Budget Resolutions
Debate between Meg Hillier and John Redwood
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a shame that I have only eight minutes, because I could use all those eight minutes to rebut some of the views just espoused by the right hon. Member for Wokingham (John Redwood).
If this was an “austerity is over” Budget, I invite the Chancellor to come to my constituency and see the challenges there, particularly with housing and homelessness, which I want to address. However, I must pause for a moment to touch on the views of the right hon. Member for Wokingham. The idea that we do not have to pay the £39 billion if we crash out of the EU is not the case. We have certain contractual obligations; I could go through them all in detail. In particular, there is the pension liability that we have for many of our own people who worked in Europe and have those pensions, and there are many other commitments that we have entered into. It was the Prime Minister— was it not?—who said that we are a country that pays what we owe, and we do owe money.
John Redwood
I do not think the hon. Lady understands. The bulk of the money is payments for another 21 months in the EU that we would not be making if we simply left.
Meg Hillier
It is about commitments that have already been made, and we have to pay our share of that as we were members at the time.
The Chancellor talked about this Budget being for strivers, grafters and carers, and he said that austerity was not driven by ideology. His own phrases demonstrate, as austerity has demonstrated every step of the way, a disconnect with the reality of people’s lives. He talked about 3.3 million more people being in jobs and the proportion of low-paid jobs being at its lowest. I wonder what measure that was based on, because very many of my constituents have low-paid and insecure jobs working on zero-hours contracts, which may have their place for certain people but not for those who are trying to pay the family bills and trying to pay the rent on time. In my constituency, we also have huge issues with housing, on which, as I say, I will go into in more detail.
The digital services tax is very interesting to me as the Member representing Shoreditch and all the tech businesses there, including some of the big players. This is only a consultation, of course. The big question, as my hon. Friend the Member for Leeds West (Rachel Reeves) highlighted, is whether it will deliver a result. If it only levies up to £400 million, as I think the Chancellor said, it will not recover the tax that some of the big tech giants have avoided through their complex multinational tax arrangements. I will be watching this closely, not least to see whether those big players will cough up, but also to make sure that the growing start-up businesses in my constituency will be protected as the Chancellor has said. We need an ecosystem of tech businesses. We need those start-ups to start and grow in Britain so that they become the big employers and the responsible taxpayers of the future.
On local government funding, the £650 million in grant funding as a one-off is not good enough. We have had so much money taken out of local councils. Their real-terms spending on social care, for example, reduced by 5.3% between 2010 and 2017, while the number of over-85s rose by 28% between 2006 and 2016—a slightly longer period. The £20 billion for the NHS does not cover social care. It may make small contributions, but on its own it is not enough.
Since 2010-11, in my own borough, Hackney Council has had £130 million cut from its core grant funding from the Government. Dividing the £650 million by the number of local authorities in the country, Hackney will get a tiny amount, possibly for only one year, I think the Chancellor said—obviously, I have not had time to go through the Red Book. The cuts to Hackney so far are the equivalent of £471 per head—one of the largest cuts in England. In terms of spending power, Hackney will lose £1,425 per household between 2010 and 2020—the highest amount in the country—and we have £30 million more of cuts to find.
We are having big discussions about some budget cuts with Government, particularly for special educational needs, which Hackney Council has been cross-subsidising since 2011 from other parts of the budget. There is only so far that we can squeeze before the pips squeak, and the pips have been squeaking for some time now in Hackney.
I will not repeat what my right hon. Friend the Member for Birkenhead (Frank Field) and my hon. Friend the Member for Leeds West said, but suffice it to say that the problems with universal credit were predicted, foreseeable and exacerbated by the £2 billion of cuts under the former Chancellor. The Public Accounts Committee has been looking at universal credit since 2012, and our voice was added to a chorus of concern. The Government just have to listen, but they are detached from the reality of people’s lives.
In the past, there has been broad cross-party consensus on universal credit. It is still not Labour policy to completely get rid of it; there would be a pause, a review and an assessment of what could be done to make it work, because it would be very difficult to unpick it now. If we want universal credit to work, we need a Government who are listening and understanding people’s needs. My hon. Friends have outlined the problems.
For my borough, housing and homelessness is the really big issue. In London as a whole, almost nine in 10 households believe that there is a housing crisis in the capital. In Hackney, a borough-wide survey in 2015 showed that housing affordability was the top concern for residents, and things have got worse since then. The average house price in Hackney South and Shoreditch is £530,000 as of March this year. Hackney now has 34,000 privately rented homes, which is around 30% of all homes in the borough—a proportion that has more than doubled in the past decade. Rents in the private sector are astronomically high and out of many people’s reach. Rising rents have meant that the average two-bedroom property now costs £1,820 a month in the private market, which is over £300 a month more than in 2011—and that is if people are lucky; many are more expensive than that.
