Finance Bill

Nick Raynsford Excerpts

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.

--- Later in debate ---

[Graham Jones]

Does my right hon. Friend agree that the Treasury does not seem to be taking account of evidence which shows that the cost of private renting housing, per unit, is roughly twice the cost of social housing? At that rate, the more reliance there is on the private rented sector, the higher the housing benefit will be.

[Mr Raynsford]

I entirely agree. As my hon. Friend the Member for Birmingham, Erdington pointed out, it is important to support the private rented sector, but it must be helped to do the job it does best, which is providing for people whose incomes are higher than the incomes of those who have traditionally depended on social housing.

The Government have created a problem for themselves by trying to use the private rented sector, with high rents, as a substitute for social housing, with lower rents. That is inevitably a recipe for more dependence on housing benefit. It traps people who are dependent on benefit, which is bad for them, and it increases the bill for housing benefit. What we need are policies that encourage both the growth of a private rented sector for people who can afford to pay a market rent for their housing and will not be dependent on benefit, and, in parallel, the revival of a social housing sector that meets the needs of those who require housing at sub-market rents.

[Sheila Gilmore]

Sometimes the issue of private rents is presented as though it involved people living in mansions, but many of those high private rents are actually charged in former council properties. Ironically, two tenants living next door to each other may both be receiving housing benefit, but the rents involved may be very different. People who are not living in mansions are simply having to pay high rents.

[Mr Raynsford]

My hon. Friend has made a fair point about the fact that the rise in rent levels means that many people are paying above the odds for accommodation that is not particularly good. However, that is a product of shortage. We need an increased supply of good-quality private rented housing which commands a market rent. There will be people who are perfectly happy to pay that rent, and to benefit from good-quality accommodation as a result.

As my hon. Friend the Member for Birmingham, Erdington said, we need to bear down on exploitative landlords who are letting substandard properties and charging above the odds for them. We also need to ensure that councils and housing associations provide an adequate supply of alternative housing for people who genuinely cannot afford to pay a market rent, and who would otherwise be left either dependent on housing benefit or homeless.

[Ian Mearns]

My right hon. Friend is making some very powerful points. The private rented housing market is very diverse, but in areas such as mine in Gateshead in the north-east of England, where we have a substantial private rented sector, unfortunately much of the property in that sector is housing of last resort and people are having to pay inflated rents for it—rents that are much higher than they would have to pay for much higher-quality socially rented housing in the neighbourhood.

[Mr Raynsford]

My hon. Friend makes a very good point that again illustrates just how dire the consequences of current policies are for people in need of housing.

If the current housing policy and current housing market are bad news for people in housing need, they are also bad for the economy. As my hon. Friend the Member for Birmingham, Erdington rightly emphasised, there would be huge economic benefits from an expanded house building programme. Not only would we see an increase in employment and demand for materials, most of which are sourced within the UK, but there would be huge impacts on the supply chain.

[Lisa Nandy (Wigan) (Lab)]

I agree with what my right hon. Friend is saying. Does he agree that there would be a particular impact on young people? There are more than 1 million young people in this country who are desperately in need of a job. Many young people in Wigan were employed in the construction industry and on apprenticeships before this Government came to power, so they would experience a very positive effect from the changes he is describing.

[Mr Raynsford]

I entirely agree. I happen to be the president of Youthbuild UK, which is one of the bodies that has been campaigning specifically for more effective opportunities for young people, in particular disadvantaged youngsters, to get the training and skills necessary to secure employment in the construction industry. I wholly endorse what my hon. Friend says.

There are benefits in terms of the economy. There are benefits in terms of employment. There are wider supply chain benefits. I am thinking in particular of all the industries that provide the materials, furniture, furnishings and equipment that go into houses when they are built. When people move into a house, they need carpets, furniture and various fittings, and all of that additional demand will be good for the UK economy. There is therefore a real multiplier effect from an expanded house building programme.

It is not just about new homes. As has been said, it is also about retrofitting existing homes that are in poor condition. Here the Government have got themselves into another mess, but not through lack of a good idea. The idea behind the green deal is a sound one: that we try to put in place a mechanism that enables people to borrow the money required to fund improvements in the energy efficiency of their home and they can then pay for that out of the savings they make through reduced bills because the home demands less energy. That is in principle a very good idea. The problem is that the scheme the Government have managed to come up with after quite a long gestation period has proved so complex, opaque and financially disadvantageous that it is at present struggling to get any takers.

I admire the ambition displayed by the Minister responsible for the scheme in trying to get it off the ground. He has put a huge amount of effort into trying to promote it, but as it is currently constituted it is simply not attracting the interest of the British public, and without doing that it will not fly, so we will have a continuation of the problems of energy inefficient homes that are bad for the environment because they pour out unnecessary carbon emissions. That will be bad for the fuel poor who end up paying more for fuel than they need to, and it will be bad for the construction industry because all those potential jobs in retrofitting existing homes will not be taken up.

[Graham Jones]

Does my right hon. Friend agree that it is an indictment of the Government’s shambolic housing policy that they rejected the idea that private landlords should in the near future be forced to implement the green deal and energy efficiency measures in properties? The Government have put that backstop date back to 2018, which allows private landlords still to have houses that do not meet the lowest of energy ratings for many years.

[Mr Raynsford]

I am grateful to my hon. Friend for highlighting that, because it is a cause of real concern that the energy efficiency programmes that were in place have come to an end, and as a result of the introduction of the new ones—the green deal and the energy company obligation programme—the level of activity on energy efficiency retrofitting has plummeted.

I talked to a housing association, active in my constituency, that has done a magnificent retrofit of about 1,000 properties in Charlton. That has hugely improved the comfort of its tenants, who can now keep warm at much less cost. It has improved the appearance of the estate and has won plaudits from everyone, and it was done with a work force who included a number of young unemployed people from the area, who were trained specifically to be able to take up the advantages of employment as part of the scheme. It was an admirable scheme. When I was congratulating the housing association on it, the one and only disappointment came when it told me “Well of course this was funded under the old community energy saving programme—CESP—which made it possible and has now ended. We would probably not be able to do this again if we were starting from scratch today.” That is an obvious problem.

[Bill Esterson (Sefton Central) (Lab)]

My right hon. Friend is talking about the ending of schemes. Does he agree that this is not just about renovating properties where people are living, but about the large number of empty properties in boroughs such as mine which are crying out to be renovated? They are in places where people want to live, where communities can be recovered in the way he just described, but nobody is living there now. Does he agree that the Government need to revisit the issue of funding for empty properties?

[Mr Raynsford]

The thrust of my whole speech is about the importance of the Government finding more effective measures to stimulate investment in housing in all sectors. That includes bringing empty properties into use, improving the existing substandard housing stock and building new homes that are needed to increase the supply. The case is overwhelming, but, sadly, as the figures cited in this debate so far have shown, the Government are failing to meet the needs. I am not going to go into that in detail, because it has already been covered.

I wish to draw attention to the new homes bonus. It an extraordinary scheme, and our Front-Bench spokesperson made some pertinent remarks about it. It was launched by the Government as, supposedly, the panacea for the problem of opposition among some local communities to new house building in their area. The theory was that if a financial incentive was given to councils and to communities for agreeing to build new homes, we would get a different attitude—we would have enthusiasm for new house building rather than hostility. And so the new homes bonus was launched.

The new homes bonus is a very expensive scheme. As the National Audit Office report demonstrates, it is costing £668 million in the current year, but that is due to rise to £905 million next year, to £1.1 billion in 2015 and on beyond that, because it is a cumulative bonus that is paid for a six-year period. I have given only the individual one-year costs. When we add in the cumulative costs derived from previous years’ awards, we find that by 2018-19—that is six years ahead, so at the end of the six-year period—on current trends, expenditure on the scheme would be £7.5 billion. It is a very, very expensive use of public money, which is mostly taken from local authorities. The Government talk about it as though it is a Government scheme, but they are putting in only £250 million a year, with the rest coming as a top-slice from local government funding.

