Budget Resolutions and Economic Situation

Hilary Benn Excerpts

Friday 20th March 2015 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

May I apologise to you, Mr Deputy Speaker, and to the Secretary of State for the fact that I will not be able to be present for the close of the debate owing to a long-standing constituency commitment?

It is a pleasure to respond to the right hon. Gentleman—probably, I suspect, for the last time in this Parliament. If I may say so, his speech had more than a touch of a valedictory air about it. I join him in his congratulations tweeted yesterday to Lord Kerslake on his elevation to the other place. Lord Kerslake marked that occasion by telling the Local Government Chronicle that the current state of local government finance

“shouldn’t be confused with saying that therefore there’s another round of savings of equivalent size that can simply be taken out...I don’t believe that.”

More of that later.

I hope that someone is keeping score of the number of times we are going to have to hear the words “long-term economic plan” during the whole of this Budget debate. [Interruption.] Well, we did not hear it from the right hon. Member for Bexhill and Battle (Gregory Barker). By my reckoning, it took the Secretary of State 59 seconds to refer to it in his speech. I suspect that the repetition is a comfort blanket for Government Members who, given this wonderful success that we have heard about today, cannot understand why, so close to the general election, they are neck and neck in the opinion polls. The reason is that people know they are not better off under this Government and the Government have failed.

Let me say something about the attempt to rewrite economic history, because it is important to place this on the record. I have heard more than enough times from Government Members the charge that somehow the previous Labour Government brought about the global economic recession. It is not true: fact. Prior to the global economic crash, debt and borrowing were lower. Investment in public services was backed by the pledge of the then Leader of the Opposition, now the Prime Minister, to match Labour’s spending plans pound for pound. The action that we rightly took, against the advice of the then Opposition, kept people in their homes and kept them in their jobs, and not a single person lost a penny of their savings. I am still waiting, all these years after the event, for someone to explain to the House how the decisions taken by the previous Labour Government caused Lehman Brothers to collapse in New York. If anyone has an answer, I will readily give way. The truth is that the British economy was growing and unemployment was falling, and it does no credit to the Government to try to rewrite the past.

In 2010, the Chancellor of the Exchequer said:

“we are on track to have…a balanced structural current budget by the end of this Parliament.”—[Official Report, 22 June 2010; Vol. 512, c. 168.]

As we know, that has not happened, and people have paid the price. They are worse off, they have seen their living standards squeezed, many of the services they rely on have been cut, and the poorest people and the poorest communities have been hardest hit. In the words of the Institute for Fiscal Studies, UK households have experienced

“the slowest recovery in incomes in modern history”.

That is quite some record. Despite the Chancellor’s excuses, we now know that it will take twice as long to balance the books as he said it would, and his plans for the next five years will involve extreme cuts to public spending. Do not take my word for it—listen to what Paul Johnson at the IFS says:

“The cuts of more than 5% implied in each of 2016-17 and 2017-18 are twice the size of any year’s cuts in this parliament.”

No wonder the Liberal Democrats tried to distance themselves from all this in their rather unsuccessful yellow Budget yesterday, but the whole nation knows that they are up to their necks in it because they have been supporting the Tories over the past five years.

It is not only on the deficit that the Government have failed. What about housing, which the Secretary of State mentioned? Having enough homes is of course absolutely fundamental to the economic growth that Members in all parts of the House want to see. If businesses are looking to expand, they need workers to fill those jobs and those workers need somewhere to live. Yet homes are being built at half the rate we need, house prices are rising out of reach, one in four young people in their 20s and early 30s are still living with their parents, and more and more people are having to rent privately, with all the insecurity that that can bring.

Back in 2010, at least two of the Ministers who are present today sat behind their new desks and made a lot of promises about what was going to happen to housing. Appearing before the Communities and Local Government Committee, the then Housing Minister was asked by the Chair:

“do we take it that success for this Government, when you are eventually judged on your record, will be building more homes per year than were being built prior to the recession, and that failure will be building less?”

The Housing Minister replied:

“Yes. Building more homes is the gold standard upon which we shall be judged.”

