Amendment of the Law

Debate between George Howarth and Mike Weir

Thursday 19th March 2015 Commons Chamber

[Mr Howarth]

My hon. Friend is absolutely right. Knowsley has had the worst cuts in Government grant this year, and over the period of this Government the amount of Government grant per household in Knowsley will have been reduced by £1,500, yet it is one of the poorest, most deprived local authorities in the area.

The main point I want to make is to do with economic growth and the structural problems in our economy. The key point is that we have an unbalanced economy; economic growth is overly dependent on asset inflation and consumer demand. As a consequence, over recent decades the balance has shifted away from manufacturing and towards the service and retail sectors. This is well illustrated by the decline in manufacturing as a proportion of gross domestic product. In 1970, manufacturing accounted for about 30% of GDP, but in the intervening period it has declined to some 10%. For an area such as Knowsley, which has a strong manufacturing base, that is bad news.

There is of course a complex set of reasons for that, but two factors are specifically relevant, the first of which is housing policy and our national obsession with owner-occupation, which distorts any attempt to have a rational housing policy. In the north-west, between 1997 and 2013, average house prices increased from £51,000 to £109,000, yet in the same period wages increased from £309 a week to just £460 a week. In the same period, local authority waiting lists have grown by more than 90%. So, despite the various incentives for owner-occupiers, saving for a deposit and securing a mortgage is becoming an increasingly impossible goal.

I welcome the Chancellor’s introduction in the Budget statement of a new Help to Buy ISA, which will help people to save towards a deposit. Superficially, that is an attractive way to help them get a foot on the property ladder, but the real problem is that it will not help those on lower incomes. A first-time buyer currently needs an income of about £36,000 a year, which is way beyond what many of my constituents earn, so even with that scheme, they will not be able to get on the property ladder.

I am pleased that my party is committed to working towards a goal of building 200,000 homes a year over the next five years. Welcome though that is, it still will not make up the shortfall. Although the sale of council houses—the hon. Member for Angus (Mr Weir) referred to this; I may have misunderstood him—is a good thing from the point of view of the individual buyer, is it good public policy? The National Housing Federation has called for a review of that policy, which I support. We need to know how that policy will contribute to the building of more properties, which needs to happen if we are to bring prices down.

[Mr Weir]

For the avoidance of doubt, I was making the point that the right to buy caused the sale of many council houses and new ones were not being built to replace them. The removal of the right to buy in Scotland has meant that we are now building new houses for the first time in many years.

[Mr Howarth]

The hon. Gentleman is quite right, but my point is that, even if we are substituting those houses with new ones, we are still not building enough additional properties, net, to solve the problem.

The Chancellor sees himself as the champion of devolution and the northern powerhouse, and that is a fair claim for him to make. I am very much in favour of greater devolution and the development of city regions, and there are many problems in our city region that need to be addressed. Time forbids me to go into them all, but, for example, we need to get 42,000 more people into employment and an increase in income of about £1,700 per head if we are to close the gap between us and the UK average. The Chancellor said that in his view there is no one-size-fits-all solution to leadership for city regions, yet the evidence of Manchester suggests that there is a favoured option—an elected mayor.

The key to unlocking more resources and powers appears to involve agreeing to have an elected mayor. Regardless of my views on elected mayors, there is no consensus on this on Merseyside. I do not think it should be for the Government to insist on people having one thing before they can get another. There should be a referendum so that the people can have their say on the matter. I hope that progress on devolution to city regions will not be sacrificed purely on the basis that there is no consensus on an elected mayor for the Liverpool city region.