Building More Homes (Economic Affairs Committee Report)

Baroness Wheatcroft Excerpts

Thursday 2nd March 2017 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I am delighted to follow the right reverend Prelate. I sympathise with his compassionate comments, particularly on rural housing. As a member of the Economic Affairs Committee I would like to echo the words of others in thanking the staff for the extraordinarily good work they did and also the chairman, the noble Lord, Lord Hollick, for his skilful chairmanship.

The debate has been wide-ranging already and many of the topics that were in our report have been addressed, so I will restrict myself to just two issues. First, the government White Paper accepts that we need to build more homes, faster. Much has been said about more, but not much about faster. We need to make sure that planning permissions are developed speedily. There is far too long between permission being granted and housing being built—not that it is always built, given that about one-third of planning permissions are never fulfilled. The Government have to look at how to get planning permissions turned into real developed houses in the shortest possible time. That may mean some sort of penalty, which the committee certainly thought was worth investigating.

However, there is another aspect to building houses faster that we should be doing more about: modern methods of construction. Some of those have been going on, but not nearly enough. We need to get momentum going if that is to take off. It could make a huge difference to our housing situation. The Building Societies Association has said that MMC could be a game-changer, but that it will not happen unless the Government really get behind it. There is too much nervousness among consumers and a lack of knowledge among lenders. We need to get enough of those houses built to demonstrate that this is the way forward. The current method of housebuilding, bricks and blocks, has been unchanged for virtually 100 years, and of course it is very vulnerable to the weather. Fabricating large parts of a house in factories and then moving it to site could make huge savings. The steel construction industry reckons that 75% of the labour costs could be taken out if we got MMC working properly. As the Building Societies Association said, we need to see the Government backing this. Major projects such as Northstone, where there are plans for 10,000 houses and the Government are taking the lead, would be the perfect place for MMC techniques to work. The big housebuilders have projects under way and are investing in factories, but much more needs to be done. I would very much like to hear from the Minister his plans for putting government support behind MMC.

My second point concerns spending by local authorities and their ability to borrow to fund public sector housing. In our report we called for the cap to be loosened. Local authorities told us over and over again that they wanted to be able to borrow more. They said they thought it a nonsense that they could borrow to build swimming pools but not the housing that is so badly needed in so many parts of the country. The Minister told us in our private meeting that there is a little more flexibility in that area now, but as the noble Lord, Lord Sharkey, pointed out, it is nowhere near enough. Yet while these local authorities are being restricted in what they can borrow to build housing, they are having a high old time borrowing to buy commercial property. In recent years councils have become really big players in the market, outbidding private sector investors in many cases. They have been buying shopping centres, bingo halls, service stations, hotels, offices—you name it, councils are now the proud owners. The biggest deal so far was Spelthorne Borough Council, which spent £360 million of largely borrowed money buying BP’s office complex at Sunbury-on-Thames. It is very pleased with the deal—but just think how many houses it could have built for that much.

The explanation for this hunger for commercial property is that local authorities are trying to bridge the gap between what they have now and what they have lost in the government funding that has been taken away. By buying property at low interest rates and letting it at higher rates, they hope to pocket a sizeable margin that they can use to spend on other things—which is fine for as long as the margin persists. They are able to do so because of the low interest rates at which they borrow. We may wonder how they manage to do that. A recent article by John Plender in the Financial Times explains exactly how it works. Councils are borrowing from the Public Works Loans Board, a very low-cost lender with average loans last year of 3.2%. It has plenty of money to keep on lending, too. In March last year it had loans of £65.3 billion outstanding, but its headroom goes up to £95 billion; so councils with an appetite for funding have plenty of it to go for. The Public Works Loans Board is run by the UK Debt Management Office, which is controlled by the Treasury—the very same Treasury that will not allow our local authorities to borrow large amounts of money to build the council housing they need. There seems to be a bit of a contradiction. I can see why local authorities are doing what they think they need to do, even though they would like to borrow to build social housing; they ought to be given more options.

Is it not somewhat strange that, just last year, Portsmouth City Council bought shops in Redditch, a ferry terminal, a Mercedes showroom in Southampton and a warehouse near Gloucester? It may be that Portsmouth has lots of information and knowledge about the commercial property market; we can only hope so. That goes for all the other local authorities that have been building up these vast portfolios. I am prepared to believe that local authorities know a lot about social housing, but I am not convinced of their knowledge about Mercedes showrooms or ferry terminals. Therefore, I would like the Minister to tell me, if he can, whether he is comfortable about the investments—I hope they are investments—these local authorities are making, or whether he can see a way to make more of that money available to invest in the social housing we so badly need.