That was a pretty unequivocal answer.

We must make some allowance for the fact that the then Housing Minister—now the chairman of the Conservative party—does not always get things right, but what have the Government actually achieved? Fact: they have achieved a lower level of peacetime house building than any Government since the 1920s, and a failure to build, in any single year, more homes than the Labour Government built in every single year in which they were in office. The number of new homes for social rent is at its lowest level for 20 years. [Interruption.] Ministers can chunter as much as they like, but those are the facts.

Starts and completions of social homes have collapsed, which makes the Chief Secretary’s claim to the House last week all the more extraordinary. He said then:

“we have the highest annual rate of social house building than under the previous Government or for the past 20 years”.—[Official Report, 10 March 2015; Vol. 594, c. 145.]

If one of the first acts of a Government is to cut the affordable homes budget by 60%, they should not be entirely surprised if there is a collapse.

The Secretary of State talked about affordable homes. He made great play of the subject. I have the figures in front of me—the figures from his own Department, headed

“National trends in additional affordable housing… Trends in gross supply”.

In 2009-10, the supply of “All affordable housing” was 57,980. In 2013-14, the figure was 42,710. During the last full year for which figures are available, affordable house building under the present Government was at its lowest level for nine years. Those are the facts. Ministers have not even returned house building to its level before the global recession. They set a gold standard on which they said they wanted to be judged, and they have comprehensively failed to meet it.

One of the other consequences of the collapse in social house building is the rise in the housing benefit bill over the current Parliament. This year, it reached £24 billion. Half a million more people now rely on help from the Government to pay their rent than relied on it when the coalition came to power—many of them work, but do not earn enough money to pay their rent and other bills and look after their families—and 2.5 million more people live in the private rented sector. There are now 11 million people who rent privately, including a growing number of families with children, but nothing has been done to help generation rent.

[Gavin Shuker (Luton South) (Lab/Co-op)]

My right hon. Friend has made an excellent point. There are people who are working—working in many of the jobs that have been trumpeted by the Conservatives—but are not earning enough to put food on their tables and a roof over their heads. That is one reason why the Conservatives are failing so shockingly on issues such as housing benefit while claiming to be trying to lower the welfare bill.

[Hilary Benn]

I entirely agree. That is one of the consequences of the cost of living crisis, which is why we want a higher minimum wage.

A Labour Government will do something for generation rent. We will scrap the charging of tenants for letting agents’ fees, we will legislate for three-year tenancies—the Government say that they are in favour of three-year tenancies, but they will not actually make them happen—and we will put a ceiling on rent increases during the second and third years of those tenancies.

As for those who dream of owning their own homes, the Conservative manifesto could not have been clearer, stating:

“We want to create a property-owning democracy where everyone has the chance to own their own home.”

I give credit to the Secretary of State and the Government for the steps that they have taken to try to help first-time buyers, including Help to Buy and the measures in the Budget. We support those moves, especially the help for first-time buyers. However, let me say gently to the Secretary of State that Ministers must know—they must have been advised by their officials, and by plenty of other people—that if demand is increased without an increase in supply, all that will happen is that house prices will rise even further out of reach of people who dream of owning their own homes, the very people whom the House wants to help.

[Mr Steve Reed (Croydon North) (Lab)]

Does my right hon. Friend share my concern that under this Government thousands of homes in London have been sold to overseas investors who leave them empty, while throughout this city there is a growing housing crisis and people cannot find a home? How frustrating it is for them to see those homes kept empty when they have nowhere to live.

[Hilary Benn]

I agree that that is a particular feature of the housing market in London. The Government could do two things: the first is to say that homes in this country cannot be advertised for sale in other parts of the world before they are advertised in the United Kingdom, so that people in this country have an equal chance to buy them; and the second is to give local authorities greater power to disincentivise those who leave their homes empty, or who put in a stick of furniture and claim that they are occupied.

[Mr Pickles]

As far as I understand it, that is a new policy. Quite a lot of estate agents’ businesses are on the web these days, so how would that policy be possible? If adverts are on the web locally, they are on the web internationally. Will the right hon. Gentleman explain how it will operate?

