THE NEW TOWNS

‘The investment in the New Towns must not be regarded as an
addition to the aggregate of national expenditure on rebuilding, but
as an alternative distribution of part of it. . . To a large extent the nation
will be spending outside congested areas money otherwise spent, possibly
to less good purpose, within them.’
This is the first part of the answer to those, even within the Labour Movement,
 who feel rather jealously that the residents of New Towns have somehow
 stolen a march on the rest of the country. Secondly, if the alternative
to New Towns is rehousing on old sites, which may mean high costs for
clearing, for compulsory purchase of property and land, then the cost to
the national economy jn terms of subsidies and higher construction costs
will be much greater. It has been estimated, by way of illustration, that
10,000 flats in multi-storey blocks sited in Metropolitan Boroughs would
cost ten to fifteen million pounds more than 10,000 New Town houses.
Some explanation of New Town finance is needed. The Corporations
receive advances from the Treasury, at rates of interest that have fluctuated
between 3 and 44 per cent., which are repayable over sixty years. The upper
limit of these was recently raised from £150m. to £250m. From these
capital advances, the entire cost of construction has to be met, and the income
from the completed project must be large enough to pay back interest and
principal over the stated term. This is the crux of the whole operation:
the Corporation has no source of capital but the Treasury, and no source
of income save its rent roll and some minor ancillary activities.

Local Dwellers Pay

This means that the entire capital cost of a New Town, plus the interest
on the borrowed money, must be met by the domestic, industrial and shopkeeping
 tenants. No such condition is laid upon local authorities undertaking
 housing schemes, nor would a private housing developer have to reckon
in his overheads many of the items for which a Development Corporation
must pay. The entire capital charge and revenue account must be met out
of income—the land, the sewers, the roads and site preparation, architects’
fees, Corporation staff salaries and expenses, building costs, the provision
of town centres, public and amenity buildings, as well as the laying out and
provision of many of the factory premises.
It is true that the Corporation receives the normal housing subsidies
from the Treasury, which are reckoned as part of income, but unlike a local
authority it has no rate fund to which it can turn for additional help. Thus,
in the rent of every house, shop and factory there is a considerable contribulion
 to overhead and development costs for the New Town as a whole.
Naturally, in order to keep rents within reasonable limits, the Corporations
must continually count the cost of non-earning assets or amenities; lower
the housing density, permit larger gardens, wider streets and verges, and each
tenant must pay a little more towards the cost of the land; leave land for
parks and playing fields—a fraction more on the rents; turn a muddy brook
into a stream flowing through water-gardens in the town centre—more
capital expenditure without any increased income to meet it. So strong is