Budget Resolutions and Economic Situation

Daniel Zeichner Excerpts

Thursday 9th July 2015 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

I shall tackle three areas and be brief. First, student finance has clearly been a controversial issue for a number of Parliaments. The tripling of tuition fees in the last Parliament was obviously highly controversial, and we now know that it was also an unsustainable system, with almost half of current students unable to repay their loans and the Government building up a huge amount of debt.

What is curious is that by abolishing the maintenance grant, the Government seem to be repeating the mistake. The Chancellor boasted yesterday that students from poorer backgrounds had not been put off going to university, but as hon. Members have pointed out, that was partly because these maintenance grants existed. Taking them away is likely to make that less the case. We should not underestimate the numbers involved. I was surprised to find that at Anglia Ruskin University in my own city, 5,697 students were in receipt of maintenance grants, while at the University of Cambridge, there were 2,720. Almost 8,500 young people in my constituency will, I suggest, all be angry when they learn about this.

The problem is not solved either, because more debt is created for the next generation, and the Government’s cunning plan to solve all this is to sell off the student loan book and raise huge amounts of money from it. We know that is controversial, too. Warning bells should be ringing if people read the small print on page 59 of the Red Book, where the Government say they will “review the discount rate”. What that basically means is that students will pick up the tab. They will notice this—and they will be loud.

My second point is about the proposal to limit public sector pay rises to 1% for the next four years. I do not think anyone knows what the economic situation is going to be in four years’ time. Frankly, it is hard to predict for four weeks when it comes to interest rates, oil prices and all the rest. One thing I do know is that rents in a city like Cambridge are shooting up and up. What that means is that for public sector organisations such as our national health service, recruitment—already difficult—will become near impossible in the future. Some of the high-flying research scientists in Cambridge are, in fact, public servants, and they had been waiting to see a sign that things were going to improve. I fear that what the Chancellor has done is in effect to write their exit visa to other countries. Our brightest and best—the people we need if we are to be competitive in the future—are being told that they can expect 1% over the next four years. That is not sustainable.

Finally, let me deal with housing, which is the key issue in Cambridge. There was nothing in the Budget to deal with the things that really matter in a city like Cambridge—nothing on more affordable housing, nothing on the huge trend of people from foreign countries buying up housing off-plan before it is even built, and nothing on the dreadful insecurity faced by tenants in the private rented sector, who are a different group of people these days. Conservative Members stole quite a few things from Labour’s manifesto, but they could do with stealing some of our proposals on the private rented sector, which would really help. As for the extension of the right-to-buy process, I have to say that almost half of all council homes sold in Cambridge under right to buy since 1980 are now back in the private rented sector, building up the housing benefit bill, which has increased by 51% since 2010.

Let me conclude by making one or two general points about the assault on council housing, including the threat to lifetime security of tenancy. Many people have told me about the difference it made to them when they actually got a council home that really was a secure home for them. People cannot be treated as if they are simply pawns in a game that can be moved from place to place. We are talking about people’s homes; if they are not secure, it makes thing very different for them.

Conservative Members have no understanding of what council housing was intended to be. It used to be a public service, not a safety net. We need to remember that tenants pay rent, and some of these houses have been paid for time after time. Extraordinarily, if there is any cross-subsidy going on, all too often, thanks to the vagaries of housing finance, it is happening the other way round, so council tenants are subsidising the wider community. Who can forget the dreadful “daylight robbery” situation under the last Conservative Government when council tenants were in effect subsidising all those on housing benefit.

The housing situation is deeply complicated. I finish by saying that the great goal of British housing policy was mixed communities. Nye Bevan famously said that he wanted a situation in which

“the doctor, the grocer, the butcher, the farm-labourer all live in the same street”.

We can update that image. We know that mixed communities work best, but they are hard to achieve, and this “pay to stay” is exactly the wrong thing to be doing. We need people to stay in their communities, not to be driven out. What a ridiculous situation it is when people who have done well are faced with a false choice, as my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) suggested. An income of £30,000 in a city like Cambridge is not extraordinary. My friend Councillor Kevin Price, the executive member for housing in Cambridge, tells me that people will face a 45% rise in rent if this proposal goes through. For a lot of those people, the sensible thing to do would then be to work fewer hours or for one person in the household not to go to work at all, which is the exact opposite of what the Government are claiming to want.

There is a real danger that we could lose our mixed communities and create no-go areas and dumping grounds of despair, fomenting future discontent. That is not about building one nation; it is about a divided nation, at a time when we should be bringing people together. I genuinely urge Conservative Members to think hard about these dangers and to step back from these proposals. These might just be a few lines at the bottom of a page in the Red Book, but they could do serious damage to our communities. and I urge Conservative Members to dissociate themselves from them.