[Hilary Benn]

There is indeed the web, but the right hon. Gentleman will be well aware, having studied the market, that some companies make a special effort to market properties elsewhere and do not make a similar effort to market them in this country. He surely does not agree with that. Everyone in Britain should have the same right and opportunity, and companies should not make a deliberate effort to try to sell to people from other countries before those in London have a chance to access such properties.

[Robert Neill]

Given that this is a completely new policy that, as far as we can see, is being made up as we go along—

[Robert Neill]

And it is being changed, so will the right hon. Gentleman tell us exactly what the policy is? What will the policy cost, how many bureaucrats will be needed to enforce it and what will be the impact on London as an international financial centre?

[Hilary Benn]

The hon. Gentleman should have listened to what I said. There is no cost. The principle is very simple, and I would have thought that it would command support right across the House. The advertising and marketing of properties should be done in the capital at the same time as it is done elsewhere, so that people in this country have the same opportunity to buy. I would have thought that he would support that policy.

[Robert Neill]

Will the right hon. Gentleman give way?

[Hilary Benn]

No, I will not. I have answered the hon. Gentleman’s question.

There is another policy that the Government—actually, the Conservative party—have said that they will put in place if they are re-elected, which is to sell homes at 20% off. To go back to the chairman of the Conservative party, he was recently asked several times on Sky News how exactly that would be funded. He was not able to reply, but others have said that it will be done by exempting such sites, first, from the requirement to build social housing, and secondly, from the zero-carbon homes standard. I would tell the Secretary of State that the consequence will be that other people have less of a chance of getting a home they can afford, and people who move into houses built to a lower energy standard will end up paying higher bills than they otherwise would.

I have another question for Ministers. In talking about that plan, the Prime Minister said the homes

“can’t be bought by foreigners”.

I would be grateful if the Minister who responds clarified what exactly the Prime Minister meant.

[Barry Gardiner (Brent North) (Lab)]

They’ve gone very quiet.

[Hilary Benn]

Indeed. Suddenly silence falls on the Chamber.

Does that mean that EU citizens will be barred from buying one of these homes at 20% off? I think we should get an answer. The truth is that home ownership—[Interruption.] Well, I would give way if someone could give me an answer, but I do not suppose that I am going to get one. Home ownership is now at its lowest level for 30 years, and there are those with no home at all. Since 2010, homelessness is up by a quarter and rough sleeping is up 50%.

[Mr Pickles]

Because we count them.

[Hilary Benn]

That really takes the biscuit—trying to allege that somehow the Government are counting properly. The fact is that before the last election, the Prime Minister said that it is

“a disgrace that in the fifth biggest economy in the world…we have people homeless, people sleeping on the streets”.

I agree with him. It is a disgrace and people should hold him to account for his shocking record.

We shall deal with the housing crisis only if we have a comprehensive plan. We have one—the most comprehensive in a generation—in the form of the Lyons review, which we will implement from day one of a Labour Government. We will make housing a national priority for capital investment. We will work with housing associations and councils to make it easier to build council houses, building on the changes we made to the housing revenue account.

We need more firms to be building. Thirty to 40 years ago, two thirds of the homes in this country were built by small and medium-sized builders; that proportion is now less than a third. Ask small builders what the problem is and they say, “I can’t get access to land and I can’t get access to finance.” We will introduce a help to build scheme, which will allow small and medium-sized builders to get lower-cost bank lending, supported by Treasury guarantees. We will encourage local authorities and others to make more innovative use of public sector land, investing in it as equity instead of selling it to the highest bidder, because that will also help us to deliver more affordable homes.

We will use Treasury guarantees and financial incentives to support the building of garden cities, and we will ensure that every council has a local plan. The Minister of State, the hon. Member for Great Yarmouth (Brandon Lewis), said that it is not necessary for every council to have a plan, but I think it is the responsibility of every local authority in England to have a local plan. Why would someone seek to be elected to an authority, or to be its leader, if they were not going to draw up a plan for the future of their community that included how they will meet the housing needs of the people who elected them?

