Finance (No. 2) Bill

Bill Esterson Excerpts

Wednesday 17th April 2013 Commons Chamber

[Sammy Wilson]

It does indeed. Let me illustrate the success of co-ownership in Northern Ireland, which is similar to the co-operative housing that the hon. Gentleman describes. More than 50% of new houses in Northern Ireland are being sold through the co-ownership arrangement. Importantly, because it is targeted at first-time buyers, it has enabled them to get their foot on the housing market ladder, stimulated demand in the economy and created the jobs in the construction industry that are so sorely needed.

Be it the mortgage equity scheme or the mortgage loan scheme, the Government should have no fear of new clause 1. If they have confidence in the schemes they propose, they should not fear scrutiny of them. Indeed, all the evidence from the Northern Ireland market and the Irish Republic market shows that the schemes will work.

[Bill Esterson (Sefton Central) (Lab)]

Does the hon. Gentleman agree that there is a particular need across the country for affordable housing to rent and to buy, and that, on striking the balance that he referred to earlier, there is a grave danger, as the Royal Institution of Chartered Surveyors has said, of creating another housing bubble if the wrong level is set? Is that the point he is driving at?

[Sammy Wilson]

That is the next point I want to make—

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[Sajid Javid]

What I am saying is that, at the Budget, we set out a scheme outline. Now we need to work, with lenders and other stakeholders, on the detail. We want to ensure that we avoid any unexpected adverse consequences of the scheme, such as attempts to use it to purchase second homes. We want to look at this carefully, and we want to ensure that we discuss the details with industry. We have already started this process, and we will report back to Parliament in due course. Therefore the report suggested by new clause 1 is wholly unnecessary.

[Bill Esterson]

This is a really important point. What the Minister has not announced is that, if somebody is moving up to a second home, they must sell their first home. Can he confirm that they will not be able to keep that first home, because otherwise it will mean that people will be able to get a second home by using the scheme?

[Sajid Javid]

The hon. Gentleman raises a good point, which is that it is the Government’s duty to carefully consider what is meant by a second home. He has given as an example the situation in which someone has no intention of owning two homes, but is in the process of moving home. Let me share another example. There are couples who unfortunately get divorced, and there may be a need for another home as the family splits. The question then arises, is that a second home or not? It is sensible for the Government to examine such issues carefully as we flesh out the details.

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[Chris Leslie]

I get the sense that the hon. Gentleman is starting an accountancy line, perhaps thinking how best to advise these bankers of ways around that nasty Labour Government’s bankers’ bonus tax. I am sure that whether it be in Bitcoins, gold or shares, bankers will be ingenious in how they pay and reward themselves. We have to get a grip of it, though, because however much they lavish rewards on themselves, the Exchequer needs to keep pace with the arrangement. I accept that this is a fluid situation, with policy and banker remuneration changing at the European level, but we must capture this particular issue and not adopt the lackadaisical attitude that the Treasury has adopted so far.

[Bill Esterson]

A number of figures have been bandied around in the debate, and it is difficult to know exactly which ones are right. Surely that is why we need the review that the amendment proposes. Such a review will, using the resources available to the Treasury, show how the scheme would work. That is surely the best way of answering the questions. We are hearing too many different arguments and different figures—even from the Members who have spoken over the last few minutes.

[Chris Leslie]

My hon. Friend is correct. However, even if we assume that, as the Minister will no doubt say when I give way to him in a moment, cash bonuses have been changing and the revenue yield will not be the same as it was in 2009, the fact remains that in 2009 we brought in £3.5 billion, and we calculate that this year we could bring in £2 billion. I have not seen any figures to the contrary. As for the Minister’s predictions of what may happen to bonus arrangements in the future, we can come to that in time.

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[Geraint Davies]

That simply is not the case. I was at the Bank of England relatively recently looking at the profile of debt in the run-up to 2008 and from 2010. From 2010, the ratio of the debt between the Government and the banking community was 1:2. Two thirds of the debt was that of the banking community. Do not misunderstand me: there has been a problem with the general public ratcheting up more private debt through the availability of low interest rates, which in themselves are a good thing, thanks to the fact that my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) introduced Bank of England independence and all the rest of it, and thanks to a feeling that there would be a continuation of growth. People were investing in houses and they were growing in price and so on.

Since 2010, when the Chancellor said, “We will have half a million people unemployed in the public services” and did not say who they were or when they would lose their jobs, there has been a sharp rise in savings rates and a fall-off in consumer demand. We have seen consumer demand basically flatlining, which underlines the reason why we do not have growth, which is why we do not have a reduction in the debt to GDP ratio.