The brutal reality is that, given the cap, housing benefit does not pay the rent on any three or four-bedroom property in my borough or in many boroughs. In London and the south-east in general, people will find it hard to pay their rent if they are relying on housing benefit. Let us be clear: the majority of people claiming housing benefit are in work, which puts the lie to what the Chancellor said about employment solving everything. Of course employment is important, but the jobs have to be decent enough to pay the wages.
A 2017 report by Shelter ranked Hackney 10th in a list of the 50 areas in the country with the highest levels of homelessness—something the Chancellor did not mention. According to that survey, one in 44 Hackney residents were either sleeping rough or in temporary accommodation. This is a real issue. My surgeries are full of people who are desperate: women sent home from hospital with a baby and toddler to a hostel where they have been living for 18 months or two years. Four or five years ago, they were waiting only six months. Six months in a hostel was bad, but 18 months has a destroying effect on family life, the ability to work and the ability of children to study.
There has been a 300% rise in homelessness in Hackney since 2010, with 3,000 households now living in temporary accommodation. Hackney’s bill for temporary accommodation has gone up from £26 million in 2013-14 to £54.8 million—an increase of over 100%. That is money down the drain—money that is not helping people, but just keeping a vague, bare roof over their heads and nothing more.
My hon. Friend the Member for Leeds West touched on education. It is important to highlight that we in Hackney have some of the best schools in the country. We heard that there will be a £400 million in-year bonus for some little extras—what a patronising way to provide money for our children’s education. That means £10,000 for a primary school and £50,000 for a secondary school on average, which is not even enough to pay for the teachers they are having to shed, not enough to make up the short weeks they are having to introduce and not enough to reintroduce the full curriculum that they have had to cut.
I have not even had a chance to get into the details of Brexit or the fact that policing is under such siege in our city and in my borough. Extraordinarily, for the first time in my 13 years as an MP and 25 years in elected office, I have had a stream of people coming to my surgeries saying that the police did not investigate something—not something they would normally come to an MP about. It is becoming a pattern, because we have lost a fifth of our officers in Hackney.
To finish on a positive point, I welcome the business rates relief, if the revaluation delivers what the Chancellor says it will. I have lobbied for that in the past. But on the rest, austerity is not over for my constituents—it is still biting hard—and the Government have got to get in tune with the lives of real people.
Housing Supply
Debate between Meg Hillier and John RedwoodWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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John Redwood
I entirely agree, and I mentioned security for families at the beginning. That is a point well made.
We need to ask what we can do. House prices in many parts of the country, most especially in London and the south-east, are extremely high, and it is very difficult even for someone on average earnings, let alone below-average earnings, to raise a sufficiently large deposit, meet the requirements to raise the loan and meet the interest payments on it. One driver of these very high house prices is undoubtedly the big imbalance between demand and supply in housing. I know the Government accept that and are trying to work on the supply side. If more houses can be produced, all other things beings equal, that should help ease the house price pressures.
There is also the question of demand. I think all of us wish to be generous to refugees and to invite in people of talent who can make a good contribution to our community. There is everything to be said for allowing companies investing here to bring in their executives and so forth, but Government Members feel there has to be some control on overall numbers. When we are being generous, as we should be, we have to take into account the strains being put on the housing market, which may mean that the people coming here cannot get the quality and price of housing that we would regard as important for the lifestyles we wish for all the people in our country.
We need to look at the number of people who need housing vis-à-vis migration, as well as supply. I know the Government are considering that and will be freer on it in due course, once we come to debate in the House of Commons a UK migration policy that meets demands for decency and labour mobility for business, but that also understands the stresses placed on housing and other services if we have very large numbers. Those stresses run the risk of us not being able to offer people the standards we think are appropriate for anyone settled here in our country.
The Government have attempted to tackle the housing problem by driving the construction of more homes and to tackle the issue of affordability by working particularly with first-time buyers on how to get the first deposit and raise sufficient money to buy what are expensive properties. I welcome the Government’s initiatives. They are all well-intended, and some have been doing good things. My main purpose today is to raise two questions. Can the initiatives that already exist be beefed up and better advertised, so that we get more people to use them? It is still slower than we would like. Secondly, are there new initiatives we should add to them, given the general imperative to get on with solving the housing scarcity problem in general and the shortage of affordable housing to buy in particular?
Through the help to buy ISA, the Government are offering a £3,000 top-up to someone who can save £12,000 for a deposit on a house. Although £15,000 is a lot of money for someone on a low income who is trying to save, it is not a lot of money for a house deposit. I wonder whether, through the Minister, the Chancellor might think a little more about those figures. The more help that can be offered, the faster someone can get a deposit and the better that is for their ability to access the housing market.