[The Minister of State, Department for Communities and Local Government (Brandon Lewis)]

Has the right hon. Gentleman looked through the details of the builders finance fund, which deals with this issue? Why does he not trust local councils to represent local people with a local plan driven by local people, for local people, instead of the top-down approach that failed for 13 years?

[Hilary Benn]

It is very simple: the Minister and I have a different view. I think every local authority should have a local plan. To be perfectly honest, I cannot understand why a local authority would not want a local plan, given the structure of the national planning policy framework. I think that is an obligation. The Minister and I disagree. He is entitled to his view and I am entitled to mine.

[Sir Andrew Stunell]

Does the right hon. Gentleman acknowledge that when the NPPF was introduced, it was discovered that only about a quarter of local authorities actually had a statutory plan, despite the requirement to have one? What did the Labour Government do in 13 years to ensure that local authorities complied with what he now asserts to be vital and necessary?

[Hilary Benn]

With respect to the right hon. Gentleman, the coalition cannot have it both ways. The Minister says we took a top-down approach and told people what to do, but the right hon. Gentleman says the very opposite. The fact is—

[Sir Andrew Stunell]

rose—

[Hilary Benn]

The right hon. Gentleman should bear with me. The NPPF has changed things. I support its basic structure, but the changes I would make would be, first, to ensure that local authorities calculate their housing need on a similar basis and, secondly, to strengthen the brownfield policy, which, whether the right hon. Gentleman wants to argue about it or not, was weakened in the final version of the NPPF. That is the difference. I will give way to the right hon. Gentleman again, but why does he think that any local authority should not have a local plan? Does he agree with what I am arguing?

[Sir Andrew Stunell]

I am asking the right hon. Gentleman whether the criticism he is levelling at the coalition Government for failing to achieve what he sets out also applies to him and his Government, who failed to achieve it in 13 years. This Government believed—my right hon. Friend the Secretary of State and I certainly did—that it was right for local authorities to proceed at their own pace. We provided a carrot, not a stick.

[Hilary Benn]

No one is arguing about the pace, because the time it will take local authorities to come up with a local plan will differ. I think most of us agree—although clearly not everyone does—that every local authority ought to have a plan. If they do not, are they taking responsibility for their local community? On that, we have a different view.

We will give new powers to local authorities to create housing growth areas and new homes corporations, so that they can assemble land and work with builders—small and large—construction firms and self-builders to get more homes built.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does my right hon. Friend agree that the Mayor of London is undermining the social housing target by watering it down and making it an aspiration? In contrast, our policy is to set private developers a target on social housing and intermediate development of between 25% and 40%. Surely the Mayor of London is undermining any attempt to deal with the housing shortage, leading, frankly, to the social cleansing of people who cannot afford to buy houses that are worth hundreds of thousands of pounds.

[Hilary Benn]

My hon. Friend is absolutely right. As we have heard in this debate, the problem is most acute in London. The consequences of not building sufficient affordable homes are being felt in many ways, such as in the number of people who are privately renting, in higher rents that people cannot afford and in the housing benefit bill. Ultimately, it is a self-defeating approach.

One problem is that the process of house building has been far too passive for local authorities in many parts of the country. They identify the land and then hope that someone will come along with a proposal. The Lyons review is about creating the means—the tools—for local authorities. I bet Ministers wish that they had applied their minds and come up with a report like the Lyons review.

[Brandon Lewis]

Will the right hon. Gentleman at least acknowledge that as a result of trusting local people with local and neighbourhood plans, a record number of some 250,000 homes were given planning approval last year, which is way beyond what Labour was achieving? Why does he not just trust local people like we do?

[Hilary Benn]

As the hon. Gentleman is well aware, I am a strong supporter of neighbourhood planning, and I have said so from this Dispatch Box on many occasions. He will just have to wait until his Government manage to complete more homes in one year than we managed in any one of our 13 years before he stands up and says, “Our record is better than yours”, because his record is much worse than ours.

