Quango chief faces questions over cash

THE CHIEF executive of the Merseyside Development Corporation has been ordered to appear before the Commons public accounts committee to explain why his quango, set up to revive inner-city Liverpool, spent pounds 300,000 of public money organising an opera recital.

Chris Farrow will give evidence to the committee tomorrow, together with Andrew Turnbull, a Department of the Environment accounting officer, about the conduct of the quango and its involvement in the Tall Ships Regatta last August and its recital, starring Montserrat Caballe. The events had to be subsidised to the tune of pounds 695,000 when they nearly collapsed through poor ticket sales.

Mr Farrow will answer questions on a National Audit Office report which blamed the MDC for poor management, lack of financial controls and over-optimism. It highlighted the pounds 962,000 cost of the regatta, which exceeded income by pounds 426,000.

The public accounts committee hearing comes at a time of increasing concern over the Government's costly inner-city policy which appears to be making little headway in relieving urban deprivation. Last week it was disclosed that a critical report into inner-city policy - which had been suppressed by ministers - calculated that pounds 10bn had been spent with little return to Britain's inner cities.

The report, by Professor Brian Robson of Manchester's Centre for Urban Policy Studies and Professor Michael Parkinson of Liverpool John Moores University, said that money had been frittered away between 1988 and 1991 on projects such as industrial parks, while little attention had been given to health, education and fighting crime.

Further evidence emerged last week of the extent to which inner-city projects are in disarray:

In Manchester, the Central Manchester Development Corporation is suing British Gas for the return of pounds 4.4m of public funds, used to subsidise the cost of building an office block from which British Gas made an estimated pounds 9m profit.

The corporation issued a writ after investigators discovered that the office block, now used by the British Council, cost pounds 5m less to build than British Gas's City Grant application had specified. British Gas describes suggestions of misuse of public money as a slur.

In Brixton, pounds 150m-worth of projects to revive the run-down area of south London are in jeopardy after the inner-cities minister, Sir George Young, threatened to cancel one of the Government's flagship City Challenge projects. Brixton City Challenge faces the axe because it failed to spend pounds 2m of its pounds 7.5m first-year budget.

In Bristol, Sir George has also stepped in to demand that the city council and development corporation stop acting as competitors after they began promoting rival sites as the city's 'office quarter'.

Many of the complaints about government inner-city policy focus not only on wasted money, but also on the confusing number of inner-city initiatives, the minor role often given to elected councils, the power given to quangos, and signs that the Government's commitment has become lacklustre.

Even business executives, whom the Government wanted to take the lead in reviving run- down areas, are becoming disillusioned.

Charles Brocklehurst, managing director of Inner City Enterprises - set up after the Toxteth riots to invest pension fund money in the inner cities - said: 'Year-on-year accounting, ministerial photo-opportunities and an obsession with public-sector leverage have all tended to lead to superficial physical renewal dropped into an area of need.'

Recent changes to simplify grants have disguised cuts. Figures obtained from the Commons research library show that the new Single Regeneration Budget, which replaces several existing grants, will lead to a fall in spending from pounds 1.348bn this financial year to just over pounds 1.151bn by 1996-97.