Urban Development Corporations in England (Area and Constitution) Order 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Urban Development Corporations in England (Area and Constitution) Order 2014

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, I am pleased to introduce to the Committee the Urban Development Corporations in England (Area and Constitution) Order 2014, laid before this House on 10 February 2014.

The order formally revokes the statutory instruments under which the West Northamptonshire Development Corporation, London Thames Gateway Development Corporation and Thurrock Thames Gateway Development Corporation were established in 2003. The former urban development corporations of London Thames Gateway and Thurrock Thames Gateway closed for business on 28 February 2013 and 31 March 2012 respectively. The corporations were subsequently formally dissolved. West Northamptonshire Development Corporation will close on 31 March 2014 and be formally dissolved on 31 July 2014. These three urban development corporations were set up to promote and enable growth in their areas, unlock economic potential and drive local regeneration to deliver new homes, businesses and jobs. Their role was always intended to be time-limited, with a planned lifespan of up to 10 years. The purpose of this order is to make the necessary legislative changes to the statute book by revoking the statutory instruments that set up these three urban development corporations and provided them with their powers.

This order is linked to another two orders specifically related to the West Northamptonshire Development Corporation. The first of these is the West Northamptonshire Development Corporation transfer order, which transfers the corporation’s property, rights and liabilities to relevant local authorities in the area and comes into effect on 27 March. That is a negative SI that is not the subject of today’s debate. The second is the West Northamptonshire Development Corporation dissolution order, which formally closes down the corporation but allows for any residual winding-up tasks, including the preparation of the final report and accounts by a skeleton team and board members on the audit and risk committee. That dissolution order is not subject to any parliamentary procedure and will come into effect on 31 July.

The three urban development corporations achieved much in their lifetimes, but their lifespans have reached a natural end. They leave a legacy that local authorities and other public sector bodies can build on as we enter a different phase. Their achievements allow us to pass responsibility to locally led delivery bodies that are already rooted in their areas and can be responsive to the needs of their local communities.

Urban development corporations are only one of several ways in which we can support major developments, and this Government intend to use them only sparingly, when they are the appropriate model to deliver growth. For example, as the Chancellor announced last week, we will set up a new urban development corporation that will work with local communities and has been welcomed by them to drive and accelerate progress at Ebbsfleet and deliver up to 15,000 homes along with new jobs and infrastructure.

This order is the final step to fulfil the legislative requirement to revoke the respective area and constitutions that established the three urban development corporations. I beg to move.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for moving this order. When I first looked at the Explanatory Memorandum, I assumed that we were in effect dealing with two orders because the negative order as well as the affirmative order is covered in it. I hope that the Minister will therefore allow me to raise one or two questions about the West Northamptonshire Development Corporation (Transfer of Property, Rights and Liabilities) Order 2014. As we have heard, the urban development corporation order would appear to revoke the order which established three further development areas. The Thurrock Development Corporation was dissolved in 2012 and the London Thames Gateway Development Corporation was dissolved in 2013. In each case, the property, rights and liabilities were transferred to other bodies. However, in the case of the West Northamptonshire Development Corporation, it appears that some assets and powers have already been transferred to successor bodies. One of the orders completes the transfer and enables the revocation of the third urban development order.

As a general point, if each of the development corporations is devoid of assets and has been dissolved, is the revocation order just a tidying-up exercise to prevent them being revived at some stage in the future? I think the noble Baroness said that they have a 10-year life, so no wonder if they expire anyway. Given that there will be nothing in them, why is there a need formally to deal with them in this manner?

Specifically in relation to the West Northamptonshire DC transfer order, a reference is made to a dissolution date, being a dissolution by an order made under Section 166(1A) of the Local Government, Planning and Land Act 1980, so presumably that order will be laid in due course. I think that that may have been what the Minister referred to when introducing the order. Can she say why paragraph 2 of the West Northamptonshire DC order is being revoked separately from the residual revocation which is to take place with effect from 31 July 2014?

On paragraph 4.1 of the transfer order, can the Minister say what remaining property rights and liabilities are to be transferred to the Secretary of State? Also, what is the final destination of the property, rights and liabilities which are on the retained list? Similarly, what is the position in relation to contracts of employment and pension schemes under paragraph 3(3)(b), given that the import of those arrangements is obvious? What is the position of West Northamptonshire DC if it has not completed the winding-up of its affairs by 31 July 2014, or is there an inevitability about that? Paragraph 8.3 of the Explanatory Memorandum indicates ongoing discussions between Northampton Borough Council and the Department for Communities and Local Government. What are the points at issue and have they now been dealt with satisfactorily?