[Graham Jones]

My right hon. Friend is making a strong argument about the new homes bonus, which is top-sliced from local authorities and given back to those who build. On other policies, such as empty homes and retrofitting, local authorities that have had their income reduced substantially, and are in low-demand areas such as mine and unable to build new homes, encounter a perverse incentive, whereby a slew of issues, such as empty homes and dealing with the private rented sector, cannot be dealt with. The money is simply given to authorities that are cash rich and are building more homes, and it is not really in their interests to build any more because they have got enough money.

[Mr Raynsford]

My hon. Friend makes a very good point. The NAO made an absolutely damning comment—I am astonished that the Government have not looked at this one sentence and said that they clearly need to reconsider the scheme. It is, quite simply:

“We found no association between individual local authorities’ planning application approval rates and their numbers of homes qualifying for the Bonus.”

There we have it: the NAO can find no correlation between the granting of planning consent and the awarding of the bonus, yet that is what it is supposed to do—it is supposed to incentivise councils to improve their performance in granting planning consent. No wonder the Government are embarrassed.

Rather than doing what they ought to by carrying out a thorough and quick review of the scheme and winding it up if it is proved to be as ineffective as the NAO indicates, the Government have done another extraordinary thing and announced in the spending review last week that they will take £400 million of new homes bonus money and transfer it to local enterprise partnerships. It is not their own money—only £250 million is Government money, and the other £150 million would otherwise have been paid to local government. It will now go to the LEPs. Whatever happened to localism? I thought the Government’s mantra when they came into office was that they would allow more decisions to be taken locally. This decision muddies the waters and it will be even more confusing to work out where the money goes.

As my hon. Friend the Member for Hyndburn (Graham Jones) pointed out, there is already gross inequality between different parts of the country, many of which are contributing to the new homes bonus and getting nothing out of it while others, which have done nothing to improve their housing performance because they already have a high demand for housing and because it is already been built in those areas, benefit from the scheme. It is a most extraordinary scheme and it will be made even more opaque and confusing. Clearly, such a scheme has no prospect of achieving the incentive effect it was supposed to achieve.

[John Healey]

My right hon. Friend has put his finger on it. There is not an economic rationale for the policy, but a political one. Essentially, it is a stealth redistribution from poor areas to wealthier ones with a more active, buoyant and successful housing market.

[Mr Raynsford]

My right hon. Friend, as always, is very acute and he realises that this is a political move. The change is being introduced with no analysis and no evidence base—it is a political move that will have significant redistributional consequences in favour of some areas at the expense of others, paying no regard whatever to the principles of localism that the Government used to proclaim.

[John Healey]

May I tempt my right hon. Friend to reflect on one other aspect of the subject he just touched on? If his figures are right—I am sure they are—by 2017-18 this will cost £7.5 billion in total. That cannot be described as a top-slice from local government as it represents almost a third of the total local government expenditure in England. The proposal will fundamentally destabilise the whole system of local government funding within five to six years.

[Mr Raynsford]

My right hon. Friend makes a valid point, and it is a further argument for the serious and thorough evidence-based review of the subject that the Government ought to be undertaking. It is shameful that they are continuing to tinker with this failed scheme at a time when there is such an urgent need for the limited funds that are available to be used to best effect to stimulate investment in housing and to have the beneficial economic effects that my hon. Friends and I have been talking about.

The amendment specifically calls for a review of the operation of REITs and their interaction with the housing market. That is important because the scale of investment necessary to secure the level of house building and home improvement we need will require a combination of public and private investment. We must therefore have measures that encourage more private investment in both private and social rented housing. Institutional investment in private renting has been a bit of a holy grail for many years for people who saw it as a way of ensuring an improved private rented sector driven by responsible investors who would be keen to see high standards of investment and management.

[Graham Jones]

I am grateful to my right hon. Friend for giving way once again. Will he congratulate my local Labour authority, Hyndburn borough council, which has private institutional investors? The council has got a pension company to invest in private lets to the tune of £14 million and is using that capital to regenerate and provide affordable housing for rent for people who need it. Does he not agree that there should be more such schemes in the UK? That flagship programme has appeared on many television programmes and I am proud to say that a Labour authority is doing it.

[Mr Raynsford]

My hon. Friend makes a valid point and highlights the fact that throughout the country, there are a series of partnership agreements between the public and private sectors which are successfully helping to attract increased investment to meet social needs. That is what we need to encourage. I very much welcome amendment 57 because it calls for precisely that: it calls for a review of the REITs programme and how it interacts with the housing market. The thinking behind it is entirely about how we can ensure more effective blending of public and private finance to meet housing needs.

I have gone on quite long enough, so I will let others contribute. I conclude by saying that current policies are not working. We have a stagnant housing market, which is showing very limited signs of recovery. We have massive unmet needs., and we have huge economic problems which should be addressed by an expanded house building programme. I hope the Government will change course.

Economic Policy

Nick Raynsford Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

I agree with my hon. Friend and we should listen to the demands of the business community. It wants a more competitive business tax regime and additional help with investment, which we are providing. It wants essential economic infrastructure that was not provided over the past 15 years, and we are providing that. It wants a lighter regulatory regime, and we are providing that for small businesses. My hon. Friend is right: businesses large and small are the engine of growth in our economy, and it is welcome that there have been 1 million private sector jobs since the election.

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

The Chancellor has been noticeably more comfortable this afternoon looking backwards rather than forwards. Will he please tell the House his estimate for the likely impact of recent events on the sterling exchange rate, and what the implications will be for inflation?

[Mr Osborne]

I do not comment on the level of sterling. The G7, which the UK chairs at the moment, issued a clear statement that we are not targeting an exchange rate and that the exchange rate flows from the economic policies that we pursue at home to improve our domestic economies.

Infrastructure

Nick Raynsford Excerpts

Tuesday 12th February 2013 Commons Chamber

[Greg Clark]

The hon. Lady did not hear what I said. The structural deficit the Labour Government ran was in place before the financial crisis. That is the root of the problems we now face.

I do not for a moment want to suggest those 13 years did not result in a transformation of Britain’s position in respect of infrastructure. It was transformed, all right: the quality of our infrastructure declined in relation to that of our world competitors.

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

Will the right hon. Gentleman address the issue of rail and tell the House what his party did about High Speed 1 and Crossrail when it was in government? Will he congratulate the last Government on completing HS1—the first new high-speed rail link to the channel tunnel, some 15 years after the channel tunnel was opened—and on starting the Crossrail scheme, which is essential to the future of London? How can he possibly repudiate that record of achievement?

[Greg Clark]

That was a good example of cross-party support, and the idea that it was some unilateral initiative by the Labour party is for the birds. We should have been more ambitious; we should have gone further and faster. It will be 15 years before we can count on the first trains running on High Speed 2. Why were those plans not advanced by the previous Government from the beginning? After 13 years we could have been looking forward to seeing progress in a couple of years’ time, rather than waiting for this Government to lay the necessary legislation.

--- Later in debate ---

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

I draw attention at the outset to my interests as declared in the register.

This has been a curious debate to date. Infrastructure is, at least in theory, a subject on which there is a large measure of cross-party support. There is general agreement across the House that we need to ensure that we have the transport networks, power arrangements, waste and water distribution systems, sewerage systems, flood protection systems and all the other necessary infrastructure that is essential to a modern, functioning economy. Really, we should have been debating how to make a reality of the current investment programmes to deliver the kind of infrastructure that is essential to our economic well-being in the longer term and, in the short term, that will help to create jobs, employment and growth in our stuttering economy.

