Covid-19: Economy

Lord Layard Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Layard (Lab)]

My Lords, the huge danger that we face is mass long-term unemployment. Once that takes root, it is extremely difficult to reduce it. It kills the human spirit but also of course costs the Exchequer a lot of money. However, there is a well-tested way to prevent it, which is an active labour market policy. Instead of paying people money for doing nothing, we pay employers to employ them to do something useful. That is what we did for young people under 25 after the financial crisis. It was called the young person’s guarantee. Once these young people were long-term unemployed, their benefits ceased and instead they were offered a guarantee of work at the rate of the job for at least 25 hours a week for at least six months. The jobs were with regular employers, the state paid the basic wage and the employers had to compete for access to the workers on these terms by offering meaningful jobs, including training. When the programme was evaluated, it was found to have raised the employability of those who went on it by at least a quarter, and the net cost to the Exchequer was under half the gross cost.

The crisis that we now face is much greater than after the financial crash. It is a crisis that, as we know, was rightly and deliberately created by the Government, and I think that puts an especial responsibility on the Government to the victims of the slump that they have created. That responsibility has to extend this time to people of all ages, so we need more than a young person’s guarantee: we need a guarantee to workers of all ages that they will not be left to drift into long-term unemployment. For any worker approaching a year’s unemployment, there should be a job guarantee and we should then support people’s incomes only through work, not through inactivity. To find the jobs that we need, the state should pay the minimum wage for at least 25 hours a week for the first six months that an employer employs an at-risk person.

This is not pie in the sky; we have decades of experience of it. I ask the Minister to meet with some labour market experts to discuss what should be done this time around.

Building More Homes (Economic Affairs Committee Report)

Lord Layard Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Layard (Lab)]

My Lords, as a member of the committee, I too thank our great leader, sitting in front of me. As has been said, the starting point for our inquiry was a very remarkable estimate that is widely accepted—that, simply to stop real house prices and rents from rising further, we need not 200,000 homes a year but 300,000, just to stop things getting worse. However, surely we want things to get better, so we need more than 300,000 homes a year to make the target of an affordable housing sector a reality. That means a massive housing boom over 15 years, as the noble Lord, Lord Kerslake, has said—that is what we have to generate. We have to ask ourselves what conditions could generate a continuing housing boom—not little tinkerings but the fundamentals for generating such a boom. However, I do not think that we will get the answer to that unless we understand the fundamentals of our present situation, which is really quite remarkable.

Real house prices and rents have trebled over the last 30 years—it has been said that that is completely out of line with the experience in the rest of the world—yet the number of houses built by the private sector is the same as it was 30 years ago, so there is no response. You would have expected those extraordinary prices to generate an extraordinary supply response but that has not happened. If you look for explanations, you can find little ones that might apply in one year or another, but surely the fundamental explanation must be the planning system. The planning system determines the supply of land on which the houses are built and, if the supply is restricted, the real price of land goes up. So what has happened to the price of land? It has more than quadrupled. In fact, in terms of the constituents of the price of housing, the whole increase is due to the increase in the price of land. Therefore, I would like to talk about land and planning.

There is only one way that we can describe the present situation, which is that it involves a major disregard of human need. For example, if a hectare of land is worth £2 million when it is used to provide homes for people and with its existing use it is worth only £20,000, that simply disregards the simple evidence of human need. What is the value of the land to society with one use as compared with another? The only exception to that being an outrage would be if one could show that the amenity value of the land with its existing use was as high as the price of the land if it provided homes. That might be the position sometimes but certainly not in an awful lot of cases at present.

How can we improve the situation and unleash the energy of the housebuilding industry? The key is to make it easier to get planning permission. It is that simple and, unless we face up to that, we will not start from the central analysis of how we have reached where we are. In particular, we have to make things easier for small and medium-sized builders, who have been pushed out of the market mainly by the complexity of the planning system. We have to get them back in to create this boom. Therefore, I want to make two suggestions for liberalising the planning system and generating the boom.

First, there has to be in the system more presumption in favour of development. I think that the Government have used that phrase sometimes but it has to be made real. One possibility is to focus on areas where the price of land is very high and therefore the evidence of human need for houses is very strong. You could say that in areas where the value of land was above £2 million, there would be a presumption in favour of development, and the local authority could refuse it only if it could persuade the inspector that the amenity value of the existing use exceeded the value of the land if it were used to provide houses. I would not suggest that as a universal arrangement, and certainly not in areas of the green belt that were open to public access, for example, but I shall make a few suggestions as to where you could start.

One obvious starting point that has been suggested in some reports is on land near railway stations. I think it has been suggested that if we could build up the areas within two miles of railways stations in commuter reach of big cities, we could have an awful lot more homes. Another suggestion would be parts of the green belt lying inside the M25 but without public access. There is an awful lot of land without public access inside the M25. I do not know whether your Lordships know this extraordinary fact but if only 10% of the green belt inside the M25 were developed, this would provide 1 million homes. It is important to get these things in perspective.

[Baroness Young of Old Scone]

I have recently chaired a conference on the green belt for Greater London. It was startling to see just how the proposition that my noble friend is putting forward works in practice. The reality is that, if we are to make London liveable in the face of climate change, we need to maximise the benefits of the existing green belt to deliver heat reduction, water protection, flood risk management and access to open spaces, otherwise we will see the heat impacts on London of increasing temperatures from climate change. As far as I am concerned, the secret is not to build lots of houses on the green belt but to get the green belt to work for its living in all these aspects. Two-thirds of the green belt being inaccessible to the public is something to change, but it does not need to be built over.

