Oral Answers to Questions
Matthew Pennycook Excerpts(8 years, 2 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
I thank my hon. Friend for raising this point. We have launched something called the financial advice market review, which will be reporting around the time of the Budget. We will be looking at how to make financial advice more affordable and more available, and also at how to get the right kind of regulatory balance for smaller firms.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
T6. Following reports that Hinkley Point C faces further delays, will the Chancellor revisit his decision effectively to write the French an extremely generous long-dated option and instead bring forward fall-back options?
Mr Osborne
We are working with the French Government, and all the signs are that they are committed to this project. This is a good example of how the United Kingdom, working with France and indeed attracting investment from Asia, is getting a new generation of nuclear power under way. That was promised for 20 years or more and did not happen, but it is now going to take place in Somerset.
Energy BILL [ Lords ] (Fifth sitting)
Matthew Pennycook Excerpts(8 years, 3 months ago)
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Andrea Leadsom
I welcome the hon. Gentleman. I think this is the first sitting of the Committee that he has been able to attend and it is good to see him here. He will appreciate that grace periods have to be set and a line has to be drawn somewhere. We have tried to accommodate the need for investor certainty and to be fair both to the businesses building onshore wind and to the consumers who are paying for them. We will get on to that in due course.
The first part of our manifesto commitment is now well on its way: clause 79, together with supporting secondary legislation, will ensure that the Secretary of State is no longer the primary decision maker for any onshore wind applications in England and Wales. New planning guidance for England, issued by my right hon. Friend the Minister for Communities and Local Government, complements this change by ensuring that local people have the final say on new onshore wind planning applications.
It is imperative that we deliver the second part of our manifesto commitment—to end new subsidies for onshore wind—to protect consumer bills and manage spending under the levy control framework. These amendments will ensure that we do exactly that by reinstating the provisions that were removed in the other place. We are committed to delivering our manifesto commitment while protecting investor confidence. It is my view that these provisions, including our grace period proposals, strike a fair balance between the public interest—including protecting consumer bills and ensuring the right mix of energy—and the interests of onshore wind developers and the wider industry.
At the end of April 2015, there were already 490 operational onshore wind farms in the UK, with an installed capacity of more than 8 GW—enough to power the equivalent of more than 4.5 million homes when the wind is blowing. That significant achievement was made possible only by providing consumer-funded subsidies. The Government estimate that in 2015-16, £850 million of support will go towards funding onshore wind across the UK, of which about £520 million, or approximately 60%, will fund Scottish onshore wind farms.
Recent levy control framework forecasts indicate that spending on low-carbon generation in 2020 will be £9.1 billion in 2012 prices. The Government previously set a limit of £7.6 billion, so the current forecast is already £1.5 billion above that, and additional costs would need to be met through increases to consumer energy bills. As my right hon. Friend the Secretary of State for Energy and Climate Change said on 18 January,
“New, clean technologies will be sustainable at the scale we need only if they are cheap enough.”—[Official Report, 18 January 2016; Vol. 604, c. 1152.]
When costs come down, as they have for onshore wind and solar, consumer-funded support should, too.
Let me reassure all Committee members that we already have enough onshore wind in the pipeline to meet the projected 11 to 13 GW needed to meet our ambition of generating 30% of electricity from renewables by 2020. That 11 to 13 GW is the deployment range clearly set out in the electricity market reform delivery plan. It is our best estimate of what we need to meet our 2020 targets, compared with what we can afford under our low-carbon spending cap.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
Does the Minister accept that if we do not make up lost ground on heat and transport, we will have to do more on renewable electricity to meet our EU renewables target?
Andrea Leadsom
As the hon. Gentleman knows, there are separate binding targets for different types of renewable energy. He also knows that we are making good progress in meeting our targets. We expect to be within the deployment range for onshore wind that was projected in the electricity market reform plan.
If we do not implement the early closure proposals in these amendments, there is a risk that we will deploy beyond the range that we forecast. There is the potential for up to 7.1 GW of further onshore wind under the renewables obligation. Without action to close the renewables obligation early and manage the spending under the levy control framework, there is a risk of deploying beyond the delivery plan range, which would add more costs to consumer bills.
I remind the Committee that, as my right hon. Friend the Secretary of State for Energy and Climate Change said on 18 January,
“Subsidies should be temporary, not part of a permanent business model.”—[Official Report, 18 January 2016; Vol. 604, c. 1152.]
That is what we seek to implement.
Simon Hoare
I am just coming to a close, if the hon. Gentleman will forgive me.
Rather than jiggery-pokery such as applying for two turbines in a 22-acre field to establish the principle and then coming back for more through variations to consent, which the amendments from the hon. Member for Coatbridge, Chryston and Bellshill sought to protect, we may well find that local communities and their planning authorities will see the whole picture at the start of the planning process rather than planning by salami-slicing, having established the principle.