[Brandon Lewis]

I appreciate the right hon. Gentleman being so generous with his time. To be fair, Labour finished off with 85,000 homes in its last year—the lowest level since 1923—and we have delivered some 500,000 homes in the last few years, so he really should think again.

[Hilary Benn]

The hon. Gentleman is, of course, referring to the consequences of a global recession. [Hon. Members: “Ah!”] Well, it was a global recession. The Secretary of State made specific promises about what the Government were going to do and they have comprehensively failed.

The Lyons review says to communities, “In return for taking responsibility for building the homes that you need, we will give you the powers that you need when you identify sites.” I have listened to debates in this House in which Members, particularly Government Members, have said, “We don’t understand it. We’ve identified sites, but the developers come along and say, ‘I don’t fancy building there. It’s not viable for me. I’m going to put in a planning application for that greenfield site over there.’” Up and down the country, that is happening. It is a great frustration for local authorities and citizens, because if they identify sites, the deal in return has to be that that is where the development will take place. If we are just dependent on the big house builders, we will never get to the figures that we need and it will undermine the public consent that, we all agree, is fundamental to making progress on house building.

We must say to local authorities, “Here’s a range of tools that you can use to ensure that the kind of homes you want get built in the places you have identified and go to the people who need them.” That is why the one other thing that we will do is to give local authorities a planning power to say that in housing growth areas a percentage of the new homes that are built for sale should, in the first instance, be reserved for local first-time buyers. If we do that, we will turn quite a few nimbys into yimbys, because they will realise that their son or daughter, or their neighbour’s son or daughter, will have the chance to get one of those houses.

If we are to get to the target that we have set of 200,000 homes a year by 2020—I say to Ministers that surely their experience over the past four years has taught them that we will not do it by trying to put a bit more petrol into the old house building engine and cranking it up—there has to be a fundamental change in the way the house building market works.

Let me turn to economic evolution and growth. I acknowledge what the Secretary of State has done with deals for some cities—it would be churlish not to—but there is an unanswered question: if he and the Government are so committed to devolution, why has progress been so slow, patchy and piecemeal? Manchester aside, why have such limited powers been offered to a small number of large cities. Why, as the Local Government Chronicle put it yesterday, has DCLG

“almost seemed peripheral, a bystander to the devolution debate”?

Why has Lord Kerslake, now free from the responsibilities of office, said—again in the Local Government Chronicle—that

“it was only well into its fourth year that the government woke up to the benefits of devolution”?

I suspect there is plenty more where that came from. Why has the right hon. Gentleman stepped aside while the Chancellor and Deputy Prime Minister have had a row about whether powers can be devolved and whether we need a metro mayor? Perhaps he is not actually in charge of the policy.

What about the great counties of England? Until the Chancellor got up on Wednesday and finally adopted Labour’s policy on 100% retention of business rate income growth, which he said he would apply to Cambridge and Greater Manchester, the counties of England had frankly been ignored. The Secretary of State will be only too well aware of how angry his colleagues in the counties have been at his failure to stand up for them. It was noticeable last year that at the meeting of the County Councils Network—the great annual gathering of county councils—not a single DCLG Commons Minister could manage to clear their diaries to turn up to address what was mainly their party colleagues.

It is not a very long journey to Marlow—about an hour in the ministerial car—and I think the real reason is what happened to the Secretary of State the previous year at the 2013 conference. LocalGov.co.uk reported it thus:

“Mr Pickles received a hostile reception at the conference…During questions, the Tory leader of Leicestershire, CC Nick Rushton, asked the secretary of state: ‘Why are you always so rude to us?—

I am sure the Secretary of State remembers that well—

“It’s about time you spoke up for us in Government.’”

I sympathise with the Secretary of State because with friends like that who needs us on the Opposition Benches? It is the unfairness that makes people angry. The truth is that his Conservative colleagues in the counties know that they will get a better deal from a Labour Government than they have got from the Tory Government, and the same is true for the city regions.

[Robert Neill]

In what ways does the right hon. Gentleman intend to alter the operation of the formula grant to address sparsity in rural areas? How will he deal with adult social care, which it seems his Government want to nationalise and which is one of the principal cost pressures on top-tier authorities such as councils? How will that help the county council?