We need confidence to get back on a growth path so that people can spend in the knowledge that they will have jobs in the future. Part of that is to re-engineer the financial world in such a way that money is channelled into productive capacity. Although, allegedly, we have an extra million people in work, overall output is the same. Average production has fallen and average productivity is down, which is very worrying. So we need to think how to ensure that the banking community pays its fair share and how to direct money, in a meaningful way, into job creation and public and private assets.

I was not in the Chamber for the previous debate, but part of that thought process would be, how to encourage the banking community, not in a high-risk way, to start helping people to build desperately needed housing—to get people who have been out of work, many of them in the construction industry, back into work to provide social houses.

[Bill Esterson]

Will my hon. Friend give way?

[Geraint Davies]

I will give way in a moment.

After all, one of the big issues that is waved around by the Government is, “We must get the welfare bill down and Labour will not do anything about it.” The flagship of that proposition is, “Housing benefit has doubled to £20 billion in the past 10 years. What is the Labour party going to do about that? We are going to introduce the empty bedroom tax.” In fact, 70% of that increase has come about through escalating private sector rents, and local councils being forced to use the private sector for people in need of housing, because not enough social housing is being built.

If we could somehow get the banks to build social houses, perhaps by allowing them to own partly some of those assets, and by doing so create jobs for people who would pay tax, people would have houses and the housing benefit bill per household would go down because rents would go down—housing benefit is linked to rent levels. We need to think about how to put this together, and part of that debate clearly relates to the banks. When there are obscene bonuses and the recipients are receiving tax cuts, it is not fair, certainly from where I stand, when I am seeing local unemployment up 42%.

[Geraint Davies]

I will give way to my hon. Friend the Member for Sefton Central (Bill Esterson) first.

[Bill Esterson]

My hon. Friend is conducting a very thorough examination of the causes of the financial problems that we face. He mentioned housing. Does he agree that the housing bubble is part of the cause of the problem, because people borrowed against the value of their property, which is not a long-term, sustainable way of producing growth in the economy? One reason why the proposal that we are debating is so important is that we need a sustainable model of taxation to underpin the growth in the economy with the type of investment that my hon. Friend is talking about, rather than using assets as a way of investing, which is not sustainable. Actually, there is some evidence that that problem is recurring now.

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[Geraint Davies]

You, Mr Amess, probably have one of these sophisticated iPhones. I bring it out of my pocket because all the heavy lifting of the technology in this phone, which is a multi-billion pound product in a global marketplace, has been done by the public sector. We invented the internet, but GPS, touch sensitivity, voice sensitivity and most of those things were done by the institute of technology in California, which is why the Californian government are suing Apple for £26 billion to try to recover some of the money earned. Apple did a bit of packaging and marketing, produced the goods in a lower cost place, and paid tax somewhere else. We have global companies, which we all know about, which do not pay tax where the economic activity takes place. The answer to the hon. Gentleman’s question whether it would be better to give money back to companies for R and D is that companies want to do a bit of R and D, but they want to do it on the back of the heavy lifting of the public sector. That is the reality. Part of our challenge is to attract those companies to where we have public sector activity, to engage in partnership, and to ensure that we tax where the economic activity and marketplaces are, so that we get our fair share of the added value and a return from our taxpayer investment. So the answer is yes, yes, yes.

[Bill Esterson]

With regard to why Government have to intervene, my hon. Friend mentioned Swansea, but around the country there are regions with big problems, particularly youth unemployment—Merseyside is a key area where that is a problem—where we need such intervention. We are talking about a levy on banks, not on Tata, and we need that money to be directed where the job shortages are for young people. A small number of my constituents who have not been able to find work locally travel to London to obtain work, with all the inherent problems of high housing costs. It is not an attractive option. It is not what they want to do, but they have no choice. However, the vast majority are not in a position to do that, and that is why youth unemployment in the regions is going up, and that is why we need the kind of intervention that my hon. Friend is talking about.

[Geraint Davies]

Yes, and my hon. Friend makes an important point about the growing regional imbalance in the British economy. I realise that the Government have paid lip service to that issue, but if the only place to get a good job is London, that inflates costs, and young people come to London to live in squalid conditions in the hope that they can get the experience to go home at some point. There is a brain-drain as well, so this policy does not make any sense. One of the first things the Government did was to get rid of the regional development agencies. They said that they were no use and cost too much.