The Government are absolutely right in their approach to the subsidy. My hon. Friend the Member for Daventry spoke wisely about the civil war. I must say that I would probably have found myself more of a cavalier than a roundhead, but there we are. However, there is an important point to make. If the civil war was about the proportionate balance between Crown and Parliament, the clauses inserted in the other place are, without over-egging this particular pudding, potentially as significant. If the Salisbury convention is to mean anything, something that passed the survey of the general election and a policy that commanded strong public support should not be challenged by the other place. I hope that we do not get involved in an overly long game of ping-pong with their lordships, because the view of the democratically elected House, certainly on this matter, must prevail.
Matthew Pennycook
When I drafted my notes for this speech earlier today, I did not comprehend that it was quite on an English civil war-type level of debate, but I will do my best.
Before I move on to my substantive comments, I will refer to the very interesting debate we had earlier about variability and balancing. It is worth returning to because—like so much of the debate on this issue, and not only in Committee and on Second Reading—we hear less about the costs of particular subsidies or how onshore wind forms part of our energy mix and more about the politics of onshore wind, which is really not what we are discussing when we consider what is the contentious part of the Bill.
Earlier, the hon. Member for Daventry raised the issue of intermittency, but I agree with my hon. Friend the Member for Stalybridge and Hyde that he did so in a way that did not shed much light on the subject, because the notification of inadequate system margin event that he talked about—I believe that it was a NISM event in November, and incidentally it does not mean that the lights are about to go out, but merely that the National Grid would like to see a larger safety cushion of spare generating capacity being brought on to the grid, which is not an unusual practice for the industry—was not caused just by an extended period of low wind, although that was part of it. It was also caused by unexpected plant faults and losses, so it was not just the fault of wind. When one drills down into the costs of that NISM event, one finds that it was in the hundreds of thousands, and not the calamitous figures that we got in the press.
Similarly, I am sure that we can have an extended debate about base load and about whether the idea of large coal-fired or nuclear power stations for base load is outdated, as Steve Holliday, the CEO of National Grid, has himself argued.
However, what cannot be denied is that onshore wind is a flexible technology that helps National Grid to balance the network quickly, by ramping output up and down at times of constraint or system imbalance and, as the Royal Academy of Engineering has estimated, it requires no specific extra back-up until we hit 50 GW of onshore wind, which is five times the current level on the system.
When it comes to the costs of balancing to account for the increased variability, which is a product of moving towards a more decarbonised and flexible energy system, gas is far, far more expensive than wind. For 2014-15, 7% of the costs of balancing the grid were due to payment to wind. In the equivalent year, the balancing costs associated with gas amounted to £240 million, which is five times as much as the costs associated with wind. So we need to bring some sense to the debate about what these technologies do and, in a sense, approach it—as I hope the Government still do—in a technology-neutral manner.
By bringing the Committee’s attention to this point, I am only drawing attention to what I believe is actually the driving force behind the early closure of the RO and the Government’s insistence on reinserting these clauses, which is not a hard-headed calculation of what is required to balance the energy trilemma, or to meet the costs of controlling the levy framework; it is about the politics of the windy caucus and the understandable anger of constituents in parts of the country who have had onshore wind projects foisted on them when they do not support such projects.
As we have heard, onshore wind has been a success story. It is proven; it is mature; and its costs are coming down. That is precisely because of the conducive framework for investment that was provided by 10 to 15 years of energy policy consistency and a large degree of consensus about that policy. It is that consistency and the investor confidence that comes with it that the Government have played fast and loose with since May 2015.
The hon. Member for Daventry said that this whole debate turns on this point, and in a sense he is right to say so. However, to label it dancing on the head of a pin does him a disservice, given the number of people who have invested substantial amounts of money over long periods of time, because—as we heard from hon. Members before—the lead-in times for these projects go back years. Those people invested in those projects in good faith and they did not invest to see them close early.
I am very clear about the manifesto commitment. We are not talking about the localist aspect; there is no dispute about that. The manifesto is very clear that local people will have the final say. On the nebulous wording
“we will end any new public subsidy”,
it is clear that the renewables obligation is not a new public subsidy. It is an existing subsidy that was legislated for by the coalition Government in 2013, and investors were right to think that it would continue. As recently as 13 October 2014, the then Minister—now the Secretary of State—said that
“the RO will be closed to new capacity from 1st April 2017”,
and there have been other similar statements.