More generally, can the Minister confirm that there will be no adverse financial consequences for any of the local authority transferees from these arrangements, including their prudential borrowing power and capacity? Will that be affected in any way by these transfers? It is presumed again that there are no taxation consequences for the West Northamptonshire DC, but perhaps the Minister can confirm that. I ask the question simply because if an entity is transferring a range of assets to another entity, typically if it were a private sector entity, valuations and capital gains tax would have to be dealt with, as well as other issues. I presume that that does not come into play with the sort of body we are dealing with here, but it would be good to have that confirmation. Lastly, what measures are the Government putting in hand to estimate whether the successor arrangements are delivering on regeneration?

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord McKenzie, for his remarks. I thought that he might have some questions about the orders that are referred to in the Explanatory Memorandum but are not before the Grand Committee for debate today, so I have some information which I hope will be helpful to him.

One of the first points he made concerned why we are introducing the order formally to bring these corporations to an end. Although there was an expectation that they would be time-limited when they were set up, no specific time was fixed for them at the point of their creation. Therefore, it is necessary to draw them formally to a close.

17:15

I may have to write to the noble Lord on some of the specific questions that he raised. However, I can respond to the questions he posed on Northamptonshire, which relate more to the transfer order than to the one before us. The proposal to transfer the corporation’s assets has been subject to consultation, as required by the statute under which the transfer is made. We consulted Northampton Borough Council, Daventry District Council, South Northants Council and Northamptonshire County Council as the authorities within the West Northamptonshire Development Corporation’s geographical area of operation which are directly affected by the closure.

All four councils participated in the consultation, which took place from 26 November 2013 until 2 January this year. My officials worked closely with the authorities before the consultation for some time, so the proposals did not come as any surprise. Indeed, the successor local authorities are eager to take on their new responsibilities. Quite a bit of work has taken place between all the interested parties.

Three out of the four local authorities formally responded to the consultation, all of which supported the proposals. In the main, they were seeking clarity on the arrangements—for example, confirmation that the assets would be transferred to them for nil cash consideration. We were able to confirm that this would be the case, as it was with the transfer of assets from London and Thurrock corporations.

Northampton Borough Council queried the adoption of a bridge on one of the sites, but we were able to give it sufficient additional information to resolve this concern. To help it with sufficient resource capacity to manage the assets and liabilities going forward, we have provided £1 million of funding to Northampton Borough Council, which will be taking on the vast majority of projects. In the case of London and Thurrock, similar capacity funding was also provided to the GLA and Thurrock Council respectively. Therefore, we have ensured that any costs involved will be covered and that local authorities will not be disadvantaged.

It might be worth my telling the noble Lord what assets we are talking about. The majority of assets are in Northampton. The major assets being transferred are St Peter’s Waterside, land at South Bridge Road and land at Avon Nunn Mills. That has all gone to Northampton Borough Council. A former railway line between Coton Road, Northampton and Great Houghton is transferred to Northamptonshire County Council.

In Thurrock, all the assets and liabilities of Thurrock Thames Gateway have been transferred. London Thames Gateway’s development assets on the fringes of the Olympic Park were transferred to the new London Legacy Development Corporation. This was followed in January 2013 by a transfer of further land in the Lee River Park. In April last year, the remaining development assets of the London Thames Gateway Development Corporation were transferred to the Greater London Authority. As I say, funding has been provided to cover any costs.

The noble Lord, Lord McKenzie, asked about pension rights and retained pension liabilities. They revert to the DCLG. He also asked about a retained list and human resources, I think. That, again, comes back to the DCLG.

On ensuring the successor arrangements are delivering in line with the principle of localism, we will not be formally monitoring local authorities’ performance but, as I have already said, we have provided capacity funding for them and have confidence in Northampton Borough Council on the specific points for which it is going to take responsibility.

The noble Lord asked about winding up affairs by 31 July. If any issues are outstanding, they return to the department. It will be dealing with issues such as final accounts between March and July, so we are now in the period where we are dealing with all the minor remaining issues, and we have no reason to believe that they will not be completed by 31 July.

I hope I have responded to at least the vast majority of the points that the noble Lord raised. If there is anything that I missed, I will come back to him in writing.

[Lord McKenzie of Luton]

I am very grateful to the Minister for a very full reply. There are a couple of points that we might just have in writing. In relation to prudential borrowing by the transfer-in entities, if they are going to get a bunch of assets for a nil value, some of those assets are presumably quite valuable and some may be very valuable. Routinely you would expect that potentially to influence what prudential borrowing that entity might be able to undertake. The answer may be that that is not how the rules operate, but I would be grateful for further clarification on that.

In relation to pension arrangements, I was not quite sure what was transferring to CLG. Presumably employees will be TUPE-ed to the new transferee councils. What pensions is CLG picking up?

[Baroness Stowell of Beeston]

I have just been handed a note. I understand the words on it but not how they relate to the question the noble Lord has just asked me. If he will allow me, I will write to him on that matter and on borrowing capacity against assets because I do not think that the note that I have been handed quite answers the specific point he raised so I will not take up your Lordships’ time by reading it out.

I am grateful to the noble Lord for his broad support for this order, and I commend it to the Committee.

Motion agreed.