Budget Resolutions and Economic Situation

Greg Clark Excerpts

Monday 13th July 2015 Commons Chamber

[The Secretary of State for Communities and Local Government (Greg Clark)]

Just over five years ago, on Friday 7 May 2010, another emergency summit of Finance Ministers from across Europe was convened to save the economies of Greece, Spain, Portugal, Italy and Ireland from falling over like a row of dominoes. Here at home, unemployment was galloping away and had passed 2.5 million, 1 million more people than five years before. The Government had lost control of spending, spending nearly £150 billion a year that they did not have in the biggest structural deficit in the western world, which meant they had to borrow one pound in every four they spent. That very day, a note was waiting in the desk drawer of the Chief Secretary to the Treasury, telling his successor with brutal bluntness that “there is no money”.

The Cabinet Secretary had to intervene in the discussions between the political parties to impress on them the consequences of delay in forming a Government. As The Daily Telegraph reported that day:

“UK bond investors, facing huge borrowing demands from the Government this year, started selling…The fear stalking investors is that a delay in forming a coalition will set back plans to tackle Britain’s record Budget deficit, triggering a full-scale run on the pound.”

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Will the right hon. Gentleman give way?

[Greg Clark]

On that fateful day, in those dramatic circumstances, a Conservative-led Government did what history has regularly called on Conservatives to do and begin to pull the nation back from the brink of ruin after the disastrous denouement of a period of Labour Government. During the five years that followed, Britain’s prospects have been transformed, with the deficit cut by half, 1 million low earners taken out of income tax and spending on the NHS and schools safeguarded. More people are working than ever before in our history and Britain’s economy is the strongest growing in the western world. Thanks to the hard work and enterprise of the British people, our nation is on the rise again, but our task is far from complete. On 7 May this year, the British people looked at the past, looked to the future and asked us to finish the job. We are determined to repay their trust.

The Chancellor’s Budget puts our economic security first by cutting the deficit at the same pace as in the last Parliament until we have a surplus and ensuring that Britain pays its way in the world. It will help working people, support aspiration and boost productivity. It will reward work and allow people to keep more of the money they have earned. As the Chancellor said last week, the Budget is a new settlement for Britain.

Let me be frank: not every Budget goes according to plan. Some are cheered and others are jeered, such are the ups and downs of government, but it takes a special kind of genius to have an omnishambles Budget while in Opposition. I am sure that the whole House is eagerly awaiting the latest news from the hon. Member for Wolverhampton North East (Emma Reynolds) on whether the Opposition have a view on the Budget. Yesterday, the acting Leader of the Opposition announced that Labour would support the welfare cap and the restrictions on family tax credits, but within hours of her announcement three of the four leadership contenders—the right hon. Members for Normanton, Pontefract and Castleford (Yvette Cooper) and for Leigh (Andy Burnham) and the hon. Member for Islington North (Jeremy Corbyn)—denounced her and a policy that they had presumably agreed. We await the view of the hon. Member for Leicester West (Liz Kendall), but we have her representative on earth here—the hon. Member for Wolverhampton North East, who supports her campaign—and we want to find out whether the chaos is complete or partial. After the disarray of the last 24 hours, who could disagree with the hon. Member for Stoke-on-Trent Central (Tristram Hunt) when he said yesterday:

“The speed and rapidity with which we are beginning to be regarded as irrelevant…is really terrifying”?

We on the Government Benches have a settled view on the matters at hand. This afternoon, I will talk about two aspects of the Budget in particular: the opportunity that it offers to every part of the country to participate in our national success; and the imperative that it sets to move our economy to one of high productivity by addressing vital challenges, at the centre of which is building more homes.

[Andy McDonald (Middlesbrough) (Lab)]

rose—

[Emily Thornberry]

rose—

[Greg Clark]

I will give way to the hon. Member for Middlesbrough (Andy McDonald)—the Member for my home town.

[Andy McDonald (Middlesbrough) (Lab)]

May I tell the Minister what is truly terrifying? It is his Government’s proposal to introduce a two-child policy that will punish the most vulnerable and the poorest in our society. That is the terrifying thing about this Budget.

[Greg Clark]

The hon. Gentleman can make that intervention in the parliamentary Labour party meeting later this afternoon, because I understand that that is the official Labour party policy.

Let me say a few words about devolution. As we recover from the recession and look to the future, it is clear that economic progress cannot come from London alone. One of the most striking achievements of the past five years is that the recovery has come from every part of our country. Businesses have created 2 million jobs over the past five years. Before 2010, only one in three jobs was created outside London and the south-east; now the figure is three in every five.