Andrea Leadsom
I could agree with everything the hon. Gentleman said until that last comment. That is the point: he says it is the cheapest form of renewable electricity, and we are saying that as costs come down industries need to stand on their own two feet. Opposition Members accuse us of attacking them, stopping them and killing them—they use those sorts of emotive words—but that is simply not the case. The hon. Gentleman must realise that developers are looking for a subsidy-free, market-stabilising CfD. Does he accept that he may be wrong—that the subsidy may not be the be all and end all, and that the success of the onshore wind industry could continue with local support and without the subsidy? Does he think that if we want the industry, we have to keep adding to the consumer bill?
Matthew Pennycook
I do not think that if we want it we have to continue to add to the consumer bill. I very much agree that a contracts for difference regime is a much more stable mechanism for driving down costs. I do not use the words “killing” or “attacking”, but I do think that the Government have undermined support in a way that the industry was not expecting. It had stability in this regard.
Stephen Kinnock (Aberavon) (Lab)
Does this not ultimately boil down to risk management? Any business looking to invest will weigh up its risks; if we are looking at continuing a subsidy through to 2017, that will clearly play a role in how a business thinks about its risk portfolio before it actually makes the investment that it needs to make. Nobody here is saying that it is black or white—subsidies for ever or straight to a CfD. What we are saying is let us help these businesses, many of which are nascent but very important, to manage their risks. That is surely the role of Government: to have a proactive strategy to help businesses manage their risks and go forward.
Matthew Pennycook
I absolutely agree; my hon. Friend makes the case very powerfully. It is what I have heard on the Select Committee time and again, across a variety of renewable technologies. No one argues with the Minister’s point that as costs come down, subsidies should, in a stable and certain flight path, also reduce with them. What we take issue with is the early closure, as announced in June with very little consultation.
This could have been done in a much more effective way, in negotiation and consultation with the industry, where we move to different contracts for different regimes more stably. If the Minister is willing and happy to give the onshore wind industry the certainty that it is looking for around contracts for difference, I am sure we would be happy to hear that. What we have at the moment is a policy vacuum, when we had, before, not indefinite public subsidy but a certain flight path off it through the ending of the renewables obligation in 2017.
I return to my point about the EU renewables directive. When we look at the figures, we see that the situation is stark. We need 180 TW of new low-carbon generation by 2030. Every megawatt of generation that we do not get from onshore wind, in the sense of falling below our EU renewables target, will have to come from a more expensive form of renewable technology, be it offshore wind or nuclear.
Given how far behind we are on heat or transport—and I hope the Minister will agree with the Secretary of State that we do not have the right policies in place; we are behind on those targets and that part of renewables—the idea that this will bring down bills, which I understand is a large part of the rationale, at least according to Ministers, not the windy caucus, is unlikely. Even that 30p in the central scenario in the impact assessment is unlikely to happen, because we will be forced to turn to more expensive forms of renewables to meet our targets.
The worrying signal that this policy has sent, not just for investor confidence, is that the Government have abandoned their previous commitment to a technology-neutral approach at a time when the overriding priority must be decarbonisation at the lowest possible cost, regardless of what technology best aids that. So I support the Bill as it stands and I oppose the amendments.
Dr Whitehead
I do not rise to head up the debate, because my hon. Friend and fellow Front-Bench spokesman the Member for Norwich South has already done that admirably this afternoon. We are debating a number of amendments together in a process whereby something is potentially coming back into the Bill where it was not previously. Therefore, a principal series of amendments and consequential amendments to those amendments are being debated essentially at the same time, although I am sure we will have an opportunity to disentangle those two aspects of our debate; I am talking about the formal process of putting Government amendments 1, 2 and 3 to the Committee and considering whether we should divide on them, subsequently to which amendments to the amendments may then be considered formally. I understand that that is how we are going to do it.
Although Opposition Members are relatively confident that the strength of the argument made so far means that those original amendments will not pass, it is nevertheless possible that they might. We need to be clear in this debate about what the consequential amendments consist of. I will restrict my remarks solely to amendment (a) to new clause 1, which is in my name.
The hon. Member for Coatbridge, Chryston and Bellshill has done this Committee a service by setting out the range of issues relating to the grace periods, which are a consequence of the proposal to put back into legislation a clause bringing the renewables obligation to an early halt. I appreciate that we have in the Committee what one might call the “windy caucus”—the “ultras” is another way of describing them—who would have no grace periods and feel the process should have stopped immediately, the day after the general election. However, we have grace periods, and if one is to have them, it is important we get them right.
Grace periods should be reasonably equitable. Clearly, it is not equitable if instead of being a slamming shut of the door in its own right, a grace period slams another series of doors shut in the process of being exercised. There are a number of instances where that has apparently occurred.
