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

Lord McKenzie of Luton Excerpts

Monday 24th March 2014 Grand Committee

[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.

--- Later in debate ---

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?