Budget Resolutions and Economic Situation

Debate between John Howell and Sheila Gilmore

Thursday 21st March 2013 Commons Chamber

[John Howell (Henley) (Con)]

One is tempted to start with the unemployment figure in one’s constituency—it is down by 25% since April 2010—but I wish to speak about housing. It is appropriate to raise that issue today because our reforms are as much about the supply of housing as about the demand for it and about the importance of that sector and of the construction sector as a whole.

The Localism Act 2011 turned us into a nation of planners. Neighbourhood plans are steaming ahead, and the reform of the planning system has ended one of the biggest blocks to development and taken away a large amount of red tape. I understand that the proportion of planning applications approved is at a 10-year high. As for local plans, 70% of councils now have something on paper. However, there is still much more to do to turn this nation of planners into a nation of builders. I was interested to read paragraph 1.115 in the Red Book, which said that yet more reforms to the planning system were proposed. We are to have reduced planning guidance, which will come forward in line with Lord Taylor’s recommendations, and

“pro-growth planning policies and delivery arrangements”

for local areas as part of local growth deals.

The importance of the supply side can be seen in a number of areas. The first such area is affordable housing, which is an important element for this Government and always has been. We have recently issued a prospectus to support affordable homes delivered through the guarantee programme, so I was pleased that an additional £225 million had been put into the Budget to support a further 15,000 affordable homes, which will be built by 2015.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[John Howell]

No, I am not giving way. Those 15,000 homes will be new build homes. As for the build-to-rent sector, the Budget provides £1 billion to support the development of more homes—that is an awful lot of homes to be built. We also need certainty on social rents, which is left to the spending round in the Budget book. On the right to buy, a great Conservative measure, we are increasing the London cap to £100,000 and reducing the qualifying period to three years. Overall, this Budget introduces billions of pounds of financial support to tackle both the long-term housing market problems—the problems with the sector—and the problems faced by people wanting to get on to the housing ladder.

The Chancellor mentioned two schemes in that latter regard, the first of which is the “help to buy: equity loan” scheme. It applies to new builds only, and someone will need a minimum 5% deposit to qualify. The scheme will expand the existing FirstBuy scheme and is available to everyone; the Government will lend up to 20% of the value of the property through an equity loan. That provides extremely important assistance to first-time buyers and to those wanting to acquire a new build as part of their development. The second scheme is the mortgage guarantee scheme, under the same arrangement, where the intention is clearly not to provide a subsidy for second homes—the intention is to have a consultation to ensure that it precisely does not give subsidies to second homes.

All these measures illustrate the main point: the Government have understood that the link between the supply of mortgages and the supply of houses is an intimate one, and that these things cannot be tackled separately. They need to be looked at in the round and together.

We hope that by tackling the problem of access to mortgages we will help to stimulate the economy. That is certainly what the Federation of Small Businesses has suggested. It has said:

“The Help to Buy scheme is a bold move from the Chancellor to boost the industry and to get people onto the housing ladder.”

It continued:

“In addition the measure to build 15,000 new homes will give the sector a welcome boost.”

The Home Builders Federation has said:

“Building the homes the country desperately needs can be a key driver of economic activity. Government must be praised for its attempts to stimulate activity”.

I agree absolutely with that. A very bold attempt is being made to stimulate activity, both on the development of housing and on access to that housing.