Housing

Nick Raynsford Excerpts

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.

--- Later in debate ---

[Robert Neill (Bromley and Chislehurst) (Con)]

I start by warmly welcoming the Minister for Housing, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), to his new job and to a Department that I hope he will enjoy. It is an important job that he takes on, and I assure him that his task will be made easier by the support of an outstanding Secretary of State— I regard it is a matter of great pride to have worked with him for the past two years. So I wish my hon. Friend well. I know that he will continue the work the Government have already done.

With respect to the hon. Member for Birmingham, Erdington (Jack Dromey), who was always a courteous and affable opponent, I must say that there was more than a little collective amnesia in his speech and in the interventions from Opposition Members. I refer to collective amnesia because of the Labour party’s persistent failure over 15 or more years—throughout its time in government—to deliver on housing. I include in that its under-delivery of affordable housing. The net result was the lowest amount of house building in peacetime since the ’20s and—this is particularly troubling—a decline of about 421,000 in the amount of social rented stock available.

The Opposition showed collective amnesia in their assertion that we should place faith in local councils. I agree with that, but the Labour Government trammelled the ability of local authorities to take decisions on planning matters that were in the interest of and reflected the needs and priorities of their local communities. They also showed collective amnesia over the failure of their dirigiste, top-down, target-imposed system for delivering housing on the ground, and over the sometimes perverse impact that unduly rigid adherence to targets for affordable housing and other planning obligations had on the delivery of viable sites.

My hon. Friend the Minister knows that the Government have already started the important work of building greater flexibility into section 106 agreements. I hope that he will continue that work, because it is important to bringing forward more sites and keeping them viable.

[Mr Raynsford]

May I express my sadness that the hon. Gentleman is no longer on the Front Bench? I did not always agree with him in that role, but he was always a courteous and good Minister, and we miss him. However, may I also ask him to direct his claims of amnesia towards himself? He will recall from the debates on the Localism Act 2011 that, contrary to what he has said, under the last Government the output of new homes, according to the measure that his Department used to use to record the figure—and correctly so; that is, net additions to the housing stock—rose year on year until the recession, to 200,000 net additions in 2007. When does he expect the present Government to get anywhere near 200,000 net additions to the stock?

[Robert Neill]

I am grateful to the right hon. Gentleman for his comments. It is always a pleasure to exchange arguments with him. He must bear in mind the reduction in affordable homes of about 250,000 over that period. Whatever his intentions, the fact is that there was a consistent under-supply throughout the Labour Government, and we are now reaping the consequence.

--- Later in debate ---

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

May I first draw attention to my interests, as declared in the register?

I intend to focus on three themes. First, I will debunk some of the myths and, frankly, the abuses of statistics that we have heard today from those on the Government Benches. Secondly, if time allows, I will offer my analysis of why we face this dire situation. Thirdly, I will suggest one practical way the Government could and should act to start new house building and help to get us out of the mess.

The Government know that the housing situation is dire—their own statistics tell the story clearly—but rather than face the facts, they have been pretending, through what is, frankly, a shameless abuse of statistics, that the picture is rosier than it really is. The former Minister for Housing was at it all the time and the Prime Minister was at it today, claiming during Prime Minister’s questions that housing starts were up. The Government amendment to the motion repeats the error and even the new Minister for Housing, for whom I have great respect and whom I welcome to his post, repeated the same incorrect claim.

The only way in which the Minister can justify the completely non-credible claim that housing starts are up is by comparing the latest figures with those for 2009. Why 2009? There is no statistical justification for plucking out of thin air a year that simply produces a good outcome. It is as if a Health Minister, faced with an epidemic, chose to compare fatalities during their period with those of 1348, when the black death was ravaging the country.

The truth of the matter is that 2009 was the depth of the recession and the figures were very low, but they recovered because the Government of the time had put in place measures to help recovery. The second quarter of 2010 was a significant period because government changed hands. I do not think that this Government can claim, although the previous Minister for Housing tried to, that the figures for that quarter were their responsibility, but by that quarter, starts were back up to 33,000.

If the new Minister looks at his figures, as I hope he will—his officials will be able to guide him on this—he will see that in no quarter since then has that figure been exceeded. In the latest quarter, the total number of new starts was just 23,000—10,000 fewer than in the second quarter of 2010. Can we put an end to that abuse of statistics? Yes, the recession had a dire effect, but we were coming out of recession when the Government changed, and since then housing has been flatlining at levels hopelessly inadequate in comparison with the need for new housing. We have to find ways of stimulating new growth.

Time is limited, so I shall go to my final point—my modest suggestion about how the Government can get some new house building started. The Minister will know that the worst hit area has been social housing because of the serious cuts made in the early months of the coalition in the social and affordable housing programme. That has drastically cut back investment in new social and affordable homes. I support the Government’s measures to try to lever in more private finance, although there are disadvantages to do with rent levels, which will have knock-on consequences for housing benefit. The measures are nevertheless an intelligent way of trying to get as much building as possible. However, Government investment is not adequate or sufficient.

I know that the Government will say, “We can’t put any more money in,” so let us look at what is not being well spent at the moment. There it is, in the Minister’s own Department—he has only to look at his budget to see £250 million a year, over the next three years, allocated to the new homes bonus. I wholly disagree with the hon. Member for Mid Dorset and North Poole (Annette Brooke), who spoke earlier about the bonus. It gives absolutely no benefit at all—there is no evidence to show any positive impact that it has had. The scheme itself is opaque. The linkage to the granting of planning consent, which it is supposed to incentivise, is so tenuous that, not surprisingly, no serious commentator believes it is having a beneficial effect. But it is very expensive, costing £250 million a year over the next three years.

If that money were reallocated to direct investment in social and affordable housing, that could help to get things going. Linking schemes for social investment with private investment and mixed developments would help give greater confidence in the market as well. Steps can be taken, but they require the Government to be intelligent in their use of money and recognise that they have to find ways of investing to get us out of the serious mess we are in.