Policing and Crime Bill

Baroness Wheatcroft Excerpts

Committee: 4th sitting (Hansard - part two): House of Lords
Wednesday 9th November 2016 Lords Chamber

[Lord Rosser]

My Lords, the noble Lord, Lord Moynihan, has explained the purpose of this amendment and the extent of its provisions. It is a very timely amendment: the Olympic Games in Rio were overshadowed by doping scandals. Russia was banned from the Paralympics, but did not receive a blanket ban from the main Olympics, despite the state-sponsored doping that had been exposed.

Now, a recent report from the World Anti-Doping Agency independent observers has highlighted failings in the anti-doping checks and procedures at Rio, which the report indicates put an almost unmanageable strain on drug testing during the Olympics. The result was that on Sundays, up to half of all drug tests did not take place because athletes could not be found at the athletes’ village or competition venues due to lack of support, training and information given to chaperones, whose job it was to notify athletes of testing.

Apart from management failings, the report also blamed the failings on budget and operational cutbacks. About 500 fewer drug tests were carried out at Rio than were planned, albeit failing a drugs test at the Games themselves suggests a competitor or their aides who are not particularly conversant with the ways of covering up the taking of drugs. In addition, more than a third of athletes competing in Rio were not subject to drugs testing before the Games in 2016, and of these, nearly 200 were competing in one of the 10 high- risk sports. Despite this report, the International Olympic Committee stated a day later that the report showed that it had been a successful Olympic Games with a successful anti-doping programme.

Doping issues are not, of course, confined to the Olympic Games. The Tour de France has not exactly been immune from them, and neither has tennis or football in this country, to give just three other examples. I suspect that most of us, including, not least, myself, just do not appreciate the full extent and breadth of prohibited substance-taking across different sports.

Prohibited substances, as the noble Lord, Lord Moynihan, has said, are taken to gain an advantage in sport over fellow competitors. They are taken to produce a false result which is not determined purely and solely by the skill and unaided effort of each competitor. That false result will at the very least be influenced—and at the worst determined—by the taking of a substance that improves performance unrelated to the skill or effort of the competitor concerned. It is a form of fraud. It is cheating—cheating not just fellow competitors but the public who paid to come watch the sporting event in the belief that they would see a fair competition with competitors competing on a level playing field.

The purpose of the amendment is, through a series of measures—including the creation, as in some other countries, of a criminal offence carrying, in exceptional circumstances, a custodial sentence—to throttle the deliberate and intentional use of drugs in sport by any person in this country or by any person in this country who,

“knowingly takes anywhere in the world a prohibited substance with the intention of enhancing his or her performance”;

or by any person, deliberately and intentionally, among other things, providing or administering to an athlete prohibited substances with a view to enhancing the performance of that athlete. The amendment also lays a responsibility on an organising committee.

The amendment would also require the Secretary of State to submit an annual report to Parliament which would include documenting the performance of the World Anti-Doping Agency in general in its effectiveness in preventing the offences provided for in the amendment, together with a requirement on the Secretary of State to determine whether the Government should remain a member of and continue to support the World Anti-Doping Agency.

The events before and during the Rio Olympics and the ever-increasing range of sports apparently affected by the use of prohibited substances suggest that doping in sport, including state-sponsored doping, is still not being taken sufficiently seriously by those at the most senior level who are in a position to stamp it out. The amendment is intended to toughen up our approach in this country to the serious problem of doping, including by people from this country competing, or assisting those competing, elsewhere in the world. We most certainly support it and hope that it will find favour with the Government.

[Baroness Wheatcroft (Con)]

I support the amendment. I cannot claim to be an expert on sport, but my noble friend Lord Moynihan most certainly is. His sporting legacy to this country is extraordinary, not least the performance of our team in the London Olympics, which was engineered by his work as chairman of the British Olympic Association, but also the extraordinary performance of our team in Rio. At first glance, the amendment appeared to be radical but, having heard the argument, I understand that we are lagging behind on this important front. That is not the right position for this great sporting nation to be in.