Where are exports growing fastest in the country? Is it in London? No, it is in the north-east, the home region of the hon. Member for Middlesbrough and myself. Where in England has the largest trade surplus? Is it London, or the south-east? No, it is the north-east again. Where is employment rising fastest? Is it in the south-east? No, it is in the north-west of England. For Britain to succeed, every part of the country must be firing on all cylinders.

That requires that we ask every city, town and county what they need to prosper. No two places are the same —Manchester cannot be confused with Margate, nor Newcastle with Newquay—so it should be obvious that a central plan for everywhere will end up working nowhere. For decades, however, that is exactly what central Government Departments tried to do; they prescribed blanket solutions for diverse local problems, which were enforced through unaccountable and expensive regional bureaucracies.

During the last Parliament, we made great strides towards reversing the failures of centralisation by devolving powers on planning, housing and economic growth. The Chancellor has already set out a bold vision for building the northern powerhouse, and this Budget will take us further.

[Jonathan Ashworth (Leicester South) (Lab)]

I know that the right hon. Gentleman is committed to devolving powers to the regions. However, in the last Parliament Conservative Ministers made a commitment to deliver the electrification of the midland main line. Why will the Government not get on with that, because it would be good for the east midlands economy?

[Greg Clark]

I share the hon. Gentleman’s view that that project is very important, and we are committed to it. However, to the regret of, I think, every Member, it has been necessary to pause it, to ensure that it can be done according to prudent budgetary principles. Nevertheless, the Transport Secretary has made it absolutely clear that such transport projects are very important for the hon. Gentleman’s constituency and others.

[Mr Nigel Evans (Ribble Valley) (Con)]

Did the Minister also welcome the news that BAE Systems announced last week that it wishes to take on 2,000 apprentices by 2018, which yet again reinforces the image of the northern powerhouse?

[Greg Clark]

My hon. Friend is absolutely right; that is marvellous news and a reflection of the confidence in the economy of the UK and of the north-west. It also underlines the point that that is happening not only in our country’s big cities, important though they are, but in all parts of the north and, indeed, all parts of the country.

The Chancellor made it clear in the Budget that we have reached agreement with the 10 councils in Greater Manchester to devolve additional powers to them, beyond those powers that were devolved previously. A land commission will help to release public land to build new homes; fire services will be put under the control of the new mayor; and new powers will encourage further collaboration on children’s services and employment programmes. This historic process of devolution is now available to other cities and other parts of the country. The Chancellor made it clear that we are in active negotiations to devolve powers to the Sheffield city region, to Leeds, west Yorkshire and its partner authorities, and to the Liverpool city region. Each area will receive far-reaching devolved powers and resources in return for the election of a directly elected mayor. We are also in advanced negotiations with Cornwall on the first devolution for a county in this country.

This is just the start. The Cities and Local Government Devolution Bill, which is before the House of Lords, will enable us to negotiate with cities, towns and counties right across the country to give them the power that they need to galvanise their local economies. Such deals are in their local interest, but also in the national interest. At a time when limited public resources must be invested wisely, it is right to offer our cities, towns and counties a bigger share of the funding that is available. Why? Partly, it is because they have already demonstrated that they can make funding go further by managing it more creatively and attracting private sector investment.

[Mr James Gray (North Wiltshire) (Con)]

I absolutely agree with my right hon. Friend about the importance of devolving power in the way that he describes. However, he will recall that it was a Conservative Government who abolished Avon, Humberside and Cleveland—those much-hated examples of regionalisation. Will he make a commitment today that, although devolution is a good thing, it will not become a substitute for regionalisation, and that if counties such as Wiltshire, for example, do not want it, we will not have to have it?

[Greg Clark]

I can give that reassurance to my hon. Friend. That is the essential difference between the programme of devolution that we are offering and what has been attempted in the past. Every proposal will come from local people. I do not have the power, still less the inclination, to force local people into any arrangements other than those for which they are enthusiastic.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Will the Secretary of State explain to me and the residents of Greater Manchester how the devolved £6 billion health and social care budget marries with the £7.1 billion that is currently spent in Greater Manchester? What will happen to the residents of Greater Manchester when that money runs out?

[Greg Clark]

The hon. Lady, who is a Greater Manchester Member of Parliament, should talk to her leaders in Greater Manchester who put the proposal to the Government. The proposal was not invented in Whitehall and visited upon Greater Manchester. The leaders of Greater Manchester made the very good point that when there is a strong connection between the needs of the national health service and the social care of residents across Greater Manchester, it makes complete sense for them to be managed together. That was their proposal and, in line with what my hon. Friend the Member for North Wiltshire (Mr Gray) said, we were very pleased to endorse it.