One of the most egregious instances of a door being shut by a grace period when that grace period should be holding the door open is where applications have gone down exactly the path set out in the Conservative manifesto for wind farms—that is, local people have the final say on wind farm applications. They have specifically gone into the process of seeking approval. Without strings attached, without attempting to go for non-determination and without attempting to go straight to appeal groups, they have wholeheartedly gone into the process of properly consulting and seeking agreement at local level and have gone through all the procedures relating to local planning committees. Indeed, they have done exactly what would be envisaged for the process in the future, were the second part of that Conservative manifesto commitment to have been put into place.
Those particular schemes have not only gone through that process but received planning consent through it—that is, they have applied for consent and a planning committee has considered it and consented to the application, with all the issues concerning the consent having been resolved.
As hon. Members will know, in all planning arrangements—this is not only a question of wind farm applications—a number of sub-conditions may be discussed; for example, section 106 arrangements or, in some instances, a variation of a previous planning condition that needs to be discussed. Essentially, the degree or the qualification has been passed, but the degree ceremony has not been held and the certificate has not been given out, yet to all intents and purposes that application has been determined and the scheme is therefore in the pipeline. It is in the pipeline because it has been agreed by local determination.
Housing and Planning Bill (First sitting)
Matthew Pennycook Excerpts(8 years, 6 months ago)
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Helen Hayes
Q 6 Finally, are you concerned that starter home development will be free from the community infrastructure levy and section 106 contributions?
Richard Blakeway: As we understand it, so-called exemption sites are free from the community infrastructure levy. Our expectation, however—our strategic land assessment has done a tremendous amount of work to identify brownfield opportunities—is that there are probably not many exemption sites in London where that would apply. Where it applies otherwise—clearly, starter homes should apply to all significant sites—affordable housing is already exempt from CIL, and it is just another affordable housing product.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
Q 7 May I press you on the impact of the starter homes clauses on more innovative models of affordable and intermediate housing? I am thinking, for example, of Pocket housing, which the Mayor has been very supportive of, and where eligibility is secured in perpetuity through a section 106 agreement. Do you think those clauses will have an impact on those types of models and their ability to expand across the capital?
Richard Blakeway: I emphasise the point again that starter homes are not a substitute for affordable housing and are not intended to be a substitute for all intermediate products. We would like to see both working alongside each other, and we would like to see products such as Pocket. The GLA is delivering a long-term investment partnership. I am sure Pocket would say that many of the people it helps to house are within the general expectation for starter homes—they are below the age of 40, for example, and within the price bracket to which the house-price cap applies. It is very important that starter homes work in London. They are a really important addition to help people achieve their aspiration to own a home, but they have to work alongside other intermediate products.
Matthew Pennycook
Q 8 As the Bill stands, have you been assured that they are an addition and will not simply squeeze out other affordable housing in the capital?
Richard Blakeway: A number of the key points will be articulated in the regulations. What is on the face of the Bill at the moment means that starter homes can certainly work alongside other intermediate products in the capital. The key bit will be what is in the regulations. One of the key issues is the quota of starter homes that will be required, which will be articulated in the regulations. There has been speculation that it will be 20%, but we are waiting to see the regulations. It is important that they work alongside each other. Just to pick up on your point, we have a number of intermediate products where the investment is locked in in perpetuity, and we would like to see that continue.
Mr Bacon
Q 9 Mr Blakeway, what possibilities are there for the provision of serviced plots within the GLA area for people who wish to build their own home, either individually or in what the Self-build and Custom Housebuilding Act 2015 calls “associations of individuals”, who come together to build their own houses?
Richard Blakeway: We think there is a real role for both custom build and self-build. On the identification of plots, we are working closely with local authorities to compile a list of potential sites. In addition, the GLA is acting as one of the Department for Communities and Local Government’s vanguards and establishing a register of people with an interest. We are seeing a phenomenal rate of interest in London: more than 600 people have signed the register in the past three months. People often look at London and say that custom build and self-build cannot work in the capital, but we do not believe that is the case. We think it has a role to play in the capital—particularly in outer London. We also think that custom build, in particular, has a role to play among conventional house builders and housing associations. There is absolutely no reason why you cannot reserve a proportion of plots for custom build on a large regeneration scheme or development site.
Matthew Pennycook
Q 35 I would like to return to part 4. There is nothing on the face of the Bill that would ensure the proceeds from the sale of high-value council homes—or payments to the Secretary of State, in cases where local authorities do not want to make those sales—will be kept in the local area. Miss Roe, you told the Evening Standard in July that as a result of this policy:
“What we will see is a reduction in the number of social housing units in London and more units built outside.”
There are concerns in rural areas, too, that we will not see that link. Let me ask all the witnesses—what would you like to see, or what would need to be amended in the Bill, to give you certainty that the proceeds will be kept locally, to meet housing need in the area from which the proceeds have been taken?