Beyond that, I fear that by not taking strong action against the use of drugs in sport, we are sending the wrong message to our youngsters, who look on sport as a career opportunity and wonderful thing, and to those who play sport as their great heroes. If people are banned from sport for a year or two and then come back, that seems to be acceptable. A prison sentence would be in a different league. That would send a message to our youngsters that this is something that they should not tolerate, and certainly not toy with. That is a very important message for this House to send. I support the amendment.

[Lord Harris of Haringey (Lab)]

My Lords, I, too, support the amendment. Like the noble Baroness, Lady Wheatcroft, I do not claim to be an expert in or have anything much to do with sport under most circumstances, but the amendment moved by the noble Lord, Lord Moynihan, is extremely important. This is about the confidence of the public and the importance to them of feeling that the sporting events they watch or participate in are genuine and not distorted in the way described. It therefore sends a powerful signal and if it indeed brings us back into line with other countries around the world, it is an extremely important thing for us to be doing.

My question—the noble Lord may have answered it in his remarks but if so I did not catch it—is: how broad are the sporting activities which the amendment covers? He talked about international sporting events, and we all have memories of what happened in the recent Olympics, in particular with the Russian team. However, as I understand it, the amendment covers all competitive organised sporting events where they are subject to a governing body. I should be grateful for that clarification and the extent to which it extends right the way through, because the governing bodies of the sports of which I have some knowledge are increasingly seeking not only to arrange the high-profile events but to encourage more people to participate at a lower level in local, regional or county events. It may be less likely that performance-enhancing drugs are used in those environments. However, I assume that this legislation is intended to pick up on those issues as well. It would be helpful if we had that clarity because it is important for people to have confidence in all sporting activities in this country, not just those at the highest level.

Bank of England and Financial Services Bill [HL]

Baroness Wheatcroft Excerpts

Tuesday 15th December 2015 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I echo the words of the noble Baroness, Lady Kramer. It seems that the Government have now moved to strengthen the role of the non-executives. That four of them should be able to call for a review answers many of the queries that have been raised. I completely agree with the noble Lord, Lord Turnbull, that nobody in the past accused the Treasury Select Committee of being a toothless body.

[Lord Myners (CB)]

My Lords, I declare an interest as a former member of the Court of the Bank of England. I support the amendment proposed by the Minister and I do not support the amendment to it proposed by the noble Lord, Lord Eatwell, largely for the reasons identified by my noble friend Lord Turnbull.

The functionality of the court has improved markedly since I was a member—no doubt the two are directly related. There was a dominance of the court by the executive, and the non-executives were, quite frankly, confused about their role. They did not manage to organise themselves in a manner that effectively challenged the Chancellor. I and one or two members of the court became so concerned that we felt the need to report that the court was not working effectively—but we then struggled to find out to whom we should report it. I remember going to see the Permanent Secretary to the Treasury and then the Chancellor of the Exchequer and saying, “The Bank of England is not working well because it is too detached from the real world of what is happening in banking, and it acts as the sole voice of one person—namely, the governor”. I believe that it is now a far more democratic institution.

However, I struggle to understand why this power requires to be reflected in law. I would have thought that the effective functioning of a board of directors, on which we have based the court, would allow the court to establish a sub-committee to do anything that it chose to do and that it did not need specific authorisation in law to do so. If the Government’s view is that that power does not exist for the court, we need to be very clear that the Government are telling us that the court should in no circumstances be considered to be on a par with the board of directors of a company in terms of holding the executives to account.

Bank of England and Financial Services Bill [HL]

Baroness Wheatcroft Excerpts

Monday 9th November 2015 Lords Chamber

[Baroness Kramer]

My Lords, I added my name to this amendment because this is a crucial discussion and an important opportunity to draw the Government’s attention to these issues. This Government, like many others and almost every speaker on financial issues in this House, have expressed their frustration with the short-termism that dominates the British financial services industry: a search for short-term profits rather than understanding the longer term perspective. Indeed, the Chancellor has often voiced frustration at the fact that UK pension funds are very unlikely to invest in the kind of long-term infrastructure projects he sees as essential for our country. Canadian pension funds will gladly invest, but not UK ones. We suffer from this ongoing blight. Of course, the ultimate frustration is that many of those who put their money into such pension funds would be absolutely delighted to see it invested in infrastructure, renewable energy and sustainable projects, because they are often looking for a 30 to 40-year horizon regarding the return on the money they invest. However, that is not the way the system works.