As I said, this is just the start. We want to build on the ingenuity and experience of local councils and civic and business leaders in an area to attract private investment to match the public investment. The city and local growth deals that we implemented in the last Parliament have transformed £7 billion of funds from central Government Departments into £21 billion of local investment. This Budget represents a golden opportunity for local leaders to repeat that success on a grander scale. Furthermore, with measures such as the creation of new enterprise zones, for which an invitation has gone out to places across the country, and the extension of the coastal communities fund, we are determined that this invitation should be extended to all parts of the country.

[David Morris (Morecambe and Lunesdale) (Con)]

Would my right hon. Friend look favourably on an enterprise zone application for Morecambe White Lund and on a coastal communities investment, because Morecambe needs more money on top of the £1 billion that was delivered by the previous Government? I am sure that, with the Secretary of State’s help, we can do better.

[Greg Clark]

I know from the last Parliament what a fighter my hon. Friend is for his area. I would welcome an application for Morecambe not just for an enterprise zone, but for the coastal communities fund—announcements were made on those two important policies in the Budget. I say to Members from all parts of the House that this is a big opportunity for them to work with the council and business leaders in their area to put forward a compelling bid for funds and, indeed, the devolution arrangements.

[Sir Edward Leigh (Gainsborough) (Con)]

The Secretary of State is a most cerebral Minister, so I wonder whether he can help with a problem that I am grappling with. One way in which the north has competed with the south in the past has been through lower wages. I am not saying that that is right, but how will the living wage impact on it? When employers increase wages, they normally do so as a result of an increase in productivity. If there is a living wage imposed by the state, how will we avoid increased unemployment or lower productivity —or both?

[Greg Clark]

I served my apprenticeship with my hon. Friend on the Public Accounts Committee, and partly as a result of the rigour that he imparted to the Committee’s members, I believe that the key to driving productivity is to invest in education and skills. One of the most important announcements in the Budget was the transformation of our apprenticeship system. There is a serious commitment on the Government’s part to ensure that all regions have the ability to invest in the skills that will drive productivity and justify the new wages.

In the proposals that places across the country have started to draft in response to my invitation to have more local arrangements, the common denominators are greater local involvement in skills and engagement with local employers. That is absolutely right, and I will back it in devolution deals.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I have listened carefully to what the Secretary of State has said about giving local people a say and not forcing areas to do things against their will. Why will the Government not devolve further powers to the north-east without a directly elected mayor, and why do they refuse to give local people a say on whether they even want a mayor in the first place? Will the Secretary of State listen to the north-east?

[Greg Clark]

I listen to the north-east all the time, and I have met its civic leaders in recent days and will no doubt have further conversations with them. I have always had a strong and fruitful dialogue with them. In fact, I have a letter from the leader of the hon. Lady’s own council, Sunderland City Council, who said: “The support you provided to Sunderland was crucial to us securing the deal which is so vital in helping boost the economy of our area. Your thorough understanding of the issues in our region should be commended and demonstrates this Government’s commitment to putting the north of England at the heart of its plans to strengthen the economy of the whole country.” I have good dialogue with city leaders across the country, and the hon. Lady should talk to them.

I am conscious that many hon. Members want to speak, so I will move on and say a word about housing. I am convinced that our communities will rise to the challenge of devolution, but I have made it clear to authorities across the country that in doing so, they must deliver the homes that their people need for this generation and the next. Much progress was made during the last Parliament, which began with the lowest level of peacetime house building since the 1920s and first-time buyers locked out of the housing market. Housing starts and the number of first-time buyers have doubled since 2009 and are continuing to rise. Last year alone, the number of first-time buyers rose by 20%, but we must go further. That is why the Government are committed to encouraging home ownership and building homes that people can afford to buy.

[Tom Pursglove (Corby) (Con)]

There is a real desire in Corby for a new enterprise zone, not least because of the success of enterprise zones in the original wave back in the 1980s. We are also seeing enormous housing growth. Does the Secretary of State agree that the areas that are taking that growth should be rewarded when it comes to jobs and infrastructure?

[Greg Clark]

I do agree, and I encourage my hon. Friend and his local business and civic leaders to make an application for an enterprise zone on behalf of his constituents. I am sure that that would further enhance the prosperity of the Northamptonshire economy.