However, we did not do that. Instead, we have seen a series of differences—not just across the House, between the Minister and my hon. Friend the Member for Leeds West (Rachel Reeves) on our Front Bench, but between the Minister and his Back-Bench colleague, the hon. Member for St Albans (Mrs Main), who took a very different view from him. Rather than echoing his stated wish that infrastructure investment should be speeded up, she made a fairly passionate case for slowing it down.

[Mrs Main]

The right hon. Gentleman will see clearly that I talked about the strategic rail freight interchange in my constituency. More to the point, I am sure he would agree that these issues—whether waste disposal or otherwise—cause tensions in communities and that harm to the environment has to be weighed in the balance against development.

[Mr Raynsford]

I put it to the hon. Lady that when she reads Hansard tomorrow, she will see some pretty clear references to going slowly and not following the advice of her Front-Bench colleague, who wants to accelerate development. He has not been very successful in doing that, but at least his heart is in the right place, and I am with him on that.

The Minister chose to present a case that was, frankly, absurdly partisan—perhaps to divert attention away from his difficulties with his own party, which does not always share his enthusiasm for speeding up the development of infrastructure. The implication that there was no worthwhile infrastructure investment under the previous Government and that the arrival of the current Government has unleashed a cornucopia of new infrastructure schemes is, frankly, risible.

Let us look at the record. I tried in my intervention to point out to the Minister that it was completely unfair to say that there had been no worthwhile investment, particularly in rail, under the previous Government. Let us look at the history of High Speed 1, the link between the channel tunnel and London. That link was not constructed when the channel tunnel was built, because the then Government, headed by Baroness Thatcher, did not believe in rail investment. The French did, and there was a high-speed link between the tunnel and Paris. The Belgians did, and there was a high-speed link between the tunnel and Brussels. But there was no high-speed link between the tunnel and London because the then Conservative Government did not believe in it. Eventually, the Major Government had a last-minute change of heart and began to recognise the importance of such a link, but they could not get it together and the scheme was in a state of financial uncertainty when the Labour Government came to power. The Minister is a fair-minded man, and I hope that he will recognise that High Speed 1, an important piece of infrastructure investment, was the achievement of the last Labour Government.

I would also like to remind the Minister about Crossrail. The scheme had been talked about for a very long time, since the mists of antiquity, but it was the Major Government who introduced a Bill to enable it to be built. However, rather characteristically of them, their political management in this place was so poor that they entrusted the project to a hybrid Bill Committee, which rejected it. So the Bill never progressed, the infrastructure was not built and, once again, it was left to the Labour Government to introduce the Crossrail scheme, to take the Bill through Parliament and to begin the work.

I give credit to the current Government, because they have sustained the investment in the Crossrail scheme. I am glad that they have done so, but it is risible to argue that everything being done today is wonderful and that nothing good was done before. As the Minister must recognise, the Crossrail scheme was developed by the previous Government and is being carried forward by the current Government. Making a reality of such long-term investment schemes depends on that degree of cross-party consensus.

[Greg Clark]

The right hon. Gentleman will recall that I made no criticism of Labour in that regard. In fact, I said that these were long-term decisions, and that the proposals that he has mentioned enjoyed cross- party support. My particular criticism of the previous Government was the decision of the Minister for whom he worked, now Lord Prescott, to cancel 103 out of 140 road schemes. In the spirit of bipartisanship, will he now reflect on that point and accept that that was the wrong thing to do?

[Mr Raynsford]

Perhaps the Minister will reflect on the point ably made by my hon. Friend the Member for Corby (Andy Sawford) about Lord Prescott’s part in the creation of High Speed 1 and the praise that was given to him by Michael Heseltine, whom I am sure the Minister would accept as a colleague.

[Greg Clark]

rose—

[Mr Raynsford]

Unlike the Minister’s, my speech is time-limited, and I have now given way twice. I cannot do so again, so I hope he will bear with me.

I want to take the Minister to task once more—I might give way to him again at that point, as this is a new subject—over the national infrastructure plan. The Government’s amendment to the motion is based on the absurd proposition that the national infrastructure plan is entirely the product of the current Government and that no such plan existed under the previous Government. He will know very well that Infrastructure UK was set up by the previous Government, and that all the preparatory work for the national infrastructure plan was done under that Government. That is why his Government were able to publish the national infrastructure plan in October 2010. If he thinks about it, he will realise that it would have been completely impossible to put together and publish the plan within four months or so of his party coming into government.

The national infrastructure plan was a bipartisan achievement, and I hope that we can continue this debate in a more mature spirit, and recognise that cross-party agreement is essential if we are to get the real infrastructure investment that we need and if we are to do this properly without the kind of problems that we have encountered too often in the past as a result of the failings of all Governments of all complexions.

I should also like to focus on the ambivalence that exists in relation to whether housing constitutes infrastructure. The national infrastructure plan does not define housing as infrastructure, but the Government have made provision in their Infrastructure (Financial Assistance) Act 2012 for £10 billion of support for investment in housing schemes. I would be interested to hear the Minister’s view on whether infrastructure should be defined so as to embrace housing and, if so, how quickly he thinks housing might benefit from that Act.

Last summer, Lord Sassoon, who was then the responsible Minister, talked about £40 billion-worth of schemes that were shovel ready—all ready to go—in the autumn. We are now well past the autumn and to the best of my knowledge not a single housing scheme has been given the go-ahead. Indeed, we have got to the point only of defining the criteria by which schemes may be assessed. This does not look like speedy progress. I would welcome some clarity from the Minister on when he expects that financial support mechanism to have any impact in the housing sector, which is facing a terrible problem of undersupply.

I personally believe that it is impossible to consider infrastructure without including housing, because accommodation is needed for people just as much they need the roads or rail for access, the power supply and all the other things essential for economic development. I would therefore include provision for housing within infrastructure development. I would do so particularly at the moment because the output of housing is appalling. In the last 12 months, only 98,000 housing starts were made. I put it to the Minister, who was critical of the previous Government’s failure in this respect, that if he goes back to 2007—the last year before the recession hit—we started 185,000 homes. If his Government get anywhere near the level of output of the previous Government, they will be doing very well. They are not there at the moment; they need to go very much further and rather faster than they have. I hope they will think about how this scheme can be used to stimulate housing development.

The one other area I want to touch on is aviation. The Minister was interestingly coy about aviation. We know perfectly well—we are constantly reminded of it, not least by the Mayor of London, who I believe is of the same party as the right hon. Gentleman—that there is a chronic problem of undercapacity for aviation in London and the south-east, and an urgent need for new investment. There are and will be differences about where we believe this increase in capacity should be located. I believe that the Thames estuary is the right location and I have advocated that for a long time—I am with the Mayor on that. Other people believe that Heathrow should be expanded, while others believe Stansted is the right location. But no one who has looked at this seriously believes that we do not need to expand capacity. What have the Government done? Kicked it into touch until after the next general election. That is simply not an adequate response. I put it to the Minister that the Government will have to be more serious and should approach this issue on a more cross-party basis if we really are to get progress in infrastructure investment, which is essential to us.

[Several hon. Members]

rose—

Infrastructure (Financial Assistance) Bill

Nick Raynsford Excerpts

Monday 15th October 2012 Commons Chamber

[Chris Leslie]

That loss of productive capacity is another example of the permanent damage caused by recession, resulting in an inability to take advantage of the opportunities that present themselves when a recovery occurs. The International Monetary Fund released figures only last week to illustrate the damage being done by the recession to our ability to fulfil such expectations. In my city of Nottingham, not a single new affordable social house has been constructed in the past 12 months. Is that because there is no demand? Absolutely not. We have more than 12,000 people on waiting lists for decent homes. That applies in many other areas of the country as well, including Greenwich.