[Hilary Benn]

I will come on to that very point in just a moment if the hon. Gentleman is willing to be patient. He will have seen what Councillors Keith Wakefield and Peter Box have said about the new Leeds city region deal. Peter Box described it as “disappointing”, which I would call one of the kinder comments. What has really got up the noses of the existing combined authorities is that Labour’s offer of 100% retention of business rate income growth has been made to Manchester and Cambridge but not to the other existing combined authorities. Why is that?

For all the Government’s rhetoric about the “northern powerhouse”—now running a close second to “long-term economic plan”—the truth is that the most deprived parts of the country have faced the biggest cuts in local authority funding. Yes, Labour will change the formula because what the Government have done is unjustifiable. There is nothing empowering about taking a load away and then giving a little less back.

[Gregory Barker]

The right hon. Gentleman says that Labour will change the formula. Will he spend more money, in which case where will that money come from, and if he is not going to spend more money, who will lose out?

[Hilary Benn]

We have made it clear that we will have a fairer allocation from within using funding that is there at the moment. The right hon. Gentleman’s problem is that he cannot justify what the Government have done, and therefore applying more fairness so that everybody has to make a contribution is the right thing to do.

The National Audit Office and others have said there is not much evidence that the new homes bonus encourages house building that would not have taken place anyway. It is top-sliced from revenue support grant and tends in the main to be taken from the more deprived communities with the greatest needs and to go to communities that are less deprived with fewer needs. We will phase that out and redistribute the money back to local authorities on a fairer basis. Government is about making choices. We will devolve £30 billion of economic powers from existing money for county and city regions.

[Iain Stewart (Milton Keynes South) (Con)]

Will the right hon. Gentleman give way?

[Hilary Benn]

I have been very generous in giving way, but I am going to bring my remarks to a close.

We will devolve that money so that local authorities, coming together, have powers over skills, business and employment support, housing and bus regulation. We have talked about London today. If bus regulation, the ability to control routes and fares, is good enough for London—and it is—why is it not good enough for the whole of England? That is something we will do.

The truth is that the Secretary of State has devolved in one other respect: he has passed responsibility for taking difficult decisions down to the areas with the greatest needs. As we know, the 10 most deprived local authorities have seen their council spending reduced by 16 times more than the 10 least deprived. He has taken most from the communities that can least afford it.

I asked the right hon. Gentleman at the beginning of this week about the real impact on social care for elderly people—I said I would come to this—of the decisions he has made, or, to be more precise, as a result of his failure to stand up for local government and social care. He tried to pretend that the fact that there are 220,000 fewer elderly people now getting a hot meal a day, which is what research demonstrates, had nothing to do with him. He even tried to blame the councils, but it is everything to do with the way he has unfairly applied the cuts to local government. If, as he claims, it has been fair to all, north and south, how can he explain cuts to social care being deepest in the councils he has hit the hardest as the result of the decisions he has made? That is what NAO analysis confirms. Everyone knows the answer to that question is that he has taken most from those who have least. Worse is to come. The Office for Budget Responsibility says we will see

“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything over the past five years.”

Those cuts would be extreme and irresponsible, and have a big impact, including on social care. The Health Secretary takes all the stick for the problems in the NHS, but the Communities Secretary is fanning the flames.

We need a different approach. Local communities and local government are crying out for a different approach. Times are tough, but there is no justification for applying the cuts to local government in such a fundamentally unfair way. There is no justification for taking decisions that mean elderly people in one part of the country are less likely to get social care or a hot meal a day because they live in an authority that has been penalised by the right hon. Gentleman. There is no reason why local communities and the people they elect should not be given the powers and the tools to build homes for their children and their grandchildren. There is no reason at all why all the city and county regions of England—all of them—should not get the economic powers to help them to build their own strong local economies, invest in skills, build homes and create jobs for the future. All those things are possible, but it will take a change of Government to make them happen.

[Several hon. Members]

rose—