- UDC Amount spent Amount received Value of Loss on land from land land transactions transactions 31/3/92 (pounds m) (pounds m) (pounds m) (pounds m) Black Country 68.0 3.7 38.8 26.5 Bristol 24.4 nil 11.5 12.9 Central Manchester 12.3 nil 4.0 8.3 Leeds 17.5 1.8 12.3 3.4 Trafford 41.6 9.3 22.3 10.0 Park Tyne and Wear 42.4 5.8 30.3 6.3 Table based on replies to Parliamentary Questions -----------------------------------------------------------------