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

My hon. Friend makes an extremely valid point about housing, but he understates the case. Infrastructure was the one sector of the construction industry that survived the early period of the recession relatively well. Indeed, by 2009, expenditure on infrastructure stood at £11.6 billion, which was the highest real-terms level for about two decades. That has now slipped away badly, because of the failure of the current Government to maintain infrastructure investment. That is the charge against them: they have allowed activity that was helping to counter the recession to be lost, and the sectors of the industry that are concerned with infrastructure are now as alarmed as the housing sector and all the others that have suffered so badly in the recession.

[Chris Leslie]

That is a pertinent point. The Government seem oblivious to the thoughtful concerns being expressed by industry practitioners about the damage that is being done. Their ideological fixation with austerity has led them to a position in which they have completely pulled the rug out from underneath the economy, and we are still only at an early stage of being able to calculate the damage.

--- Later in debate ---

[Mr Blunt]

That is fine, but the borough councillors of Reigate of Banstead, as the planning authority, have a mandate from their local electors and they are perfectly capable of making decisions about the requirements for housing in the area and to weigh up the competing factors. That is the mandate they enjoy from local people and, as far as I am concerned, there is no need for the view that the gentleman in Whitehall knows best. If there is going to be a wider economic case for building, it needs to be made with great clarity. If that needs to be done with infrastructure of major national significance, there are bound to be occasions when local interests will have to be overridden in the wider national interest. As far as housing is concerned, the arguments are certainly significantly weaker in that regard than they are for actual national infrastructure, the benefits of which we will enjoy for decades to come. If we have too much jerry-built housing, we will then have to live with the environmental consequences for generations.

[Mr Raynsford]

I draw attention to the interests declared in my entry in the register.

I disagree with the hon. Member for Reigate (Mr Blunt), but I do not intend to engage in a debate with him. I will simply say that I think he is in for a big disappointment and that he clearly did not listen to the statement that the Secretary of State for Communities and Local Government made about changes to the planning system that will allow him to refer a whole series of matters to the Planning Inspectorate when he does not agree with a local council’s decision. I am afraid that that is where the Government have got to in relation to localism. However, I do not intend to enter into that debate.

I entirely understand why the hon. Member for Reigate misinterpreted the effect of amendment 2, because the amendment paper gives the impression that it was designed to refer only to housing of “national significance”. It was not. It is simply that housing is the last item prior to the next clause. My reference to “national significance” applies to all the items, including roads, sewers and all the rest, as well as housing. The purpose of the amendment, which is what I will focus on, is to limit the impact of the definition of the Bill to schemes of national significance.

[Mr Blunt]

I am extremely grateful to the right hon. Gentleman for that clarification following my inability to read his amendment properly. On the planning point, and with respect to his long-established expertise and experience in this area, if he thinks that green-belt constituencies such as mine are liable to be affected under the changes he has identified, I am in the market for his advice.

[Mr Raynsford]

I said that I did not intend to engage in a debate on that subject. I believe that we need a great deal more housing in this country, but I will not engage with the hon. Gentleman in a debate about his constituency, which he knows much better than I do, and I certainly would not advocate extensive building on the green belt, which would be entirely inappropriate. I was simply drawing attention to the fact that the Secretary of State’s recent decision on planning, which came a mere three or four months after the national planning policy framework was put in place, withdrew many of the original localist hopes about allowing decisions to rest with the local authority and made it clear that he would refer items over the local authority’s head to the Planning Inspectorate. To me, that is not localism, but let us leave it there.

I tabled the amendments simply to try to get clarity and focus on the uses and application of the Bill. As drafted, it is incredibly broad. I do not object to the definition set out in clause 1(2), but the definition in clause 1(3) states:

‘“Provision” includes acquisition, design, construction, conversion, improvement, operation and repair.’

As the right hon. Member for Wokingham (Mr Redwood) pointed out, subsection (4) defines financial assistance as covering a whole range of activities, including

“loans, guarantees or indemnities, or any other kind of financial assistance”.

In theory at least, that definition would allow the Government to offer a guarantee literally on the repair of a door in a school or prison. Although that work might be entirely necessary and desirable, it is clearly nonsense for the provisions in this Bill, which are designed to allow major infrastructure schemes that are stalled for financial reasons to proceed. That is the purpose of the Bill.

[Hugh Bayley]

I am following my right hon. Friend’s argument. I am slightly concerned about how he would define “national significance”. I can think of a number of important infrastructure projects in my region that could be described as being of national or regional significance. For instance, would dualling the A-road that goes around York be seen as nationally significant? Flood defences, a matter that I hope to raise later if I catch the Chairman’s eye, need to be designed on a region-wide basis. Would my right hon. Friend regard flood defences as being of national significance—if they affected the Thames, perhaps?

[Mr Raynsford]

I think it very likely that any definition of “national significance” would include flood defence schemes, which are defined as infrastructure in the national infrastructure plan. My hon. Friend should not be troubled about their absence from the list, although he wishes to move an amendment to clarify the matter. There is no question but that flood defences are infrastructure, and if they protect from flooding areas of the country at risk of flooding, which is clearly catastrophic, the likely interpretation would be that they were of national significance.

However, I do not propose to add a precise definition; I simply want to give an overall, overarching legislative obligation for the Bill to be used for the provision of financial assistance to schemes of genuinely national significance.

[Mr Redwood]

I remind the right hon. Gentleman that the Government could not merely offer a loan for the new school door; they could pay for it—they can pay for operating expenditure. So the issue is very wide-ranging.

--- Later in debate ---

[Mr Raynsford]

The right hon. Gentleman makes a perfectly fair point, and I concur.

The Institution of Civil Engineers, the professional body for engineers and those involved in the provision of infrastructure, makes a telling point in its submission to us about the Bill. It says that the approval criteria that the Government have set out for considering schemes state clearly that

“any project must be nationally significant before it can receive financial support.”

It would clearly be a total waste of time if people read the fine print of the Bill and believed that it was appropriate for the kind of project to which the right hon. Gentleman and I were referring and submitted one, simply for it to be rejected because it did not have national significance. That is why the amendment has been tabled—to help the Government by bringing a degree of clarity and focus to the Bill.

I entirely concur with the objective of helping schemes that are stalled and ought to be able to proceed, but they should only be schemes of national significance. That is the purpose of my amendments, to which I hope the Government will be sympathetic.

[Ian Swales (Redcar) (LD)]

I shall speak briefly against amendment 1, which would have the effect of limiting the definition of infrastructure to the items listed. That could mean that key elements of economic infrastructure would be omitted. We have already heard reference to broadband and flood defences, but I am thinking in particular of the installation of carbon capture and storage networks, such as the one proposed for Teesside, which already has strong private sector support.

Those networks will be vital for future economic growth and that type of investment must be included in the scope of the Bill. I would welcome clarity on that from the Minister and I ask him to consider adding such schemes to the list. Having said that, I accept the excellent inputs from my right hon. Friend the Member for Wokingham (Mr Redwood) and my hon. Friend the Member for Reigate (Mr Blunt) on the need to limit how the Bill is implemented.

As a member of the Public Accounts Committee, I certainly do not want any suspension of proper process, judgment or value-for-money assessment of any project that comes through under the Bill.

--- Later in debate ---

[Sajid Javid]

I will plough on.

The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and across geographical regions. To achieve that ambition, the Government are committed to delivering world-class infrastructure. Firms will have access to the communications and transport networks that they need, wherever in the UK they happen to be, thus enabling Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map to deliver on that vision—a £200 billion pipeline of upcoming investment in key, large-scale projects, of which more than two thirds will, typically, be financed and delivered by the private sector.

A number of key infrastructure projects are close to starting construction but are being delayed because of the difficulties they face in securing the finance and investment that they require, and the housing market continues to suffer from an under-supply of homes in key areas. Even under favourable credit conditions, raising the amount of private finance required to deliver these projects and to meet these goals would be a challenge. However, the disruption caused by the instability of international financial markets and its adverse effect on long-term debt provision makes it clear that proactive, decisive action is needed now. The Bill will allow us to take that action and bring forward the investment that is needed.

