Budget Resolutions and Economic Situation

Clive Efford Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

The Secretary of State’s level of delusion is now bettering his previous level. He knows that the policy costings—which he has clearly not read—published by his right hon. Friend the Chancellor show that the housing benefit bill is not going down over the next couple of years, but going up. The Secretary of State’s efforts have been so successful that he is bringing in a policy—the hated bedroom tax—that will cost more than it saves. We saw the proof on Wednesday—housing benefit up by more than £1 billion. That is a mark of his failure.

[Clive Efford (Eltham) (Lab)]

The Secretary of State cannot rewrite history. This Government inherited the biggest council house building programme for 20 years. One of the first things they did was scrap it. They now have the lowest building starts since the 1920s—lower even than we had, and that is saying something.

[Mr Byrne]

My hon. Friend is absolutely right. What we needed in the Budget was determined action to build houses, not another subsidy for Britain’s richest citizens.

Let me start to conclude by reminding the House what most families will now experience. We heard in the Secretary of State’s speech some words about the rise in the personal allowance. The truth is that, even despite the rise in the personal allowance, the cuts buried in the Budget will mean that by April 2014-15 the same family who will see the personal allowance increase to £10,000 will be worse off. They will lose £600 a year in cuts, and my fear is that worse is to come.

The Chancellor gave away a lot of things in the first year of the next Parliament. Although we saw a little of how he will pay for it—he is going to fast-track the flat-rate pension—this is one of the great mysteries of this Budget, and we have not heard much about it yet. When the Minister winds up, I hope he will confirm at what rate the flat-rate pension will be introduced. The original White Paper set the figure at £144, which I notice is lower than £145, which is the combined total of pension credit and the state pension set out in the Budget book on Wednesday. As we know, the advance of the flat-rate pension offers the Treasury a huge national insurance windfall of about £5.5 billion in 2016-17 and 2017-18. What is interesting—we heard nothing about this—is that half of that windfall comes from public sector employers. The Library was able to tell me earlier in the week that the national health service, schools and the police will face a bill for £1.6 billion in higher national insurance contributions. We heard nothing about precisely where that money will come from. I hope the Minister will be able to set our minds at rest and say why this will not be another cut to the NHS in the next Parliament.

The second mystery surrounds the unspecified cuts of £11.5 billion in the first years of the next Parliament. We know that things such as the strivers tax and other cuts to working tax credits will deliver up to £6 billion, but where will the other £5 billion come from? Can DWP Ministers tell us how they will resist another huge great cut to welfare in the June spending review?

We got more of the same from the Chancellor on Wednesday and more of the same from the Secretary of State today. Once upon a time he liked to say that he cared about poverty. No more. One million children on his watch will be pushed into poverty. Tens of thousands of disabled people will follow. Families get less, while millionaires get more, all because this Chancellor has flatlined the economy and because the Secretary of State has asked for nothing, got nothing and delivered nothing to bring down unemployment.

--- Later in debate ---

[Clive Efford (Eltham) (Lab)]

I want to talk about housing, particularly in London, but before I do let me refer to the millionaires’ tax cut that will come in in April. It will benefit 13,000 individuals who earn more than £1 million and have a combined income of £27.4 billion, and I am grateful to the trade union Unison for providing me with that figure. Those 13,000 people earn £27.4 billion, and the Government somehow think that in these times that cut should be a priority for public expenditure. It is outrageous. The Government are freezing child benefit for the third year running, and the money could have been used to benefit 12 million children if child benefit had been increased in line with the consumer prices index. I wonder what the cash injection to the economy would have been if that money had been given to families who would have spent it rather than on providing a bonanza to 13,000 people. Imagine the letter from the Chancellor of the Exchequer saying, “You’ve been selected as one of 13,000 people to share in a £1.2725 billion payout from Her Majesty’s Exchequer and all you have to do to qualify is confirm in writing that you earned more than £1 million this year.” What an absolute disgrace.