Philippa Roe: First, I was misquoted in that article—that was not quite what I said, although it has been used and used.
As Richard Blakeway said, we understand that London is going to generate far and away the largest proceeds from this measure, given the value of our housing stock. The Government need to find a solution to funding right-to-buy sales outside London, and there is an acceptance that some of the proceeds will have to go outside London. However, there needs to be a mechanism within the regulations for keeping most of that money in London, because it is London that has the biggest housing crisis. It seems sensible to use that money to create housing where it is most needed, so I am hoping that we can find a balance.
Matthew Pennycook
Q 36 You say there is an acceptance that some of the proceeds will leave the capital. Do you think, therefore, that the amendment tabled by the hon. Member for Richmond Park (Zac Goldsmith) to keep the proceeds within London is unrealistic?
Philippa Roe: I would like him to see it succeed. Whether the Government will accept that, given the financial pressures they will face with right-to-buy sales outside London, I do not know. It is worth trying, but I am not sure whether he will succeed.
Mr Bacon
Q 37 Councillor Glanville, you said that you want to build, in your authority, affordable housing on land that you own. You emphasised the importance of exemptions. Are you promoting housing co-operatives as a way of delivering affordable housing? Perhaps the other witnesses could answer for their own authorities.
Phil Glanville: To answer that question, we have quite a few housing co-operatives within the borough already. They tend to be managing existing stock that they have been bequeathed through CPOs in the past and through the squatting movement in the ’70s and ’80s. As far as I am aware, they are not currently seeking to develop. We are focusing on working with housing association partners and our own new build programme that will deliver 3,000 homes over 10 years, 52% of which will be truly affordable. The rental properties there will be council rented homes on our land, making best use of our assets. We are bringing forward 18 sites. In fact, the borough is the largest house builder of any kind within Hackney, including building homes for sale, which is important as we are not against building homes for sale or for low-cost home ownership; we just do not think that the Bill will help with that process in boroughs such as Hackney.
We are also doing regeneration with our partners. We are tripling the density of an estate called Woodberry Down in the north of the borough, where we are building 5,500 homes over the next 20 years. We have no lack of ambition to develop such homes within the borough. With some of the freedoms that Councillor Roe mentioned around the HRA, we could do a lot more.
Dr Blackman-Woods
Q 58 I was struck by your opening remarks, where you all talked about having infrastructure to support housing development and building housing in communities. I wonder whether you think the Bill should do more to address the need for infrastructure and what you think about the provisions that could exempt some starter home sites from paying CIL. Would you like to see that amended?
Sir Steve Bullock: One of the things that will be important is that the Bill does not get in the way—this will largely be around the exemptions—of some of the big and complex schemes that we are doing. Those are, in effect, sweating land that is already there and intensifying the development. Some of that takes time and there are risks that we need to avoid. If the number of leaseholders on a development goes up and you are planning a comprehensive regeneration, you can make it unviable. It is those kinds of things. Crucially, working across Departments will be important. I am not sure whether the Bill can help that, but we need to be sure that it does not hinder that.
Martin Tett: I will comment on the generality. I mentioned the importance of infrastructure at the beginning. When I go to public meetings, it is the big topic raised by local communities whenever a development is talked about, and it is obviously significant when you have a major development of many hundred houses. There is also the cumulative impact of lots of small infill developments. People tend to ignore the impact of 10 or 15 houses, but if you have lots of them, particularly where large houses are being redeveloped in rural areas, you can cumulatively have a significant impact. People see the difference in their commute, their journeys and so on. There is a large impact in the south-east, which is already densely populated and seeing significant housing growth. The need to address the issue of adequate contributions towards local infrastructure is fundamental.
Philippa Roe: Some parts of the Bill are still being ironed out and discussed, such as those relating to who has which powers between the Mayor and the London boroughs. It is absolutely vital that any housing development regeneration is driven by the boroughs, because they have a far better understanding of the infrastructure impacts in their local areas. I just cannot see how a top-down approach, given how diverse the 33 boroughs are, can work in that holistic approach.
Phil Glanville: The 20% discount for starter homes is probably not enough to be offset in terms of the community infrastructure requirements. There is an element that some of that is local decision making. We decided to exempt the Woodberry Down regeneration from CIL, because of the challenges of the infrastructure: building the new schools, delivering the employment opportunities and delivering the public realm. You need flexibility at a local level to make some of those decisions, but I am not sure that the 20% discount warrants a full exemption.
Matthew Pennycook
Q 59 There is broad agreement that we need to increase supply, but as you said, Councillor Glanville, affordability is key. There is no statutory definition of affordability, and the Bill gives the impression that the working definition is 80% of market rent. Do you think there is an opportunity here to define what we mean by affordable?