As hon. Members will know, the principal aim of the Bill is to facilitate headline schemes for infrastructure and housing investment, to accelerate and bring forward significant investment in major UK infrastructure projects and to increase the number of homes being built and occupied. Through the Bill, guarantees provided by Government will help to ensure that when projects are struggling to access private finance due to adverse credit conditions they can now go ahead.

[Mr Raynsford]

What will be the success measures for the Bill? The Government have presumably set some measures by which its performance will be assessed. How many schemes and what type of schemes will go forward as a result of the Bill and how many will be required for it to be seen as successful?

[Sajid Javid]

That is a good question from a former Housing Minister—I am sure that he has all types of structures in mind, including housing. The Government cannot predict the applications we will receive under the schemes. As we said in Committee, how success is measured ultimately depends on how many projects the Government can help to finance. I am confident that many projects will come forward—they have already started to do so—and the requirement on the Government to report back annually will allow the right hon. Gentleman to judge the Bill’s success for himself.

--- Later in debate ---

[Mr Raynsford]

The Minister opened his Third Reading speech by claiming that we had had an excellent debate. If only! He must have had his tongue in his cheek when he said that. We have had a shockingly truncated debate in which only one group of amendments has been properly debated. The second group received only a perfunctory opportunity for debate, and that was cut short by the timetable at 9 pm. That left no time for any debate on three of the Bill’s four clauses. Frankly, that is not an adequate performance and I hope that conclusions will be drawn in the other place.

When I intervened on the Minister to ask what success criteria had been set to assess the Bill’s effectiveness, after a rather telling pause in which he had difficulty identifying success criteria, he referred me to the provision for annual reports, thereby neatly highlighting the fact that we had not had a debate about the frequency of the reports. I tabled an amendment to have those reports at six-monthly intervals, in order to make the point that the urgency for action to stimulate investment in infrastructure required a more accelerated timetable than the leisurely one proposed by the Government. Of course, we had no chance to debate that amendment, because it related to clause 3, which we never reached.

As my hon. Friend the Member for Nottingham East (Chris Leslie) rightly emphasised, the Minister’s response to our request for a definition of the success measures was essentially one of “Wait and see”. Frankly, this country cannot afford to wait and see. We are facing a serious economic crisis, which is more acute in the construction sector than in almost any other sector of our economy, and the serious problems affecting the construction industry are impacting more widely on the whole economy.

Urgent action to stimulate construction investment is absolutely vital. In theory, the Government are aware of that, because the Bill’s explanatory notes start with reference to the need for fast-track legislation. The notes ask:

“Why is fast-tracking necessary?”

They go on to say:

“The financial assistance is designed to assist infrastructure projects that may find it difficult to obtain private finance…The Government understand that there are currently commercially and economically viable infrastructure projects that are stalled because they cannot secure private finance. The timing of the UK’s proposed financial assistance is currently unclear, but the evidence indicates that there are projects that might be waiting only for finance before they can proceed to the construction phase.”

That may well be correct. We share the Government’s stated objective of bringing forward and accelerating the necessary investment. However, if that is the case, why can the Government not name a single project that stands ready and waiting to receive the benefit of the financial guarantees offered by the Bill?

In July, Lord Sassoon, speaking for the Government, referred to £40 billion-worth of projects that were ready to go by the autumn. I put it to the Minister that we are now in the autumn. If we are to see a significant proportion of that £40 billion of investment reasonably soon, we need to know very soon what those projects are. I put it to the Minister and to all Government Members from both coalition parties that it is not good enough to talk about good intentions but fail to come forward with concrete, practical proposals, particularly when they have said that the projects are shovel-ready and that it is only the lack of financial support from the private sector that is holding them back. They have said that the Bill is here to unlock that potential.

I repeat my question to the Minister: what are the success criteria? We believe that one measure of success would be a considerable increase in the investment in infrastructure. Back in 2009, in the depths of recession, investment in infrastructure was running at about £11.5 billion. That was the highest level for 20 years and was an indication of the previous Government’s commitment to infrastructure investment as one of the measures to deal with recession. Investment in infrastructure is now down to £8.6 billion and further falls are forecast. That is the record of the present Government. They have presided over a catastrophic fall in construction activity. Infrastructure, which was one of the few parts of the construction sector to survive the worst of the recession in the early years, is also falling. The industry is desperate for assistance.

[Stephen Phillips]

The right hon. Gentleman refers to the record of the present Government, but it was under the previous Government that house building fell to its lowest level since 1923 and 1924. Why does he not welcome the action that this Government are taking in the way that it should be welcomed?

[Mr Raynsford]

The hon. and learned Gentleman clearly did not listen to the contribution of my right hon. Friend the Member for Wentworth and Dearne (John Healey), who pointed out that house building levels have gone down further under this Government. The levels are now at their lowest since the 1920s and are lower than when the Government came to office.

The sad thing is that when the Government came to office, the housing sector was recovering. [Interruption.] It was recovering. If Government Members look at the statistics, they will see that in—[Interruption.] They clearly do not want to listen to the statistics. In the second quarter of 2010, there were more than 30,000 new starts in the housing sector. That was a recovery from the depths of recession. Since then, that level has never been matched. In the latest quarter, the number of starts was down to 23,000—a level that is consistent with an output of less than 100,000 in any one year. That is a shameful record, for which this Government are responsible. I say to Government Members that, for all their bravado and posture, their record is a shameful one and will hang around their necks as the British electorate come to see just what a mess their failed policies have left.

In conclusion, this is a Bill that we cannot object to in principle, because investment in infrastructure and housing is vital. Sadly, it is a Bill that, on the evidence that we have heard tonight, will not deliver what the Government say they would like to see and what Opposition Members would dearly love to see: increased investment in infrastructure and housing. The country needs it and the industry needs it. Sadly, I fear that the Bill promises it, but will not deliver it. Only time will tell, but the Government’s failure to respond adequately on the question of the success criteria speaks volumes about how this is a triumph of spin over substance.

Infrastructure (Financial Assistance) Bill

Nick Raynsford Excerpts

Monday 17th September 2012 Commons Chamber

[Danny Alexander]

By offering guarantees to a wide range of infrastructure projects that might otherwise be delayed because of lack of access to finance—thereby bringing those projects forward, or in some circumstances accelerating them—the Bill will, I hope, help to ensure that the businesses my hon. Friend is describing can access the quality of infrastructure they need to deliver their growth plans. In that sense, I think the Bill will make a big difference.

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

I have been listening carefully to what the Chief Secretary has been saying. I understand the argument in principle, but he has been short on specific illustrations. He will know that the national infrastructure plan identifies a significant number of schemes. Can he now tell us which schemes that are currently stalled and not proceeding he would anticipate getting the go-ahead as a result of the Bill being passed?

[Danny Alexander]

I have a good deal more detail to get to in my speech, and I shall do so as soon as I have got through the various interventions that have been made. However, I shall not list individual projects before we have agreed guarantees for them, for the very good reason that it would be wrong to set out in this House those projects that could potentially benefit from the Bill, as doing so could either disturb the commercial position of some of the finance that has already been secured or undermine the discussions that we are engaged in to put in place such guarantees.

--- Later in debate ---

[Danny Alexander]

I am going to make some progress; I shall take some more interventions later.

The Government intend to offer assistance in the form of guarantees, although the Bill makes provision for other forms of assistance that we intend to use only where unforeseen urgent provisions are required. We believe that up to £40 billion of investment in infrastructure could be brought forward or accelerated under the UK guarantee scheme, using the powers in the Bill. That will help to deliver core infrastructure that supports growth, to improve the UK’s energy, transport, water, waste and telecommunications, and it includes about £6 billion-worth of public-private partnership projects delivering essential public service infrastructure. We will issue guidelines and scrutinise proposals to ensure that any proposal that receives an infrastructure guarantee is nationally significant, financially credible, good value for the taxpayer, requires a guarantee to get under way and is ready to start within a year.