When the Bank of England was given responsibility for financial stability, there was an assumption that part of the thinking would then extend into that long-term arena, and that the Bank would be freed from the narrow and short-term issues of stability. In fact, I think the Chancellor talked about avoiding the stability of the graveyard and looking at the much longer term horizon. So far, the Bank has not used its wide range of powers or its influence to enter into that territory. Whether it is sustainability as defined by projects such as renewable energy, rail infrastructure or broadband, a wide range of projects need a response from the UK’s financial services. That surely requires the Bank to take some role, and to take cognisance of this issue. I hope that debates such as this will persuade the Treasury and Government to engage much more extensively in those conversations with the Bank in its various and many parts, and to consider whether the relevant committees should at least have regard to those priorities, and potentially see them as obligations and duties, given the important role that long-term investment plays in the future of the UK.

[Baroness Wheatcroft (Con)]

My Lords, listening to the debate this afternoon, it is clear that many have concerns about the power and influence of the Bank of England. However, I cannot help but feel that this amendment takes that concern a step too far. Much as I have great admiration for Mark Carney, I cannot imagine how he is expected to predict the effect of artificial intelligence. The duties we are putting on the Bank are already extremely far-reaching. The responsibilities now placed on the Financial Policy Committee are deep and will have a huge impact, but to ask it to range as far as this amendment is surely to demand something beyond common sense.

The role of ensuring financial stability is crucial. It means keeping our financial institutions on the straight and narrow, and watching out for problems. However, to ask for those decisions to be taken in the light of what may be happening 20 or 25 years from now is surely a step too far. The role of Government in thinking about such issues is clear, but we would be in very dangerous territory if we thought of the FPC as the arm of government to influence such decisions.

[Lord Davies of Oldham (Lab)]

My Lords, I would like to join in this debate because, although I respect the expertise of the noble Baroness who has just contributed, I am rather more in sympathy with the arguments of my noble friend Lady Worthington and the noble Baroness, Lady Kramer. I hear what was said about placing obligations on the Bank, but we should also appreciate that we have the benefit of the present governor—on whom I have not lavished many plaudits this afternoon as I was rather concerned about the future structure of the Bank, for which he will be responsible. Nevertheless, we all recognise the governor’s merits in taking a wider perspective on aspects of the economy than has perhaps been the case heretofore. Certainly, the speech that he made not so very long ago, in September, to Lloyd’s of London, in which he said that climate change is the “tragedy of the horizon”, ought to wake all of us with alarm, but also make us ask how we can adjust and make responsive our institutions to the anxieties that obviously flow from the developing and clearly established dangers of climate change.

Algorithmic Trading

Baroness Wheatcroft Excerpts

Monday 6th July 2015 Lords Chamber

Asked by

[Baroness Wheatcroft]

To ask Her Majesty’s Government whether the effects of algorithmic trading are being monitored and sufficiently regulated.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley)]

My Lords, regulators continue to watch carefully and act when required in this fast-growing area of activity in financial markets. Investment firms and trading venues using algorithmic trading in the UK are already regulated and supervised by the Financial Conduct Authority and the Prudential Regulation Authority. From 2017 they will need to abide by the rules on algorithmic trading in the EU Markets in Financial Instruments Directive II.

[Baroness Wheatcroft (Con)]

My Lords, I thank my noble friend for his reply and declare my interests as listed in the register. MiFID II will undoubtedly improve regulation, although I welcome my noble friend’s assurance that the regulators will have the resources to implement those rules. However, does he share my wider concern about algorithmic trading—that it operates to the detriment of ordinary investors and is the antithesis of the long-term investment we should be encouraging? What can he do to address this?

[Lord Bridges of Headley]

My noble friend speaks with a lot of experience on these matters. I would point her to the very interesting Foresight research carried out by the Government, which looked into this. As a result of that, we do not think that the long-term investment decision-making by companies is undermined by high-frequency traders, which should be differentiated from algorithmic trading in the round. That said, during the last Parliament, in response to the Kay review, the Government initiated a broad review of reforms to address long-standing concerns that short-termism on the part of investors has impeded the creation of sustainable value by British companies. The Government are considering what steps are appropriate to make further progress in shifting the culture of equity markets towards long-termism.