Philippa Roe: No, I think that would be too prescriptive. The definition of affordable is up to 80% of market. That is absolutely crucial because it will be different in different boroughs. Each borough has different needs. For example, in Westminster about a quarter of housing stock is social housing; about 1% or 1.5% is affordable for that next tier of low to middle-income workers, and the rest is very expensive, either to rent or to buy.
Our real gap is that intermediate. Our businesses are telling us that that is a real gap. All the supermarket shelf-stackers, people working in our restaurants and theatres and so on, need homes where they can commute at a reasonable cost and time. That is Westminster and we are quite different from perhaps an outer London borough or Tower Hamlets or, indeed, some of the boroughs round the table. As long as we have the flexibility of up to 80%, given as the definition of affordable, then each borough can do it appropriately for their area.
The Chair
Without being impolite to the other witnesses, I fear that we have come to 10.45 am, which is the end of our allotted time for the session. Thank you very much to all four of our witnesses for their extremely useful and interesting evidence. I ask the next panel to come to the floor.
If there is anything members of this panel want to say and have not had an opportunity to say, we welcome written evidence at a later stage.
Examination of Witnesses
The Chair
Q 60 This is the final session of the morning, running to 11.25 am, when I will cut us off quickly. I welcome our final panel, Mr Orr and Ms Butters. Will you kindly introduce yourselves for the sake of the record?
David Orr: I am David Orr, chief executive of the National Housing Federation.
Sinéad Butters: I am Sinéad Butters, chief executive of the Aspire Group, but today I am chair of PlaceShapers and represent the views of 116 local community-based housing associations across the country.
Matthew Pennycook
Q 61 Mr Orr, regarding the voluntary agreement that you came to with Government over the right to buy, many housing associations voted no, many were unable to convene their boards and come to a decision, yet clause 58 of the Bill brings them within the remit of a compliance mechanism under the home ownership criteria. What options do those housing associations have, given that this will be a statutory measure imposed on them?
David Orr: That is an interestingly framed question. The offer that we put to our members and then to Government was a voluntary deal on the right to buy that would cover the whole sector. Everyone who voted, even the small number who voted no, understood that what we were crafting was an offer that included the whole sector. Indeed, quite a number of the individual responses that we got from people who said no none the less said, “We understand that if the overall result is yes, we will be involved.”
Matthew Pennycook
Q 62 And those that did not have time to reply?
David Orr: In overall terms, that was a relatively small number. We have continued to have conversations with those organisations, as we have with all of our members. People had the opportunity to take part in that vote; they expressed their views; many of those who voted yes had reservations that they described to us; some of those who voted no said that they could see some value in it. None of this was easy and straightforward. We have continued to be in regular contact with all of our members about the implications. We will be working with Government and others on a piece of work to craft more of the detail that follows from the deal.
Matthew Pennycook
Q 63 Following on from that, there are lots of areas of the Bill where we await further regulations and statutory instruments. What would be the sector’s reaction if the Government did not deliver on commitments given under that voluntary deal?
David Orr: I have been asked this question on a number of occasions and my answer is always the same: this is a voluntary deal. If the Government, for whatever reason, fail to meet the commitments that they have agreed to under the deal, the deal falls. If we fail to meet the commitments that we have agreed to under the voluntary deal, the deal falls. I have no expectation that that is going to happen—I think that the core principles that we wrote into the deal will be the basis on which it operates, but if not the deal will fall.
Helen Hayes
Q 64 Some of the housing associations that recently appeared before the Select Committee on Communities and Local Government indicated that they thought the likely impact of this Bill would be fewer homes delivered by housing associations for social and other forms of affordable rent. I wanted to ask both of you, first, what you think the net impact of the Bill will be on housing associations’ delivery of social and other affordable forms of homes for rent and, secondly, whether you fear developers deserting housing associations in favour of delivering starter homes themselves?
Sinéad Butters: Our members have raised significant concerns about the potential erosion of social rented housing as a result of a combination of impacts. That combination includes the pay-to-stay option, the starter homes initiative and, depending on what is replaced under right to buy, the erosion of social housing under right to buy. What I would like to make absolutely clear is that our members collaborated with the Government on the home ownership options and see home ownership as one part of something—it is not “either/or”, it is an “and” for our members.
The impact on the future for social rented housing prompts the question, where will the poorest live? If there is nowhere for poor people to live in future, one might imagine that poverty is decreasing, yet I do not see that. It is a very real question. We would ask for the flexibility to have local solutions in the areas where we work closely with local authorities to determine what is needed in that area, including a range of social rented housing, home ownership options, market rent and sale. Our members would embrace the opportunity to work locally to make sure that what the community needs is what the community gets.
