Finance Bill

Debate between Jack Dromey and Nick Raynsford

Tuesday 2nd July 2013 Commons Chamber

[Jack Dromey]

I would make two points in response. First, the single biggest factor that would make a difference is, of course, significantly increasing supply. What is so wrong about the Government’s approach is that it has been too much focused on demand and not sufficiently focused on supply. On the issue of demand, we have heard criticisms from the IMF, the Treasury Select Committee and others about the impact of Help to Buy on pushing up house prices, without necessarily seeing a significant increase in supply.

Secondly, we definitely need to look at a very different type of private rented sector for the future, where quality standards will be raised and where there will be longer-term tenancies and flexibility for those who wish it and security for those who need it. Index-linked rents, for example, could see people having predictable and more affordable rents. If we look at existing evidence of such longer-term tenancies with the indexation of rents, we find that tenants pay significantly less and landlords have a reliable income stream, so it works for good landlords and tenants alike. The time has come for a very different private rented sector in the future. Sometimes we refer to “the continental model” of security, affordability and higher quality, where people enjoy a higher status in a sector of choice—not what we have at the moment.

Millions of people will have waited for last week’s comprehensive spending review with hope, but their hopes have been dashed. What we had was hyperbole from the Chief Secretary to the Treasury. I have to say that I sat gobsmacked at his contribution. When it comes to writing the history of hyperbole, he will deserve a chapter of his own, as we have heard it all before. The simple reality is that this Government’s housing policies, like their economic policies, have failed and will continue to fail. Whether it be “First Buy”, “NewBuy” or “Help to Buy”, the British people know from experience that getting a decent home at a price they can afford and getting Britain building once again will ultimately mean sending this message to this Government at the next general election—“goodbye”.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Let me begin by drawing attention to my interests as declared in the Register of Members’ Financial Interests.

I am very pleased to follow my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who made a powerful and persuasive speech about the importance of expanded investment in housing, and my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), who presented a masterful overview of the whole range of housing expenditure.

Housing

Debate between Jack Dromey and Nick Raynsford

Wednesday 5th September 2012 Commons Chamber

[Jack Dromey]

Our record contrasts very favourably with what happened in the 1980s. We helped first-time buyers. I have been told time and again by building companies and developers that had we not acted in the way that we did, the industry would have fallen flat on its face.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Does my hon. Friend recall that in the recession of the early 1990s repossessions rose to very alarming levels and the Government of the time took virtually no action to prevent it? That contrasts with the action taken by the previous Government to halt a rise in repossessions and keep them at a much lower level than the industry was forecasting.

[Jack Dromey]

My right hon. Friend, who has a long and honourable track record on housing, is absolutely right. Tens of thousands of people are in their homes today because we took action when faced with those dire economic circumstances, in dramatic contrast to what happened back in the 1980s.

Unlike this Government, during the recession Labour rightly increased investment in housing to provide the homes that people need and to secure construction jobs. As well as providing funding to build 112,000 affordable homes, we created and maintained 160,000 jobs and 3,000 apprenticeships for young people. Yesterday’s Housing Minister will be familiar with those homes because, extraordinarily, the Government have tried to claim credit for them. However, as the National Audit Office has confirmed, of the 170,000 affordable homes in the next five years that he used to talk about, 70,000 were commissioned and paid for by a Labour Government. Labour is showing the same determination now as it did then, because we intend to put housing at centre stage of our economic recovery plan.

We understand just how important investment in house building is as a means of economic revival. We know that for every £1 of public money spent on house building, studies have shown that the economy benefits by up to £3.50. Money spent on building affordable homes is money saved as unemployed building workers are put back to work, young apprentices are taken on, and less money goes out on housing benefit. We know that in transmission time it is the quickest way to get a sluggish economy moving. Investment is the key.

The Government were absolutely wrong to cut £4 billion from the affordable housing budget in 2010, and no amount of press releases or half-cocked initiatives will fix that. That is why Labour has proposed bringing forward infrastructure investment, including for housing, and why we have called on the Government to use £2 billion from a repeat of the bankers’ bonus tax to fund tens of thousands of affordable homes, not least because public investment can lever in investment from elsewhere.

The National Housing Federation has said that public investment of £1 billion, matched by £8 billion from the housing associations, would build 66,000 shared-ownership homes for people on low to middle incomes, create 400,000 jobs and, in so doing, save the taxpayer £700 million in jobseeker’s allowance, not to mention the added savings from housing benefit and increased tax revenues. The NHF also predicts a boost in growth, generating £15.25 billion in the wider economy. The Government should commit greater investment now—we would—rather than leave it in the pipeline.

Next, the Government need to get the banks lending again. Small to medium-sized firms, including small builders, are crying out for investment, but the banks are not lending. Thus far, the Government schemes have failed.

The Government must also urgently consider the case, proposed by my right hon. Friend the leader of the Opposition, for a British investment bank. The German state bank, KfW, is a good comparison, and a British investment bank could support the funding of new infrastructure.

Next, the Government must encourage innovation among local authorities and housing associations. The Government took a welcome step forward by proceeding with Labour’s plans to free up councils to build the next generation of council homes through housing revenue account reform. Indeed, along with the Labour leader of Southwark council, Peter John, I launched its plans to build 1,000 new, much-needed council homes. The Government must now provide help and support to those innovative councils that are taking advantage of that reform to ensure that they use the headroom to maximise the number of homes built.

It seems that those most in need of support are Conservative-run local authorities. As a freedom of information request by my right hon. Friend the shadow Secretary of State for Communities and Local Government has demonstrated, Labour councils are building while Tory councils sit on their hands. A survey showed that five times as many social homes for rent are being built in Labour authorities than in Tory areas.