Finance (No. 2) Bill

Jack Dromey Excerpts

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

You are of course entirely correct, Mr Hoyle, as we are debating new clauses 1 and 5. New clause 1, however, talks about the Government’s approach to the housing market more broadly and, in the context of taxpayer support for the housing market, it would be remiss of any hon. Member not to recognise the volatility created by consequential changes in other areas of departmental policy, particularly those of the Department for Work and Pensions, as they affect the availability of housing supply. After all, in most of our constituencies and particularly the least well-off ones across the country, there is a sense of foreboding about the potential displacement of many constituents who are being told that they should look for other housing market options when it is, in fact, quite clear that there are no suitable social housing options to fit the circumstances of nine out of 10 of them. You are completely correct, Mr Hoyle, about the nature of new clause 1.

[Jack Dromey (Birmingham, Erdington) (Lab)]

On that point and before my hon. Friend moves on, does he agree that the impact of the totality of the welfare changes, including universal credit and the factoring in of housing associations’ bad debts, will have a very serious impact on housing supply—including with respect to the recent profoundly disturbing calculation by the G15 group of housing associations in London that as a consequence of the Government’s welfare reforms, they will build 1,200 fewer badly needed affordable homes next year?

[Chris Leslie]

Very few people—

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[Chris Leslie]

The economic background is absolutely key. If we had seen a continuation of the recovery that was beginning to get under way back in 2010, we might have been in a different position. But no, the Government pulled the rug from under the confidence felt by consumers or businesses and in the housing market, too. We have seen a series of consequences as a result. Let us face it: the main problem, particularly for first-time home buyers, is the supply of housing and its cost.

[Jack Dromey]

On that point, was it not folly for the Government to cut £4 billion from affordable housing investment in 2010, leading to a 68% collapse in affordable house building? Would it not be more prudent now to endorse the shadow Chancellor’s proposal that the 4G moneys should be spent on building 100,000 affordable homes as much the quickest way of getting the housing market moving and, in turn, of getting our economy moving?

[Chris Leslie]

It is absolutely true. We have to face facts. We have to put direct support into housing supply. These rather opaque and indirect attempts to manipulate the public accounts with complicated and convoluted guarantees and underwriting arrangements do not communicate to the wider public who might be consumers of housing—looking to buy their first home or to rent differently. The Government must be far more direct about this approach.

It is clear that the Government’s ideological aversion to supporting the construction of affordable housing still inhibits recovery of the broader housing market. That is why housing starts fell 11% over the last year to 98,000 and why the number of private and local authority home starts was down, and the number of housing association home starts, at just over 19,000, was the lowest for eight years. There are 136,000 fewer home owners than when the Government came to power, and of course the youngest are hardest hit. Apparently, the average age of a first-time buyer is now 37.

We have doubts and questions about whether this Help to Buy scheme will work. Have the Government thought it through sufficiently? There are plenty of organisations focusing on housing policy. The first-time buyers pressure group PricedOut said that the Government should assist construction of more houses where there are chronic shortages. That is absolutely true. However, there is a point about whether help should no longer be targeted at lower and middle-income families, with the cap of £60,000, and used to support first-time buyers. We need from Ministers a thorough analysis of what is happening, particularly how many higher rate, or additional rate taxpayers will be taking advantage of the new scheme. What analysis have they made of that?

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[Alison Seabeck]

In speaking to new clause 1, I wish to pursue issues that have been touched on by my hon. Friend the Member for Nottingham East (Chris Leslie) and other Opposition Members and to highlight my concern that the Help to Buy scheme might well become a second home subsidy, rather than a scheme, as was intended, to help many first and second-time buyers on to the housing ladder.

In housing, as in so many other areas of policy, the Government have been found badly wanting. I remember the chutzpah the right hon. Member for Welwyn Hatfield (Grant Shapps) displayed on entering government, saying repeatedly that he would outperform the previous Labour Government when it came to house building and getting first-time buyers into the market. As Housing Minister, he failed rather magnificently. He seemed to ignore the fact that Labour built 210,000 new homes before the market crashed. We started to see an increase in the number of homes being built in the run-up to the 2010 general election as a direct result of measures taken by the Labour Government. Indeed, some of the homes that this Government have taken credit for building in 2011 are in fact the hangover from Labour’s new-build programme. We are now seeing a slump in house building.

[Jack Dromey]

The former Housing Minister claimed that the Government would build 170,000 affordable homes. The National Audit Office then produced a report stating that 70,000 of those homes had been commissioned and paid for by the previous Labour Government.

[Alison Seabeck]

My hon. Friend is right. I think we have to take the figures offered by the Government with a huge pinch of salt. Although I support any measure, as I am sure he would, to kick-start the housing market and enable young people, such as my daughter, to get on the housing ladder, I, like my Front-Bench colleagues, have serious concerns about the scheme.

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[Jack Dromey]

Is my hon. Friend aware of anything in the Bill that would prevent Russian billionaires, Greek tax exiles or dubious Australian spin doctors from buying homes on the back of the scheme?

[Alison Seabeck]

That was wonderfully well put, as usual. No, I am aware of no such thing, and that bothers me hugely. It ought to worry Ministers; it will be interesting to hear what they have to say on the matter.

My constituents are struggling under the pressure of the spare room subsidy. They rightly want to know why it is fair for the Government potentially to offer a spare house subsidy of up to £600,000 to people who already have a home. That sum would buy a mansion in Plymouth.

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[Alison Seabeck]

My hon. Friend is right. He reinforces a point I made about not only the potential for price volatility but the inability of certain people to access the housing that is so desperately needed, and the clear need to build more homes, which this Government are singularly failing to do.

[Jack Dromey]

Does my hon. Friend agree with the hon. Member for Spelthorne (Kwasi Kwarteng), who said in a recent interview, commenting on the Government’s proposed scheme, that

“giving mortgages without increasing the supply will lead to asset price inflation”?

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[Stephen Williams]

My argument is straightforward: I do not know what the Labour party’s variant of the mansion tax would be. Moreover, the Labour party does not seem to know, either; otherwise, why on earth would it frame new clause 5 in a way that asks the Treasury to explain how it might work? We are in an extraordinary position. I know what my party’s policy is and am about to tell the hon. Gentleman exactly how a mansion tax would work, but I had hoped to hear from him a little more detail on how his version would work, so that the clever people at the Treasury could produce the study that he wants.

[Jack Dromey]

I want to ask the hon. Gentleman about something that he did vote for. In a week when the International Monetary Fund has said that the politics of austerity, of which his party is a strong supporter, are clearly not working, does he now regret voting in 2010 for a £4 billion cut in affordable housing investment, which led to a 68% collapse in affordable house-building and threw tens of thousands of building workers out of a job?

[Stephen Williams]

To answer the hon. Gentleman directly, when the coalition Government came to office they had to make some quick decisions about what was essentially an economic emergency. We were left with a situation in which the last Government were borrowing £1 for every £4 that they were spending. We simply could not go on in that way, so we had to put forward an emergency Budget to gain the confidence of the markets so that people would continue to lend us enough money, on the triple A rating that we had at the time, to keep all Government programmes going. It has been acknowledged by the Chief Secretary to the Treasury and, I think, by the Deputy Prime Minister that some of the cuts in capital expenditure that the coalition implemented in its first two years in office perhaps should not have been made, in hindsight. But those cuts in the capital programme were in the last Budget of the last Government and were seen through by this Government. The Government have had the wisdom to say that investment in capital expenditure is a good way of getting growth going in the economy, and that is why we have had the wealth of initiatives that the shadow Minister mentioned earlier, and that is why we have had the new package of proposals to help the housing market.