David Orr: The Bill itself is a relatively small part of a combined package. If we are going to build a whole lot of new homes we need land first and foremost. Anything that this Bill can do to help to release land for new home building would be helpful. Like Sinéad, I have anxieties about the competing priorities in the space where section 106 presently operates. It has been a useful mechanism for delivering affordable homes for rent and for shared ownership, and a useful mechanism for volume developers to front-end the cash for their developments. If all these things are squeezed out by starter homes, the impact is likely to be a reduction in the overall supply. If we are able, as Sinéad has said, to have an environment where we see significant growth in new home building across all tenures—some for market sale, market rent, social rent, shared ownership, starter homes—that is where we need to be. We need to have this mixed-tenure package. The new homes that we build need to be across all tenures.
With regard specifically to the ability to provide social rent, I think that the Government have made it clear that they do not consider social rent to be their top priority. It remains the top priority for housing associations. The spending review will obviously be an important component, depending on what money, if any, is available to support that. Right to buy, certainly in some markets, has the potential to liberate assets that would then be turned to cash and could be used to build social rented homes. That will vary according to the different markets in different parts of the country. There is a range of factors that will influence this, but I am anxious about starter homes appearing in the section 106 space and crowding everything else out.
Matthew Pennycook
Q 88 Mr Orr, you have clearly given an indication that you would like to see more freedoms around rents. Clause 73 specifies further reductions in regulations to come. What specific freedoms will the National Housing Federation be pressing for?
David Orr: We have said for a long time that housing associations must have much greater freedoms to manage their own assets. We have to change the present disposals consent by which a housing association requires the consent of the regulator to dispose of any building or any asset. I just gave the example of the sale of a £1,000 equity share in a property, which at the moment requires a valuation of the property and a specific disposal consent. That is just completely absurd. We need to remove all that kind of unnecessary bureaucracy, which basically leaves the regulator with a determining say in how an independent social enterprise uses or disposes of the assets that it owns. There are a number of other things which follow from the ONS determination which need to be looked at again, and also the circumstances in which the regulator might be able to intervene at board level. We need to be much clearer about what those relationships are.
Matthew Pennycook
Q 89 And specifics on allocations?
David Orr: I think that we need to have a different approach to nominations and allocations, which is much more about local negotiations between housing associations and local authorities, and then contractual relationships which are potentially subject to change. Housing associations do not want to move away from the business of providing housing for people who are in the greatest housing need, and working with local authority partners to deliver it. However, they do want to be in a position where they can say that if they are charging a rent which is 70% of the market value, they do not think it is appropriate to allocate that to someone who is in the greatest housing need far away from the jobs market, and who will become more trapped in benefit dependency by being offered that product. We need to have greater variation in those local discussions.
Tax Credits (Working Families)
Matthew Pennycook Excerpts(8 years, 10 months ago)
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Matthew Pennycook (Greenwich and Woolwich) (Lab)
I welcome this important debate, which I am sure, given the volume of correspondence that I and other hon. Members have received on the subject, is being watched closely by a great number of my constituents.
As other hon. Members have said, we do not know the precise details of what the Chancellor will unveil in his Budget tomorrow, but if the assault on tax credits is anything like what has been trailed in the press over recent days, many thousands of families in my constituency should be bracing themselves this evening for a big hit to their household budgets.
I will briefly examine the implications for my constituents of the potential proposal that has received the most attention over recent days: a reduction in the value of the child element of child tax credit back to its 2003-04 level in real terms. That entitlement is paid to approximately 9,300 families in my constituency and benefits 17,500 children. More than two thirds of those families are in work and the annual value of the child element for each is £2,780. Scaling it back to its 2003-04 level would constitute a reduction in support of 30%, costing those families a staggering £845 a child. A reduction in a family budget of that scale would be deeply damaging. By its very nature, the impact would be felt disproportionately by women, ethnic minorities and single-parent households like the one that I grew up in.
The Chancellor is likely to defend taking the axe to tax credits by pointing to the much-vaunted pledge to lift low-income households out of tax altogether or, in the Prime Minister’s words, to end the “merry-go-round” of people paying tax while receiving state support. They are both tilting at straw men. As my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) mentioned, more than half the families who claim tax credits already pay no tax at all. For those who do pay tax, the likely options of bringing forward a rise in the personal allowance threshold or a rise in the national insurance threshold, while easing the strain, will nowhere near compensate them for the likely scale of reductions in in-work support.
