Queen’s Speech

Lord Patten Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Patten]

My Lords, I warmly congratulate my noble friend Lord Glasgow on what he has just said about high-speed rail, and not only on what he said but on the way that he said it, which was lucid and clear, so unlike many speeches that the political classes tend to unleash on the innocent electorate. They say all that stuff about how we are about to be nudged by the nudge unit, the need for a national conversation—what is a national conversation?—about this, that or the other and the need for us all to go out into the street and celebrate something as stakeholders, probably slipping into a paradigm shift as we do so. I greatly regret the way in which the political classes tend to address themselves and not the electorate, thus widening the gap between the two. The next thing that we will be told is that we need a political narrative about HS2. What is a political narrative? I cannot tell the difference between a political narrative and the back end of a number 11 bus.

I say this respectfully, but in the gracious Speech we have another prime example of meaningless guff, drafted for Her Majesty about a policy that I happen to support very strongly, saying that it is to be “world-class”—that dread phrase that public relations experts wheel out in company reports. I regret that the gracious Speech had those words for Her Majesty.

In the three areas that I intend to address, which are the economy, housing and transport and HS2—I regret to say that my noble friend has largely shot my fox, so the third section will be short—I wish to talk about the need for clarity and, above all else, for honesty, because if we are honest we will get a proper payback from the electorate.

I turn first to the realities of the economic situation that we are in. I am a strong supporter of our policy on deficit reduction. Doubtless the Treasury is pleased to hear that. There may not be all that many of us left, but those of us who are mostly think that the naysayers to our policy can “IMF off”.

I think the electorate will accept what is being done to achieve this deficit reduction if it is explained in an open and transparent way, so we should explain to our electorate that the UK’s debt, just as in the aftermath of World War 2, has ballooned to a level that will never be paid off by economic growth alone, probably in our lifetimes. Therefore, not wanting, at one extreme, to default our way out of the debt problems that face us or, at the other end, to impose impossible levels of austerity, what we are doing is very sensible. It is reducing the real value of debt by keeping interest rates below inflation. After 1945, this policy of negative real interest rates, sustained for many years—indeed into the 1970s—was a bipartisan and very effective approach to reducing the debt pile, with savers then as savers now being asked slowly to absorb the pain. They were a captive audience buying government debt at below market interest rates. That is certainly happening today with inflation fast approaching 3%.

Against the background of a more or less flatlining economy likely to obtain for some while—a long period of low growth—there is nowhere else for us to go. The banks already know, with greater regulation, which I again support, concerning demands on them to hold more capital, that the Government know that there is a set of captive buyers for their debt out there. I am not quite so sure that the rank and file of retail savers have woken up to the fact that government policy is indeed to erode the real value of their capital in order to reduce the country’s debt. This is a highly inconvenient truth, but truth it is, and both parties have conspired to cover up that truth in earlier years. It is better explained than not, better understood than glossed over. We should be honest.

Incidentally, there are those who want to persecute entirely innocent baby boomers for having had it too good over the years and force them to make recompense by passing some of their wealth down to generations X and Y. We should recognise that this blameless group is already doing quite a lot of that by taking part in the process that I have just outlined. Also, from January 2014, we will see more such transfers between the generations as the help to buy scheme, following the new buy scheme and then the fresh buy scheme, begins to be rolled out, paid for in part by savers and taxpayers, many of them in the baby boomer generation.

My second point is that, needless to say, I hope, I support anything that will enable more people to buy their own homes in a proper and orderly way. I also support anything that helps the building industry because it employs people and gets more jobs created more quickly. I also support anything that enhances the environment. However, there are three risks involved. First, there is the risk that under the new scheme, from some date in January 2014 onwards, people who should not be borrowing money may be brought into borrowing it and, as in the run-up to 2007, we may have a higher risk of people taking on debts that they should not be taking on. At no point in the excellent speech by my noble friend Lord Deighton that introduced this debate did I hear any assessment of the risk of this or, indeed, of the parallel risk that the scheme may incite house price inflation again in a way that we have not seen in recent years.

I am told that my noble friend was an investment banker in the old days. Doubtless he was pretty used to assessing risk and to mitigating it. I do not know whether he took a few risks as a young banker, but I do not wish to take risks with taxpayers’ funds that may leave more people in debt who should not be in debt and lead to house price inflation coming back again. If my noble friend Lady Hanham, who always speaks very clearly and never uses jargon, any more than my noble friend Lord Glasgow does, is tempted to say in her wind-up speech—if she chooses to address the point that I am making—that there is no risk at all in those schemes, I promise her I shall not barrack from my spot high up on the Back Benches by shouting “Bunkum!”, but I shall certainly be thinking it very fiercely. It is terribly important that we stress that risks are being introduced in this new housing policy.

The third risk, of course, is that it will lead to more rapid development on greenfield sites. I support housebuilding on greenfield sites. I prefer it to be on brownfield sites, but I support it because it is necessary and the only way that we can provide houses and flats for those with the ability to buy them.

However, I hear disturbing stories about the landscape effect and the quality of new buildings on greenfield sites being rolled out by housebuilding companies. I therefore took an interest this weekend and went to look at a housing scheme being run by Bovis Homes, a publicly listed company, on the edge of Wincanton, a small market town in the boondocks of Somerset. I found what I saw there disturbing. Much of the pre-existing landscaping that had been demanded by the local Liberal Democrat-controlled council had been eaten into, tree shelterbelts interfered with and taken into part of the development sites, and hedges planted by Messrs Bovis now ripped up and replaced by metal- grilled fencing, giving a terrible look to the development itself. It is just the kind of thing that discourages those who might be tempted to support, as I do, the building of high-quality houses on greenfield sites and gives it a bad name.

Incidentally, if it were not so sad it would be funny also to be told that in one or two of the new houses, which have been on sale only for about six months, there are the sort of issues that none of us who wish to promote the welfare of the housebuilding industry wish to see. One poor lady putting her three-pin plug into a socket in the wall found that it would not power up her appliances, so she asked an electrician to come; I have checked these facts, and they are facts. When the electrician came, he—for it was a male electrician—found that there was indeed no electrical supply of any sort running up the walls to the sockets. My noble friend Lady Hanham needs to do all she can to encourage local government to be strict on the maintenance of landscaping around greenfield site new buildings, and all she can to encourage the building industry to be right first time, just as we hope all manufacturers will be right first time.

Thirdly and lastly, I turn to infrastructure. Just as bad housing developments can be a blot on the landscape, as my noble friend Lord Glasgow said, we undoubtedly face blots on the landscape from the development of HS2. There is no point in messing about and saying that they are not there. We should be absolutely honest and say that HS2 will be damaging to some parts of the environment, at least for a while, through noise and the destruction of landscape and views. It is therefore absolutely right that we must persuade people to accept HS2 in its various manifestations as something that we will be prepared to pay large sums of compensation for in order to make it bearable for people who live nearby. I hope that we will say transparently that we recognise the environmental risk and intend to do something about it, including, maybe, the introduction of environmental offsets of one sort or another.

That sort of transparency is also vital for those who wish to come alongside the Government. My noble friend Lord Deighton wishes to attract investment from abroad, which I entirely support. Only last week, we had one of the big Canadian pension funds, the Ontario teachers’ pension fund, saying that it felt that too many schemes were seeking public funding from entities like it, and that it was important that we reduced the number of schemes and concentrated on those that were deliverable—and, as my noble friend Lord Glasgow said, get going on it very quickly.