[Mr Raynsford]

rose—

[Danny Alexander]

I am going to make some progress, as I say, but I will take some more interventions at a later stage.

Since the projects we expect to back will be structured to minimise the potential of losses to the Exchequer, there will be minimal impact on public sector net borrowing as a result, except in the extreme circumstance that a guarantee is called upon or other forms of financial assistance are provided. We intend to levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive, and that the taxpayer receives a fair price for any risk being taken. We also plan to use these powers to support up to £10 billion-worth of investment in housing.

[Mr Raynsford]

rose—

[Danny Alexander]

Now might be a good time to give way to the former Minister for Housing.

[Mr Raynsford]

I am grateful to the Chief Secretary for giving way, although this intervention is not on a housing matter, but relates to his earlier comment about “schemes of national significance”. As he will know, this was part of the original blueprint, yet I searched in vain through the fine print for any definition of “national significance”. Is the absence in the Bill of any such reference to nationally significant schemes a significant omission, or not? If not, how are the Government going to ensure that their objective of supporting schemes of national significance is met?

[Danny Alexander]

It is not an omission from the Bill, which puts in place broad and permanent powers to issue guarantees for infrastructure projects. The Government expect that under the UK guarantee scheme, which will be the first manifestation and use of the Bill’s powers, nationally significant projects will be the sorts of projects able to apply. That means projects listed in the national infrastructure plan or other such projects as may come forward, but the Bill gives a broader authority to the Treasury to issue guarantees in other circumstances. What I am describing is how the Government intend to use the powers in the Bill.

--- Later in debate ---

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

I draw attention to my interests as declared in the register.

There has been a paradox in this debate. We have heard a series of speeches by Members on both sides of the House setting out a persuasive case for increased infrastructure investment. Many have highlighted particular schemes in their constituencies that are fundamental to the future of their areas. At the same time, however, the Chief Secretary was either unable or unwilling to identify a single project that was likely to benefit from the Bill. Despite all the hyperbole that we have heard from the Government about its benefits, no Member will be able to go home tonight any more confident that the schemes that they desperately want and need for their constituency will go ahead. That is the conundrum in the Bill. It is not a bad Bill, and I and the Opposition will not oppose it, but there is deep scepticism about whether it will deliver all that is expected of it.

There is no question about the need for increased investment in infrastructure. Construction has been hit more severely by the recession than almost any other sector of the economy. Output has been falling quarter on quarter for the past year, and the situation is worsening, not improving. The forecasters in the industry are deeply pessimistic. The Construction Products Association forecasts two more years of decline and states:

“Between now and 2014, total construction is expected to lose £10 billion as public sector construction activity falls away sharply. Although this has been expected for some time following the government’s deficit reduction plan announcements, the hoped for recovery in the private sector, which was expected to offset these falls, has not materialised.”

Experian’s latest forecast, which is significantly more pessimistic than the previous one issued in March, states:

“The prognosis for construction is significantly weaker than in March…Significant recovery is now postponed until 2015”.

The problem is spread widely through all sectors of construction—industrial, commercial, residential, health, education, housing and infrastructure. All are looking very fragile, and almost all are at levels of activity substantially below those seen before the credit crunch.

Ironically, infrastructure was the sector of construction that best withstood the initial impact of the recession. In part, that reflected the fact that investment in infrastructure schemes takes a long time, so schemes that are in place are likely to roll on for some time. Although I shall be critical of the Government in many ways, I pay tribute to them for agreeing to maintain investment in Crossrail because there was doubt about that when they came to office, and it would have been catastrophic if they had pulled the plug on that scheme. Of course, it is now a major part of the ongoing infrastructure investment that brings real benefits. However, the latest Experian report confirms that infrastructure is no longer an engine of growth, and its September forecast is much more pessimistic than the one in March about the future prospects for infrastructure.

Housing is equally badly affected. In the 12 months that ended in June, just 98,000 homes were started, compared with 109,000 in the previous 12 months, which ended in June 2011. That is a 10% fall in the latest year, and the most recent figures imply that the situation is worsening. The second quarter of 2012 showed just 23,500 starts, compared with 29,900 in the second quarter of 2011—a fall of 22%.

It is worth recalling that the Treasury set out the criteria in July for schemes to qualify for backing under the Bill as being: nationally significant; ready to start—“shovel ready” is the informal way of putting it; financially credible; dependent on a guarantee and not otherwise financeable; and good value for the taxpayer. As my hon. Friend the Member for Walthamstow (Stella Creasy) said in her excellent speech, that implies that the schemes are almost perfect, but not quite perfect enough to get funding on their own, which raises a question about why they are otherwise unlikely to succeed. Many commentators have made that point.

Let me consider the first criterion—“nationally significant”. I intervened on the Chief Secretary—I am glad that he is back in his place—to ask whether there was any significance in the fact that the first criterion in the Treasury list is not repeated in the Bill. He assured me that I should not read anything into that. I remain slightly puzzled because, looking at the breadth of the definitions in clause 1(2), I am astonished at what is included. Many schemes that are in no way nationally significant could qualify under those criteria. I am therefore a little surprised that nationally significant schemes, which, I am sure, we all support, are not precisely defined as one of the priorities in the Bill. The lack of clarity on that and on the schemes that are likely to qualify make it hard to believe that the new guarantees will provide a rapid response to the problem of delayed or stalled infrastructure schemes.

In July, Lord Sassoon said that there were £40 billion-worth of projects in the national infrastructure plan that could be eligible for support under the scheme. He expressed the hope that the first guarantees would be granted this autumn. We are now only days from the official start of autumn, and just three months from its official end. Can we feel confident that Lord Sassoon’s expression of hope will be realised? [Interruption.] It is a very flexible autumn.

On housing, I am sceptical about the very ambitious targets for new homes. I think that the Chief Secretary referred to the possibility of up to 70,000 homes being started as a result of guarantees facilitated by the Bill. If we consider what is happening in the private sector, the problem is not supply, but lack of demand because people are nervous about their jobs and the economy, and because of the tight lending criteria that most lenders apply. The idea that simply facilitating additional supply by increasing loans will be a solution is somewhat optimistic. In the social housing sector, there is already a relatively well developed market for housing association bonds. Indeed, the trade magazine, Inside Housing, suggested that

“offering underwritten paper brings in uncertainty when it comes to take-up.”

According to an article in the magazine on 7 September, Legal & General, one of the biggest buyers of social housing bonds, reportedly said that it

“‘may look elsewhere’ if government guarantees drove down the price of housing association bonds.”

Other questions are highlighted in the latest issue of Inside Housing from 14 September:

“The social housing regulator is concerned that some housing associations are mistakenly planning to use the government’s commitment to underwrite borrowing to fund existing development plans or refinance more expensive debt already on their books”,

and the regulator is worried that that may result in schemes being delayed that otherwise would proceed while housing associations look for possible alternative funding sources. All in all, there are serious question marks about the scheme, and the Government’s confidence in unleashing a great quantity of new infrastructure investment seems to be misplaced. Having said that, it is not a bad Bill and the Labour party will not oppose it. We are, however, sceptical about whether it will deliver what it promises.

The Economy

Nick Raynsford Excerpts

Wednesday 22nd June 2011 Commons Chamber

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

May I draw attention to my interests as registered in the Register of Members’ Financial Interests?

My remarks will concentrate on the housing market, their theme being that that sector, which is fundamental to the healthy operation of the overall British economy, and after showing good signs of a recovery a year ago, is currently stagnant. It is in an extremely parlous position, and there is no evidence of the growth that is fundamental to delivering the jobs and the future prosperity that we need, but while the Government continue with their current policies, we will continue to see a seriously underperforming housing market which, in turn, will contribute to a seriously underperforming British economy.