Few, if any, now believe that the growth in tax credit support that occurred over the past 17 years can be repeated, but let us be clear: tax credits are necessary and they will continue to be so, not just to incentivise employment and reduce child poverty, but to address the underlying flaws in a low-pay, low-skill, low-productivity economic model that requires significant amounts of in-work support. For all their flaws, tax credits have provided a lifeline for those on low and middle incomes, and they will still be necessary in some form, even if the UK becomes a living wage economy overnight.
Of course we must be open minded about the need to simplify what is a fiendishly complex system, and we should question rigorously the sustainability of the underlying economic model that has made tax credits necessary. While doing so, let us not delude ourselves that another, deeper, round of cuts to tax credits will do anything other than cause untold hardship for thousands of families in my constituency and across the country who rely on state support to make the most of their lives.
The Economy
Matthew Pennycook Excerpts(8 years, 11 months ago)
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Matthew Pennycook (Greenwich and Woolwich) (Lab)
Thank you, Mr Deputy Speaker, for giving me the opportunity to make my maiden speech. I offer my congratulations on your re-election. It is a privilege to follow the hon. Member for Cannock Chase (Amanda Milling). I pay tribute to hon. Members on both sides of the House who have made their maiden speeches today and commend their excellent contributions.
For new Members like me, speaking in this Chamber for the first time is a deeply humbling experience. It is made all the more humbling for me by an awareness of the formidable predecessors who have represented the area that I call home and that I now have the privilege of serving in this place. It was on Blackheath in 1876, in an open-air meeting attended by 10,000 of his Greenwich constituents—“those rabid cockneys” in the words of Disraeli—that Gladstone first denounced the Bulgarian horrors, and in so doing reforged his links with popular radicalism and set himself on a journey towards a second Ministry.
It was in Woolwich in 1903 that Will Crooks, the son of a ship’s stoker who had endured the privations of the workhouse, won a spectacular by-election victory over his Conservative and Unionist opponent to become the fourth ever Labour Member of Parliament. It was Woolwich in February 1950 that gave Labour’s greatest Foreign Secretary, Ernie Bevin, a final berth from which to serve out his days as one of the chief architects of our post-war world.
Over the course of 23 years of distinguished service, my immediate predecessor, the right hon. Nick Raynsford, more than earned his place among such illustrious company. I would like to pay tribute to him, not just because it is customary but out of a deep sense of gratitude and respect. Nick’s efforts over many decades helped transform Greenwich and Woolwich, and his contribution to our national life was no less impressive. As well as an effective Minister and a skilled parliamentarian, Nick was a diligent and caring constituency MP who fought tenaciously to better the lives of his constituents. He was, I know, admired on both sides of the House, and it is both an honour and an enormous challenge to take on his mantle.
Greenwich and Woolwich has an extremely rich history, as the millions of tourists who visit my constituency each year discover. The historical centre of Greenwich is a breathtaking blend of history, science and architecture. It has been the residence of Tudor kings, was the birthplace of classical architecture in England, is the spiritual home of Britain’s maritime past, was the place where the heavens were first comprehensively mapped out, and is where the world’s prime meridian runs across an ordinary London pavement.
Yet as imperceptibly bound to its maritime and monarchical past as my constituency is, it has another proud history—one that is far too often overlooked, but which is just as inspiring. It is a history of industry, innovation, progressive social change and self-organisation, and above all of people who have come from every part of these islands and beyond living together and looking out for one another in diverse and tolerant communities.
The area was once a great manufacturing hub that teemed with the noise of shipbuilding, engineering, Europe’s biggest glassworks at Charlton and the colossal Royal Arsenal at Woolwich, birthplace of both the Royal Artillery and the Royal Engineers, which employed 70,000 people at its peak during the first world war. It has been a centre of research and discovery, which in the 1850s produced the earliest telegraph cables and the first to be laid across the Atlantic, by Brunel’s vast ship the Great Eastern. It has been a breeding ground of progressive politics, which gave birth to one of Britain’s first building societies, the Woolwich Provident, one of its first co-operatives, the Royal Arsenal co-op, and the first mass membership Labour party. It is a place whose people, confronted over the years by hardship, industrial decline, violence and sadly even terrorism, have none the less remained resilient, vibrant and optimistic for the future.
My constituency is now undergoing rapid change. Much of that change is extremely positive, but significant challenges remain, and not just how we get Charlton Athletic back into the premiership. Inequality, deprivation, poverty, endemic low pay, long-term and youth unemployment, strained public transport services and a chronic lack of genuinely affordable homes to rent or buy—all these issues will need to be tackled in the years ahead if we are to have an economy that is sustainable and works for all my constituents. I am determined to do everything in my power to make sure that they are tackled in the years ahead, and I am extremely grateful for the opportunity that I have been given by the people of Greenwich and Woolwich to be their voice in this place and the champion and servant of this great constituency.