[Emily Thornberry]

rose—

[Greg Clark]

The hon. Lady has been very patient, so I will give way to her now.

[Emily Thornberry]

I am grateful to the Secretary of State for his generosity.

What would the Secretary of State say to the 19,000 families in Islington who are on the waiting list for social housing about how long they might need to wait to be rehoused?

[Greg Clark]

I would say to the people of Islington that they should be pleased that the highest rate of affordable house building took place in the last Parliament, and that we will increase that rate during this Parliament.

[Mr Clive Betts (Sheffield South East) (Lab)]

On that point, the Budget changed the future rental income forecast for social housing from the consumer prices index plus 2%, to minus 1%. The National Housing Federation said that that will reduce housing association revenue by £3.9 billion in this Parliament, and that a conservative estimate suggests a reduction of 27,000 homes being built because of measures in the Budget. How does the Secretary of State begin to justify that?

[Greg Clark]

The justification is clear: over the past three years the rate of increase in rents for social tenants was twice that of private tenants. Since 2012-13 the increase in social rents has been 9.1%, and 4.8% for private tenants. It seems not unreasonable to reset the baseline—if I can put it that way—to reflect the experience in the rental sector of people in the country. I would be interested to hear from the hon. Member for Wolverhampton North East whether the Labour party will share our enthusiasm for the cut in rent for social tenants of 1% a year, when it has been increasing above inflation. It is an important move.

We want to encourage home ownership and build homes that people can afford to buy. We are extending Help to Buy, which has already helped 100,000 people to buy their own home. In autumn we will introduce the new Help to Buy individual savings account, and we will give more than 1 million housing association tenants the right to buy. The Budget and the productivity plan that the Chancellor published on Friday will free up brownfield land for development, speed up the planning system, and deliver thousands of new homes for aspiring homeowners.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

The Secretary of State mentions the great productivity plan, but what a damp squib that is. It fails to address the key fundamentals of productivity, whether lending to business, raising intermediate and higher intermediate skill levels that are a major drag on our productivity, or other facets. Surely we deserve better than the damp squib that was produced on Friday.

[Greg Clark]

I do not think that the hon. Gentleman has read the productivity plan. If he does he will find it a substantial document. That this early in the life of this Government there is a clear focus on ensuring that our country is equipped to prosper in the long term is a mark of the Government’s seriousness, and I am surprised that he disparages that.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

The plan includes important planning reforms such as new transport hubs that many Conservative Members welcome, as well as new powers for the Mayor of London. There was, however, one glaring omission because there was nothing about permitted development rights, and many people are concerned about a policy that has helped to turn empty offices into family homes. When will the Government publish their policy on that?

[Greg Clark]

My hon. Friend, who made a distinguished contribution as housing Minister, is right. Permitted development rights are important to bring otherwise disused spaces, such as offices, into use for homes. He will not have long to wait before we announce the continuation of those arrangements.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I am interested in the Secretary of State’s proposals to reform planning regulations, but will he look carefully at unintended consequences? We all want an increase in the number of homes being built, but we do not necessarily want to lose valuable employment land.

[Greg Clark]

The hon. Gentleman makes a reasonable point in a reasonable way. He is absolutely right, which is why article 4 directions are expressly available to local authorities to make sure that land is kept for a particular use where it is important to do so.

Some of the proposals will be contained in the housing Bill this autumn and the House will have the opportunity to debate them. The Bill will create a new register of brownfield land to help fast-track the construction of homes, with the principle of development being agreed on 90% of suitable sites by the end of this Parliament. In London, I am pleased that my hon. Friend the Mayor will create an additional 10 housing zones, all on brownfield land. Those additional zones will bring the total number in the capital to 20, which, combined with the 20 housing zones outside London and the eight shortlisted areas that we have agreed to work with, could deliver nearly 100,000 more homes.

[Boris Johnson (Uxbridge and South Ruislip) (Con)]

Will the Secretary of State give way?

[Greg Clark]

I will indeed give way to the Mayor.

[Boris Johnson]

I just want to thank the Secretary of State and the Minister for Housing and Planning for their work in helping us to deliver those housing zones, which are enabling London to build more homes than at any time since the 1980s and a record number of affordable homes. In fact, in the next few years we are on target to build more homes in London than at any time since the 1930s.

[Greg Clark]

My hon. Friend is right, and it is part of his record as Mayor of London of which he can be very proud. He and my hon. Friend the Minister met just before they came to the House to discuss the London Land Commission and further plans to build on the success that my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) has enjoyed. It is vital that we make sure that the capital has homes for the next generation of Londoners, just as he has provided them for this generation.