The interrelationship between the housing market and the wider economy is widely understood. The recession of 2008 had its origins very much in housing. We saw the beginnings in the American subprime housing crisis; the contagion spread rapidly; and it was no coincidence that Northern Rock constituted the first evidence in the UK of the problems that were to engulf us. The crisis was the product of unsustainable lending that had fuelled an unsustainable bubble in this country and a number of others, and the consequences were dire.

That was not the first time we have seen such a process of adjustment after unsustainable growth in the housing market. It has been a pattern over the past 40 years, because there were growth bubbles in the 1970s, the 1980s and the mid-2000s. However, unlike the adjustment after the bubble of the Lawson boom in the late 1980s, the consequences for the public of the recent adjustment—which was painful in many ways and had a dramatic impact, as house prices fell by some 20% and the output of new homes fell by slightly more than a half—were far less damaging and severe than those of the previous recession of 1990-91.

Repossessions have been mentioned, and the following is very telling. Although in 1990-91 repossessions reached some 75,000 annually, with the disaster and tragedy for all people affected matched of course by a huge incidence of negative equity, this time, although the fall in the value of houses was more extreme, the level of repossessions was very much lower—peaking at about 40,000 and falling away, although, sadly, the evidence is that it is rising again—and the problem of negative equity did not blight the lives of millions of people as it did during the 1990s. The difference was that the Government and the Monetary Policy Committee had recognised the importance of swift and clear action to respond to the unprecedented challenges of the recession—through low interest rates plus a series of measures designed to restore confidence in the market, and through public sector investment to help to mitigate the impacts of the declines of private investment and people to retain their homes rather than suffering repossession. All those actions helped to mitigate the impacts of recession.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I recognise that the low interest rate is one of the reasons that the number of repossessions was so low. On the other hand, the Monetary Policy Committee’s remit was to tackle inflation, and yet we are now seeing the challenges that an ongoing low interest rate present to people on fixed incomes, whom he seeks to defend because they are suffering as a result.

[Mr Raynsford]

I will not go into a detailed diversion on the whole issue of inflation. The Governor of the Bank of England has made very clear his view that the inflationary factors are not such as to create a fear of long-term damaging consequences and that it is right and appropriate to maintain the low-interest regime to ensure that we do not damage further the prospects for growth—the main theme of my remarks.

[Kelvin Hopkins]

I am listening to my right hon. Friend with interest, and I agree with what he is saying. While the interest rate reduction has helped on this occasion, on the previous occasion under the exchange rate mechanism strategy the deflationary effects of high interest rates created 1 million extra unemployed, and that unemployment, certainly in my constituency, caused many people to hand over their keys and walk away from their mortgages.

[Mr Raynsford]

My hon. Friend makes an important point. These factors are all interrelated. The lower impact of unemployment in this latest recession, compared with those of the 1980s and the 1990s, is undoubtedly one of the factors that has contributed to its having less severe consequences.

A year ago, before the Chancellor presented his first Budget, we were seeing recovery in the housing market. New housing starts were beginning to rise and confidence was returning, and it was reasonable to expect that real growth would be sustained through 2010 and 2011. Instead, the market has stalled. Prices are static or slightly falling. There has been a continuing very low level of starts, and consumer confidence is at catastrophic levels. For only the third time in its 37-year history, the GfK NOP consumer confidence barometer has been below the -30% level. That is an indication of just how devastating is the lack of confidence in current market circumstances.

Why are we in this situation? In part, it is the consequence of the Chancellor’s overall economic strategy and the way in which he is managing the British economy and damaging confidence. The confidence issue is not unique to the housing market. It is a much wider issue, as everyone will recognise, although it has a devastating consequence for the housing market. The situation is also the consequence of maladroit policies being pursued by the Government. I would be interested to know how the Chancellor approaches the Localism Bill, which his colleagues from the Department for Communities and Local Government are taking through Parliament with the confident claim that it will devolve more and more control to local neighbourhoods to be able to say no to developments that they do not like. As we heard in his latest Budget, he wants the default position on housing and other planning applications to be yes, but I am afraid that the truth is that most of the communities who have been given the prospect of far greater control over planning decisions want the default position to be no. There is a fundamental tension between the growth aspirations that he talks about and the actions of this Government, which are in many ways damaging growth.

[Henry Smith (Crawley) (Con)]

Does the right hon. Gentleman concede that during the last decade of the Labour Government housing starts were at their lowest since the 1920s because of top-down planning control that did not work?

[Mr Raynsford]

The hon. Gentleman should be aware that during the period leading up to the recession we saw a continual increase in housing output. Net additions to the housing stock—the measure favoured by the DCLG as the best and most accurate measure—showed growth of 10,000 to 15,000 a year from 2001 to 2007. In 2007, net additions to the housing stock, at over 200,000, were the highest for 20 years. That was the position: there was a growth trend. We were seeing increased housing output and getting near to the target of 230,000 homes that the Barker report had indicated was necessary. All that has been put at risk. The number of new starts is now only just over 100,000; consumer confidence is absolutely shattered, as I have described; and the confidence of developers is severely damaged by the fear of such maladroit changes to the planning regime.

We have also seen inept cuts in public expenditure. The Homes and Communities Agency played an absolutely vital role in helping the housing sector through the crisis of the recession and giving confidence back to developers through schemes such as Kickstart and HomeBuy Direct and investment in housing associations. All those programmes have been cut back, except one. Six months after HomeBuy Direct was cut, the Government realised that they had made a terrible mistake, so they rebadged it as Firststart, or something like that. However, I am afraid that the others have gone, and the investment levels of the Homes and Communities Agency, at 65% below what they were under the previous Government, mean that the outlook for affordable and social housing is extremely grim.

We have a Government who talk about growth, but their actions are damaging to growth. The housing market, as a microcosm of the overall economy, shows that while current policies continue we have no prospect of getting the growth we need, the homes we need, and the jobs that will come from that, because the housing market has huge multiplier consequences for the economy as a whole. I hope that the Chancellor will not continue to base his case merely on the arithmetic of deficit and will look at what is happening in the real economy and the damage that his policies are doing.

Amendment of the Law

Nick Raynsford Excerpts

Monday 28th March 2011 Commons Chamber

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

It is a great pleasure to resume the debate on the Budget.

Since 1997, year on year, families have waited for that dreaded envelope: the council tax bill. Every year under Labour, it grew, eventually doubling in size, but this year something is different. As the bill hits the doormat, families and pensioners throughout England will find that it has not gone through the roof. It will save families up to £72 on a band D home, because the coalition Government are on the side of ordinary working people. I commend those councils—every single one of them—that have taken up the Government’s offer to give their residents a much-needed break, but I am very disappointed that the Opposition have opposed the measure.

In the Commons, the shadow Local Government Minister, the hon. Member for Derby North (Chris Williamson), called the measure a “gimmick”. His Lords counterpart last week also opposed it, alleging that the

“freeze builds up financial trouble for the future.”

Surely that cannot be the Labour party’s position, because it is not what Labour councils are saying on the ground.

I have a selection of quotations, and I will read out just three that will help. Sandwell’s local authority states:

“The council is very aware of the difficult times local people face, and we don’t want to add to their misery”.

On the freeze, it states:

“It would be barmy not to do so.”

Manchester city council, a local authority that we have heard a lot of recently, states:

“We recognise it has been a very difficult year for some people, and as the UK comes out of recession it is critical we offer all the support we can to Manchester residents… it is great news…that this year we will freeze council tax”.

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

Will the right hon. Gentleman give way?

[Mr Pickles]

In a moment. Let us have the full panoply before we hear from the right hon. Gentleman.

--- Later in debate ---

[Mr Pickles]

Yes.