[Lord Layard]

I am grateful for that. I am a bit more hopeful about dealing with climate change by electrifying the economy with clean electricity rather than by failing to give people homes. I think that we can make progress without expecting people to go into ever more expensive properties. I was very encouraged by what the noble Lord, Lord Kerslake, said about the green belt. It is true that attitudes are changing, and that is very helpful.

Of course, we understand that local authorities have political reasons for not wanting to give planning permission. We always remember how Aneurin Bevan got the National Health Service set up by stuffing doctors’ mouths with gold. It still seems to me that we ought to allow local authorities to have a higher fraction of the financial uplift that occurs when they give planning permission, and we should then insist that they use that for housing purposes. My colleague Professor Cheshire at the London School of Economics has suggested a levy on the final value of a completed development, combining that with the change in presumption that I referred to earlier. There are many areas in which these ideas can be explored. The committee took no view on these issues but it made a clear recommendation that the Government should examine these proposals. I hope that the Minister can confirm that his admirable colleague Mr Barwell will be doing that.

We should recognise that we are suffering from a self-inflicted wound. We have inflicted it on ourselves mainly through the way in which we have operated the planning laws. Other countries have much less of a problem because they have not done what we have done. It is a case of the triumph of the few over the many. The distributional impact of the planning system is one of the most powerful sources of inequality in our society, and I think that we will satisfy the needs of the many only if we are honest about the origins of our present situation.

PACE Trial: Chronic Fatigue Syndrome/Myalgic Encephalomyelitis

Lord Layard Excerpts

Wednesday 6th February 2013 Grand Committee

[Lord Layard]

My Lords, I too greatly welcome this debate. This is a terrible condition and we are talking about hundreds of thousands of people who are suffering from it. While it is clear that although there have been many studies relative to the seriousness and pervasiveness of this condition, there is far too little research into what is causing it. I want to focus on treatment, as there have been terrible misunderstandings and misconceptions put about on that score.

I want to make just four points. First, the issue of what causes the condition is often quite different from how we can best treat it. This is such a basic point but it is not fully understood by many of the people suffering from this condition. Coronary heart disease may be caused by cholesterol but we treat it with a stent. In the same way, chronic fatigue may be caused by a virus yet the best treatment available at the moment may include psychological therapy. This form of treatment implies nothing about what we believe to be the cause. People who suffer from CFS, and who in almost all cases feel that it is not psychological in origin, are surely making a mistake when they reject psychological support for their condition on the grounds that this implies something about its cause. In their own interest, they should focus on what is the best possible treatment available on the evidence.

Secondly, we have quite a lot of evidence about which treatments work. More will surely be discovered in future and some of them will surely be biological. In the mean time, we have a large amount of evidence that both CBT and graded exercise therapy enable many more people to recover than if the only treatment they have is standard medical care. My main point here is that this is so, whatever the definition of recovery. It is wrong to suggest that this all depends upon that definition; you can put the cut-off for recovery in many different places and you will always find that people who get CBT and graded exercise therapy do better than people who have only standard medical care. There are many studies preceding PACE to show this. Of course, that is the main finding of PACE, which I would say is a fine piece of work by all normal standards. Some of the criticisms are really misleading but some of them have been answered already.

I come back to this question of the change in the protocol to stress that this was made before any analysis was done of the results. It was not that they looked at the results and said, “Let’s change the recovery criteria”. The changes were made because of discussions affecting the whole research world and agreed by the trial steering committee. What is very interesting is that a separate paper has been written simply on the recovery issue, which uses five or six different criteria of recovery. Again, in the PACE study it is shown that whatever cut-off you use, you get the same difference between the outcome of CBT and graded exercise therapy. There really is not a conjuring trick going on here and it is wrong for this impression to be given to the community of people who are suffering, if that leads to them not receiving help which they could really benefit from. Instead of criticising the study, we should be rejoicing that we again have more evidence that something can be done which is better than standard medical care.

My third point has, in a way, been made before but given the strength of this evidence that we have these treatments which work, it is shocking that they are so little available. This is part of a wider story of the non-availability of psychological therapy. The survey that was done by Action for M.E. found that a large number of PCTs were providing no specialist treatment clinics for this condition—or were not providing any kind of care, let alone this most evidence-based care. That is a disgrace and I hope that the Minister can say something about that.

The treatments are not unsafe, a claim that is often put about due to the fact that, of course, some people get worse during treatment. The only argument against the treatment, if it were the case, would be if people who did not receive it were less likely to get worse. Again, the statistics are absolutely clear: the proportion of people who get worse in treatment is no higher than that for people who get worse who are not in treatment. There is no argument whatever that this is unsafe.

My fourth point is about how we can get a better deal for this large group of sufferers. Obviously, the worst possible way to get it is to turn the area into a battleground. It gives the commissioners the perfect excuse for doing nothing and gives people of good will, who might come in and try to help people with this condition, a serious disincentive for getting into this field. As we know, and has already been said, many—or certainly some—of the people who work in this area have received repeated insults and even death threats. I pay particular tribute to Sir Simon Wessely at King’s College London, who has led the field for many years in this area and has stuck to it, despite all this harassment. He and his colleagues—

[Lord Wallace of Saltaire]

My Lords, the noble Lord is in his seventh minute. We are very tight on time and I am worried that the Minister will not have time to reply.

[Lord Layard]

I will stop at this point.