The Help to Buy equity loan scheme is admirable, but it is limited to new homes only, and I wonder why. Most people buy a second-hand home. By definition, the stock of those homes is massively bigger than the new supply in any given year. I know it would be a lot more expensive if we opened up the scheme to a wider range of houses, but it would also be a lot more useful, because many people buy a second-hand home as their first home. Indeed, for some, the pleasure of buying a first home is in buying a second-hand home that is not in great shape, so that they can put their stamp on it. It may be a way to have a more affordable home, because they may wish to spend their own time and effort on improving the house, rather than spending money to get others in to improve it for them. It might be worth looking at whether we can provide more of a bridge for people who want to buy second-hand homes.
The affordable housing fund was set up to generate more construction of affordable housing. Again, that is a great initiative. I would like the Minister to give us more up-to-date information on how many homes that scheme might achieve and what the approved build rate under it is. One issue with the affordable housing fund is the cost of building the properties and the quality of their construction. I am all in favour of really good-quality construction, and modern homes are built to a much higher standard in many ways than older homes. However, one way to match the need for higher quality and affordable cost may well be to build on the initiatives of the house building industry, by having more construction in the factory before things are brought to site. None of us wish to recreate the old prefabs. They were a necessary and welcome development in the immediate post-war crisis, when so much of our cities had been devastated by bombing, but they are not the kind of thing we want to build today. People want elegant, well-insulated homes that meet all modern standards.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The right hon. Gentleman talks about prefabs and the old style. In my constituency the Peabody housing trust developed as a millennium product pre-built buildings on Murray Grove. People are still living there now, and very happily so. There is a modern way of developing that could be cheaper. Does he think the Government should consider that?
John Redwood
I agree. There is not a public-private sector divide, in my view; it is something the private sector is beginning to adopt and needs to look at just as much as the public sector. If done well, it can improve the quality. Indeed, some of the most expensive properties that individuals can buy are modular German or Swedish houses, which are imported in kit form and put up in a week or two on a suitable piece of concrete, on a nice plot of land, at quite a high price, with extremely elegant finishes.
The reason we can both drive quality up and drive cost down is that in the factory environment we can engineer and produce the larger parts of the house to high specifications and low tolerances, so that they are very accurate. When the houses are then on site, they are in good order and we do not need all the site labour. We do not have problems when it rains, because it is all being done in a controlled environment, where dust and dirt can be controlled and there are not the wrong wet or dry conditions. We can have perfect conditions for manufacturing to a high quality. The more we can achieve in the factory, and the less we have to do on site, the more we speed up the build time. Months can be taken out of the build time, and if we take out time, we take out cost.
I hope that more can be done. Persimmon, for example, is producing very high-quality homes for private sector buyers. Its Space4 factory does quite a lot of prefabrication work for a number of homes in its range. I hope there will be more initiatives. I mention that to the Government because, through their affordable housing fund, they have the money and they are the customer, as well as the final customer for the property. They can therefore use that intelligently, as a buyer, to drive the process in the way I have suggested, so that we get quality up and cost down—a double benefit.
The Government have a rent to buy scheme. I would like to hear more about that and whether it can be made more generous. The idea is lower rent when someone takes on the tenancy, to give them more scope to save for a deposit. They then have the right to move in and switch from renting to buying. That is an excellent idea.
I think that the Government could do more on their own estate and on brownfields in general. That is partly a planning issue and partly an investment or encouragement issue. By Government, I mean local as well as national, because the two need to work in partnership, which often requires national Government to lead the way. A large number of properties, particularly in our towns and cities, are in use but are in decline, or the buildings may be empty because their use has terminated. Given the pace of change in retail, there will be redundant retail space, and given the pace of change in office employment and some industrial employment, there will be redundant older buildings. Older warehouses and industrial plants have been elegantly converted into homes, for example in docklands. When those buildings are down on their luck or become free, we must ensure that the public sector does all it can to make permits and proposals available so that people can transform them.
Perhaps the Government could look at a scheme to back individuals who want to transform a property of their own—a sort of modern homesteading scheme for which they can be given support if they want to take on a poor property—or if a group of people want to take on a larger property and convert it. We could have more action to deal with dereliction, which is often close to valuable real estate in some of our leading cities, but we need to back that with an initiative. It should not always be large companies that eventually get around to doing that and taking all the property; there may be an opportunity for individuals, smaller businesses, co-operative arrangements or whatever to take on property problems and turn them into opportunities.
On brownfield sites and in urban redevelopment there is generally scope for central and local government to have a bigger vision—some are good at that, but some are rather slow—and to use it to identify suitable sites for more affordable housing for sale.