Bolsover council states that

“we have taken this step to freeze our share of the Council Tax because we do not feel it is fair that these are passed onto you”.

I do not recall the right hon. Gentleman freezing the council tax during his time in government, but let us hear from him.

[Mr Raynsford]

I am sure the right hon. Gentleman will recall, because he has followed local government matters, that the London borough of Greenwich, the authority in the area I am proud to represent, has frozen its council tax for six of the past 10 years—under a Labour Government for five of those six years. Has he forgotten that? Is he not aware of what councils were doing long before he took up his current position?

[Mr Pickles]

I suppose if a council sits on £130 million of reserves, that is an easy thing to do, but let him recall Hammersmith and Fulham, which, after years of considerable increases, managed not only to freeze the council tax but to cut it in each successive year.

I regret that the Labour party says one thing in the Chamber and another thing to the voters. I am proud to say that we are able to set aside—

Financial Services (South-east London)

Nick Raynsford Excerpts

Friday 18th March 2011 Commons Chamber

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

I am grateful for this opportunity to raise concerns shared widely across south-east London about the threatened closure of a large number of Nationwide branch offices. That is part of an even wider programme of branch office closures by Nationwide that will impact on many other areas, but the scale and nature of the closures in south-east London are particularly extreme and have aroused substantial anger and concern. I am pleased to have the support this afternoon of my constituency neighbours, my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) and my hon. Friend the Member for Lewisham East (Heidi Alexander), whose constituents will also be seriously affected by the closures. I am sure that they will add their comments in so far as time allows.

Before getting into the details of what is happening, let me make it quite clear at the outset that the debate is not just a knee-jerk reaction to the threatened closure of one or two local branches. Like my right hon. and hon. Friends, I fully understand that any organisation operating on Nationwide’s scale must review from time to time the viability of its branch network in the light of changing demographics and trading patterns. We are not arguing for preserving the full existing network of branches in aspic. Change is inevitable, but what is not inevitable and is particularly shocking about Nationwide’s proposal is the closure of every single branch in inner south-east London while all the outer south-east London branches remain unscathed.

I realise that we cannot use visual aids in the Chamber, but a quick look at the map would make clear the scale and enormity of Nationwide’s actions, and I ask the Minister and colleagues to try to visualise its proposals. All seven existing branches inside the south circular road in south-east London—Walworth road, Peckham, Lewisham, Catford, Blackheath, Greenwich and Woolwich—are to close. At the same time, all the branches outside the south circular road—Beckenham, Bromley, Petts Wood, Orpington, Sidcup, Eltham and Bexleyheath—are to stay open. That is quite simply a crude and discriminatory exercise in which the leafy suburbs are favoured while inner London is punished. Not only is that socially divisive, but it leaves a huge section of London without access to the branches of the largest surviving mutual building society.

I estimate that some 670,000 people live in the area affected by the closures—the whole population of the London boroughs of Southwark and Lewisham and two thirds of the population of the London borough of Greenwich. Putting this in perspective, this is more than the entire population of a large city such as Sheffield or Manchester. Suggesting that an organisation calling itself Nationwide should entirely pull out of Manchester or Sheffield would be self-evidently extraordinary, but that is precisely what it is doing in inner south-east London.

Not surprisingly, this has provoked a great deal of anger and concern. Constituents who have contacted me as well as Nationwide have made their views very clear. Mr Daly from Woolwich writes to say:

“The suggested alternative Nationwide branches to Woolwich are Eltham and Bexleyheath which are not easy journeys, especially by public transport. The decision in respect of the Woolwich branch I find baffling as it is always busy and I don't see how closure of this branch can be justified”.

Mr Aldous from Blackheath says:

“Does the Nationwide as a mutual not have a moral obligation to the inner suburbs, where the presence of mutuals can help economic renaissance? Does the Nationwide, as a mutual, not have an obligation at least to consult its members in a timely and meaningful way before taking such a drastic decision?”

Mr Kidley of Westcombe Park writes:

“It rather looks as if someone drew a five mile circle around my house and decided to close all branches inside the circle. I can understand that the Blackheath branch could be replaced by Lewisham and Greenwich for most people, though I will miss the very helpful staff at Blackheath. I really cannot see how it makes sense to close the Greenwich and Lewisham branches, both of which are local transport hubs, easily reached from much of South East London. I can only assume that Nationwide is no longer much interested in South East London business”.

Mr Reader from Greenwich writes:

“I find this decision completely unacceptable by a major branch. I could stomach closure of my branch, but to close my next nearest six branches as well defies logic. I would ask that you contact the Nationwide and ask that they reconsider and show more respect for South East London customers, staff and local communities”.

That is precisely what I did, but when I met Mr Matthew Wyles, the group distribution director of Nationwide, on 1 March, the response was frankly shocking. Nationwide was clearly unwilling to reconsider its decision and showed little or no concern for the interests of its customers. When it suggested that none of the seven inner south-east London branches was economically sustainable, I pointed out that this might reflect on how Nationwide was running its business, as it seemed inconceivable to me that a major financial institution could not make a single branch viable in such a large and diverse area. Mr Wyles responded by saying:

“I can’t explain it to you because I myself can’t understand the reason”.

Nationwide’s behaviour is all the more extraordinary when one looks into the history of the various branches. Some were opened relatively recently. Indeed the Nationwide chief executive, Graham Beale, boasted less than four years ago when opening the Woolwich branch:

“The branch is in a central location and is a prime example of the investment and commitment Nationwide has in its branch network”.

I expect he regrets these comments now. He probably also regrets the fact that these closures come at a time when Nationwide is running a high-profile advertising campaign, including the lines:

“With no shareholders our only focus is you. Talk to the mortgage experts. Ask in branch”.

This is frankly adding insult to injury to the residents of inner south-east London who unless Nationwide reconsiders will be left with no branches to visit.

By contrast with the recently opened Woolwich branch, the Greenwich branch has a long and distinguished history. Originally it belonged to the Greenwich building society, which when established in 1809—more than 200 years ago—was the first recorded building society in London. In the 1990s, as consolidation occurred throughout the sector, the Greenwich building society merged with the Portman building society, which in time was absorbed by Nationwide. That long history of serving the community that I am proud to represent is now being snuffed out without any serious exploration of options to keep at least some of the local branches open.

What is particularly galling about this sad process is that Nationwide had its origins as the Co-operative building society, and continues to proclaim its commitments to mutuality. Indeed the advertisement to which I have referred uses the strap line, “Proud to be different”. The cynic might say that Nationwide will certainly be different from other banks, if it no longer has any branches in inner south-east London, but that is hardly something to be proud of. It is sadly reminiscent of that unhappy period in the 1970s when mortgage lenders had a tendency to “red line” inner-city communities that they regarded as undesirable and refused home purchase finance in those areas.

Those practices are now largely confined to the dustbin; indeed American experience has shown that many supposedly impoverished inner-city areas can be profitable locations for financial institutions to work in. The position in the US is helped by the Community Reinvestment Act, which imposes an obligation on banks to demonstrate that they are adequately serving low and middle-income communities. Will the Minister give some attention to whether similar obligations might be considered in the British context, if financial institutions disregard the interests of their inner-city customers?

I would also appreciate the Minister’s thoughts on how the objectives set out in the coalition agreement to

“protect consumers, particularly the most vulnerable”

and

“to promote more responsible corporate and consumer behaviour”

might be applied in the context of Nationwide’s actions. Specifically, I draw his attention to the commitment in the agreement to

“bring forward measures to enhance customer service in the private and public sectors”.

Unless Nationwide accepts that it is making a serious mistake and agrees to consult its customers further on options to maintain access to some branches in the area, it will stand accused of walking away from the inner city, from its history, and from social and economic responsibility. It will be a sad epitaph to the long, proud history of mutuality in the financial sector.