Leading Article: Inner cities fit for Tories

REMEMBER the inner cities? When Margaret Thatcher won her third general election in 1987 - with urban riots still fresh in the memory - she told an audience of baying, champagne-swilling youths at Conservative Central Office that 'now we have to get on and do something about those inner cities'. The result was the 'Action for Cities' programme consuming more than pounds 10bn of public money between 1988 and 1991. The money was not channelled through democratically elected local councils: Mrs Thatcher thought these too troublesome, too inefficient, too profligate. Most were run by the Labour Party, anyway; money could not be trusted to the 'loony left' which was still then in widespread ascendancy. Instead, the money went in grants to industry and commerce, in enterprise-zone tax breaks for the rich, in funds for various quangos.

How was this money spent and with what result? In a report published last week - ministers kept it under wraps for 18 months - academics conclude that in the most deprived urban areas, the problems have got worse. All the Tory initiatives did was to increase the polarisation between the decaying inner cities and their surrounding areas. During the 1980s, the report says, 'the main thrusts of policy have increasingly been focused on economic and environmental goals . . . the emphasis on infrastructure . . . has ignored the needs of deprived inner-area residents and has missed the opportunity to utilise their skills.' This is an academic's way of saying that too much money has gone on glitzy buildings and industrial parks; not enough on education, training, health and crime prevention. The benefits of the prestige projects, apart from providing ministers and their unelected friends on quangos with photo-opportunities, are supposed to 'trickle down' to local people. For example, even if the East End poor do not get many jobs in Canary Wharf, they should benefit from bankers spending in local shops or moving into the area. This is piffle. Or, as the academics put it, 'it appears not to be working'. It was hardly likely to, when the money spent by urban development corporations was largely balanced by cuts in council funds. Money was moved from services, which can be used by the poor, to capital projects giving uncertain benefits.

Last week provided a second example of what the Government's urban quangos are allowed to get away with: the case of the Merseyside Development Corporation, whose chairman is Sir Desmond Pitcher, an opera enthusiast and former boss of Littlewoods. Christopher Farrow, the chief executive, went before an MPs' committee to explain why some pounds 600,000 had been spent on the loss-making 'Fanfare for a New World' events in the summer of 1992. These included an open-air opera recital, starring Montserrat Caballe, on the eve of the Tall Ships Regatta. The cost of hospitality to the King and Queen of Spain was among the reasons for the loss, Mr Farrow explained. Imagine the outcry if a Labour council had spent a fraction of this money on some favoured arts project. Think of the outcry, too, whenever councils are discovered hiring advisers on, say, lesbian and gay rights or anti-racism. But is it so much less loony of the urban development corporations to have spent pounds 207m on outside consultants to advise on buying and selling properties and on job creation initiatives? The corporations have lost pounds 82.5m on property deals; the consultants may have helped to create jobs but, in Bristol for example, the average cost was nearly pounds 5,000 a job.

When Mrs Thatcher talked of 'doing something' about the inner cities, she did not envisage doing anything for their inhabitants. Rather, she envisaged making those areas fit for the kind of people who cheered her that night to work and even live in. Government policy has improved since then. For example, councils are allowed to bid for central government funds through the City Challenge scheme. But ministers must understand that the inner cities need more than smart buildings and arts festivals. They need, for example, good schools; yet the Government's funding system tends to drive both pupils and money out of the inner cities. And the Government should not forget that its taxation and benefit policies have consistently penalised the poor and that what is most wrong with deprived urban areas is that the people who live in them don't have enough money. The inner cities may no longer threaten to explode as they did in the 1980s; but we know from American cities that the fury of riot is succeeded by a slow decline into lawlessness and hopelessness.