The high price of change

Michael Heseltine's corporations, set up after urban riots to revive inner cities, have shut down. David Walker asks whether the experiment was worth it

YOU CAN see the evidence on the ground. The spectacular renovation and re-use of the warehouses around the Albert Dock on the Mersey waterfront in Liverpool, the "Tate of the North" and Granada Television's studios. Those "Spender" backdrops on the Tyne, all glitzy bars and restaurant boats. The planting of those wasteland acres between Middlesbrough town and the Tees. New tarmac pathways through the jungle of metal-bashing dereliction around Oldbury in the Black Country.

Even we can see the evidence. From our tower on London's Canary Wharf, 50 storeys high, we look down on a Legoland of dockside offices and (hugely expensive) toy trains and tunnels where once were forbidding dock walls, rusting cranes and weed-infested water of the Thames.

All this is the result of Michael Heseltine's great experiment in urban renewal - the creation of urban development corporations to revive inner city areas - which, after 17 years, ended yesterday. The bits and pieces of land and buildings still left in the urban development corporations' portfolios were formally passed to local councils and successor bodies, such as English Partnerships.

As a result of the demise of the UDCs, the quango count is down. What else does the scorecard show? "Renaissance", said Michael Heseltine. "Billions frittered away in failed property developments" said Alan Milburn, the Labour MP, who as a member of the House of Commons Public Accounts Committee harried and hassled when the Tories were in power.

"It took a riot" was the title of the famous memorandum Michael Heseltine wrote to Margaret Thatcher in the wake of the Toxteth and Brixton disturbances of 1981. One of the shots brought out of the Whitehall locker to deal with deprivation on Merseyside - which Heseltine if not Thatcher certainly believed caused the riots - was a specialist quango with money to buy land and the right to award itself planning permission, the urban development corporation. (The London Docklands Development Corporation had a different genesis, in the failure of London boroughs to agree what to do with their hundreds of hectares of redundant docks.)

There have been no urban disturbances like Toxteth since, it's true, but that is due more to the modernisation of the Merseyside police than the tarting up of the Liver Building. Urban development corporations were about property not people. They were founded on the impatience of the Thatcher government (which Tony Blair probably shares) with elected councils. Their job was to speed up the business of acquiring land, making it fit for development, then selling it on.

Who eventually got jobs in the offices and warehouses was somebody else's worry - Canary Wharf, for instance, has not been a great source of employment for the residents of the deprived London boroughs of Tower Hamlets and Newham.

The dozen corporations claim a positive job count - at least 150,000 jobs, plus 27,000 homes, 2,400 hectares of derelict land reclaimed, 596 miles of road built and over 5.4 million square metres of industrial and commercial floorspace created.

Sir John Bourn, the Comptroller and Auditor General, concluded the corporations had made "valuable contributions" towards regenerating their areas. That is a fair assessment But all that cost at least pounds 3 billion, probably more when separate subventions for road and rail projects are added in and lost revenue from the parallel Enterprise Zone initiative are subtracted. Within, say, the Black Country Development Corporation's area spending by other public bodies including the local council did not cease. It says something scandalous about how we spend public money in Britain that nobody, not even in the darkest reaches of Whitehall, knows quite how much was spent, or to what effect.

Probably the biggest effect of their creation was to shock (mostly Labour) councils into a much more sensible attitude towards development and partnership with the private sector.

The UDCs were modelled on the New Town corporations which built Stevenage, Crawley, Basildon and Corby. But they built on agricultural land and pocketed, on the taxpayers' behalf, huge gains. There is a case for saying the UDCs have folded too early, leaving private sector developers to get the benefit. The corporations, viewed in one light, represent a huge subsidy to private sector developers many of whom would have gone ahead with investments anyway.

We do know the cost per job created by the UDCs has run as high as pounds 56,000 and that the final bill for the 1.1-mile Limehouse Link road, from the City of London to the Isle of Dogs, exceeded pounds 450 million.

Some UDCs worked, some did not. The quangos created in Bristol and Plymouth have been marginal in those cities' lives. The Leeds corporation, based on the south central area of the city and the Kirkstall Valley spent pounds 55.7 million and attracted pounds 350 million of private-sector investment. But was the investment simply transferred from elsewhere?

It would be a brave person who said the development of central Manchester, Birmingham or Sheffield is now complete. There are, however, fewer holes in the ground. There are scores of inner-city quangos still at work.

The Single Regeneration Budget has this week allocated a further pounds 121 million to local projects. No surprise, then, to see several of the UDCs' executives transferring to development or job creation projects paid for from the National Lottery.

Lottery transfers

Alistair Balls of Tyne & Wear Urban Development Corporation to Lottery-funded International Centre for Life in Newcastle

Steve Thorncroft of Trafford Park UDC to the Lowry Centre, a gallery at Salford Park for LS Lowry's paintings

Jim Beeston of Birmingham Heartlands UDC to head Millennium Point, a science exhibition

Private investment

UDCs pounds m

London Docklands 6,277

Merseyside 461

Black Country 833

Teesside 928.9

Trafford Park 1,013

Tyne & Wear 1,260

B'ham Heartlands 312.2

Plymouth 19.2