Michael Heseltine – 1982 Speech on Department of Environment Finances and New Enterprise Zones

The speech made by Michael Heseltine, the then Secretary of State for the Environment, in the House of Commons on 15 November 1982.

With permission, Mr. Speaker, I will make a statement about certain public expenditure programmes for the Department of the Environment. This follows the statement made by my right hon. and learned Friend the Chancellor of the Exchequer on 8 November. Details are being laid in the Vote Office. I shall also announce the designation of new enterprise zones.

As my right hon. and learned Friend said, for the first time since 1977 a Government’s public expenditure plans have not had to be revised upwards from one year to the next. The total of planned expenditure for my own programmes has also remained broadly the same. However, as a result of the considerable success of the programme of sales of council houses and of other assets, significant additional resources are now being realised by local government. In 1983–84 these sales should be worth about £1,750 million. This allows for a marked increase in certain capital programmes.

I deal first with housing. For the current year I have asked local authorities to accelerate their capital programmes in order to spend closer to the national provision. I have offered additional capital allocations for all authorities which need them. Local authorities can increase their expenditure on home improvement grants this year without limit. The Government agree with the proposal—endorsed by The House Builders Federation—that local authorities should buy completed, or nearly completed, low-cost homes direct from house builders for sale, under shared ownership arrangements, to first-time buyers and those on the waiting list. I urge local authorities to promote these schemes.
I have also discussed with the Housing Corporation the effective use of additional resources this year. I have agreed an increase of £150 million in the corporation’s cash imit for 1982–83 to £680 million. This allows additional expenditure on fair rent, hostel and low-cost home ownership schemes and the refinancing of private borrowing guaranteed by the corporation.

For 1983–84 the gross capital provision for housing will be increased from this year’s provision of £3,190 million to £3,243 million. This is about £340 million above the expected outturn for the current year, taking account of the forecast additional spend from my statement today. It will sustain a substantial increase in construction and improvement activity. I have already announced the continuation of the higher improvement grant rates until the end of 1983–84. I shall be taking additional steps to assist local authorities to meet the resulting demand.

I deal now with other Department of the Environment programmes. For the current year, 1982–83, local authorities have been invited to seek any additional allocations they need for derelict land, urban programme expenditure, or other projects. The grant to the Sports Council is also being increased to allow increased capital expenditure, particularly in communities where the needs are greatest and where the development of small facilities can provide a basis for partnership between voluntary organisations and local government. The Minister for the Arts and I are making a further grant of £5 million to the national heritage memorial fund. I will also provide additions to the grants to the Nature Conservancy Council and the Countryside Commission.

A breakdown of Department of the Environment programmes for 1983–84 is shown in the figures placed in the Vote Office. The external financing limit for water authorities will allow capital investment to be increased from £632 million to £677 million. Provision for gross capital expenditure on local environmental services will be £605 million compared with forecast outturn this year of £481 million. Within the smaller programmes there will be an increase in the heritage, conservation and sports budgets from £156 million to £165 million.

I shall be concentrating further additional resources on the urban and derelict land programmes. The House will be aware that I recently launched a new initiative under the urban and derelict land programmes and invited local authorities to submit viable schemes, provided that they attract substantial funds from the private sector. The response from local government and the private sector has greatly exceeded expectations. We have bids of £275 million from the public sector put forward in conjunction with a potential further £900 million of investment from the private sector, spread over a number of years. Our initial appraisal shows that in the first year a public contribution of £85 million could be necessary. I have therefore increased accordingly the £70 million originally earmarked. Substantial private sector funds will flow as a consequence of this injection of Government support. The balance of both public and private expenditure will be invested over subsequent years.

In addition, I am increasing the remaining special budgets for the urban and derelict land programmes. Including the £85 million for the joint schemes, the urban programme will be increased from an expected outturn of —280 million this year to —348 million next year, the derelict land programme will be increased from £59 million to £75 million; and the resources of the urban development corporations of London and Merseyside will be increased from £64 million to £67 million. In total, the public expenditure provision for these programmes next year will be £490 million—an increase of £87 million or 22 per cent. on the likely outturn for this year.

As a further part of our efforts to restore economic health to rundown industrial areas, I can tell the House the Government’s decisions on the designation of new enterprise zones in England.

My right hon. and learned Friend the Chancellor of the Exchequer announced on 27 July that the Government intended to designate 11 new zones, seven of them in England. More than 50 English authorities have submitted bids, many of high quality.

As a result, the Government have decided that, in England, we should go ahead with nine new zones; in Allerdale and North-East Lancashire in the North-West; Rotherham and Scunthorpe in Yorkshire and Humberside; Telford in the West Midlands; North-East Derbyshire and Wellingborough in the East Midlands; Middlesbrough in the North-East; and in North-West Kent, including parts of Rochester, Gillingham and Gravesham. The Government have also decided to extend the existing zones at Speke in Liverpool and Wakefield in West Yorkshire. There will be further detailed discussions.

These programmes give priority to capital expenditure. Significant additional resources arise from the success of local government—which I commend—in selling council houses to their tenants and in realising other assets. The announcements today underline our commitment to the inner cities and to the restoration and improvement of some of the most rundown and depressed industrial areas of our society, and there is an enhanced opportunity for capital investment by much of local government.