I look back on the criticisms of our benefit changes when we were in government, and on the fact that the Liberal Democrats were constantly carping, saying how mean we were, and attacking us about benefit changes and rules for people with disabilities—but now they sit there, and that tax cut is their priority. At a time like this, when the bedroom tax is being introduced, when wages are being frozen and when unemployment is going up, as we have heard, this Government’s priority is a tax cut for millionaires. I find that absolutely shocking.

Some elements of the Budget are welcome: any assistance for people who want to buy their homes, particularly those who might have to wait many years to save a deposit, is always welcome. However, I am concerned about the impact of the Government’s planned assistance in the absence of a significant improvement in the supply of housing. I know they will say that they are planning to supply housing and that they have a house building programme, but we have been hearing those honeyed words since they came into office in 2010. In London we have seen a slump in house building and we now have the lowest level of starts since the 1920s. The Secretary of State has attacked the Labour Government and made a great deal of saying that they built too few homes—they did, and they certainly built too few socially rented homes—but this Government are going even further.

For instance, in London most of the homes built under the current Mayor were started under Ken Livingstone. The current Mayor is claiming credit for homes although the plans were started under Ken Livingstone. According to the Evening Standard—I think we can rely on the Evening Standard because, as we all know, it was heavily briefed on the Budget on Wednesday—there have been only 3,332 starts for affordable homes in the past year, and only 1,357 have been completed. That is fuelling enormous problems in London, not just for people who need rented homes but for people who want to save to buy homes.

[Jeremy Corbyn]

Is my hon. Friend aware that “affordable”, as used by the Mayor’s office, is a complete misnomer? In many places where so-called affordable homes are being built, they are affordable only for people earning well over £50,000 a year and are of no help whatsoever to the average Londoner.

[Clive Efford]

My hon. Friend is absolutely right.

I want to discuss the impact of the purchasing power of overseas money on house prices in London. That not only has an impact on house prices but has a knock-on impact on land values that makes it virtually impossible to build affordable housing, particularly in large parts of central London.

The Smith Institute published a report last year called “London for Sale”, which stated:

“Anyone doubting the scale and potential impact of overseas investment in London should note that at £5.2 billion in 2011 it was a larger sum than the whole Government investment in the Affordable Housing Programme for England for four years…Two years of overseas housing investment in London would total more than the public sector funding package (£9.3 billion) for the 2012 Olympic Games.”

That is the scale of the money coming from overseas into our housing market. Savills, one of the property market agents, says that London is a prime property market that

“will rise 22.7% during the period 2012-16.”

Its comparable forecast for the mainstream market across the UK is 6%, less than the rate of inflation. What we are seeing is the huge impact of overseas money on the price of housing in London. The Government intend to compete with that money by providing assistance with mortgages. I have no objection at all to anyone being given such assistance, but if—and this argument was made on the “Today” programme the other day—12 people go for 10 houses, that is likely to drive up prices. If the Government’s incentive to provide additional help to people to put down deposits means that 15 people go for houses, but there are still only 10 houses being supplied, prices will be driven up.

The Social Market Foundation has commented on what the Government plan to do, and it says that it helps only older home buyers:

“Overall, the scheme will entice young people to load themselves up with debt to finance overpriced houses”.

The SMF goes on to say that if prices fall those people will be in a trap, and they will pay twice: they will pay for the overpriced house, but they will also have to pay increased taxes to pay back the money that the Government have put into the scheme.

I have only a minute left, but I want to tell the Government that they must make it clear that they are going to build affordable houses. I return to the point that my hon. Friend the Member for Islington North (Jeremy Corbyn) made. When we talk about affordable houses, we must make them affordable for people on the median income for London. It must not be affordable rent calculated according to a percentage that takes into account land values in places such as Kensington and Chelsea. We must remove those land values and make sure that we build houses that are affordable, not just so that people can live in those parts of London and fill the essential jobs in the economy at the lower end of the pay scale but so that they can become savers for the future. Unless we create that capacity in the rental market so that people can live in houses that they can afford to rent and, at the same time, afford to save, we will not have a sustainable private housing market or houses for sale in future.