Local plans have been another success story, as they have helped to drive progress on both the quantity and quality of new development. In the productivity plan, we said that we want to take steps to ensure that there are local plans in every community. We will also make it easier to build 200,000 starter homes on underused commercial land, which can then be offered to first-time buyers under the age of 40 with a 20% discount.

We will update legislation and guidance to ensure that neighbouring councils co-operate on local plans—something that the Communities and Local Government Committee has taken an interest in over the years. The Chair was hopeful that I might listen to the representations from the Committee during this Parliament. We have listened and we are reflecting some of its thoughts in the productivity plan. We want to make sure that planning decisions are made as quickly as they can be; that major infrastructure projects can include some new homes as part of their plan; and that smaller firms have quicker and simpler ways of establishing where and what they can build, particularly on land in the new brownfield registers.

We also want to ensure that our existing housing stock supports working people, which is why the reduction in social housing rents—to bring them in line with the increase that has taken place in private rents—is an important step forward.

[Mark Pawsey (Rugby) (Con)]

If I may bring the Secretary of State back to the importance of local plans, part of the problem has been that some local authorities have been slow in bringing forward their plans. I therefore support the Government’s moves to encourage local authorities to get their plans in place, because the Government will do the work if local authorities fail to do so.

[Greg Clark]

I am grateful for the support of my hon. Friend, who has contributed to the Select Committee’s deliberations. Local councils have now had plenty of time to get on with their plans. More than 80% have published a plan, so we are pushing at an open door.

The Budget and its accompanying documents make clear, in tangible form, our commitment to provide the land and a simplification of the planning system to allow the homes that are needed to be built.

[Peter Dowd (Bootle) (Lab)]

On the issue of brownfield sites, my constituency has areas that are heavily contaminated and need significant remediation. Can the Secretary of State advise local authorities and developers where they can get support for that remediation?

[Greg Clark]

One of the benefits of devolving some of the powers and funds to local authorities is that by combining investment in transport infrastructure, housing and commercial development it is possible to get private sector investment in some of those regeneration projects. The hon. Gentleman has a valid point and, in recognition of the issue, we are establishing a brownfield fund that will help with the remediation of some brownfield land.

We have important themes in the Budget. It is an opportunity for our country to be even bolder over the five years ahead than we have been in the past. I am pleased that the shadow Secretary of State is on record as being a moderniser in her party. She supports a leadership candidate who says that she wants to challenge her party to be bolder. I hope that she will take the opportunity to do that. A vigorous debate on these matters—on housing, on planning and on furthering the devolution agenda—is very much to be commended in this House. Reflecting ruefully on the past five years, I found that I had a fruitful dialogue with leaders of local government, not just with Conservative leaders, such as my hon. Friend the Member for Uxbridge and South Ruislip, but with Labour leaders across the country, too. However, I did not, and they did not, get the support from Labour’s Westminster politicians. I hope that will change this time.

The hon. Member for Stoke-on-Trent Central, again providing wise words, said that this needs to be a summer of hard truths. That is good advice to the hon. Lady and I hope she will be bold. As the former shadow housing spokesman and now shadow Secretary of State, if she is not going to be bold, who is? Will she support tenants who dream of owning their own home, or not? Will she support our plan to build 200,000 starter homes? Will she back our register of brownfield sites with automatic planning permission so that builders can get on with building and young people can get a home of their own? Will she back our plans to extend home ownership through Help to Buy, right to buy and the starter homes initiative, or will she sit it out, a would-be radical afraid to speak out lest she finds that her leader is an old Labour figure who takes fright at confronting the future?

Britain has come a long way in the past five years, a journey that has taken us from the brink of ruin to the fastest growing advanced economy in the world. Confidence has returned and living standards are rising. Local economies are prospering and house building is on the rise. Businesses are growing and more people are in work than ever before. This progress bears testament to the hard work and sacrifice of the British people. It is their economic recovery and their hard-fought gains will not be squandered. Having come this far, there will be no turning back to the age of irresponsibility that caused so much damage to our country. The Budget sets out a new settlement for Britain to keep our country on the straight path to economic security and prosperity. It will give cities, towns and counties across the country the power to make their own decisions and to galvanise their local economies; it will help local communities to build the homes they need; and it will ensure that social tenants benefit from a fair rent. It is a Budget for working people and for one nation, so that whoever you are and wherever you live, you can benefit from Britain’s progress. I commend it to the House.