Budget Resolutions and Economic Situation

Debate between Richard Fuller and Emma Reynolds

Monday 13th July 2015 Commons Chamber

[Richard Fuller (Bedford) (Con)]

Will the hon. Lady confirm that even with the changes to working tax credits, they will still be higher as a proportion of gross domestic product at the end of this process than during any period of the Labour Government prior to 2004, and that at that stage there was no commitment to a national living wage?

[Emma Reynolds]

I say to those on the Government Benches that they are simply out of touch with the lives of working people up and down this country. Of course we want an economy in which people are highly paid and highly skilled, but the course towards such an economy has to be charted before the support is cut off.

Let us deal with the crucial issue of devolution. We urgently need to rebalance our economy to drive growth and prosperity in all parts of the country. We are one of the most centralised countries in Europe. London dominates our economy, and its growth surpasses that in all of our major cities, which is not the case in either Germany or France where other cities beyond Berlin and Paris are true engines of economic growth. I agree with what the Chancellor said last week—that we will not achieve a better settlement by pulling London down. We should be proud of the dynamism and success of our capital city—and long may it continue. We must, however, reverse the long tradition of British politicians of all parties and of civil servants who have hoarded power in Whitehall and failed to trust local government.

There is a huge political and economic imperative to devolve power as close as possible to local communities. As ever, the Chancellor’s Budget speech on devolution was heavy on rhetoric, but rather light on substance. This Government boast about bringing about a “northern powerhouse”, but their rhetoric rings hollow, given that no part of the country has faced bigger cuts to local authority budgets over the last five years than those in the north of England. Indeed, the shelving of the electrification of the Manchester to Leeds trans-Pennine railway means that the Government’s plans are closer to a power cut than a powerhouse. We need a settlement for every part of the north, but as one of my hon. Friends pointed out to the Secretary of State earlier, there was barely a mention of the north-east in the hour-long Budget statement or in the 123 pages of the Red Book.

Ahead of the Budget, we know that there were briefings about which deals would be announced, and we know that the Secretary of State did what some might call a frenetic round of local government speed-dating during the Local Government Association conference two weeks ago. We welcome, for instance, the extra powers that the Government are planning to devolve to Greater Manchester. We also welcome the progress that three combined authorities—Sheffield city region, Liverpool city region and Leeds, West Yorkshire and partner authorities—are making towards a devolution deal, and the progress that Cornwall is making. As a Wolverhampton MP, I particularly congratulate the leaders of the local authorities that are working so hard to create the West Midlands combined authority. We are proud of the fact that Labour leaders in local government are making the weather on devolution.

While we welcome that progress, we also believe that the Government should not impose a one-size-fits-all approach to devolution, and should stop putting obstacles in the way. In his first major speech after the election, the Chancellor said that he would not impose the mayoral model on anyone, but in the very same breath he said that he would not settle for anything less. Why are the Government running scared of letting local people decide, and when will they clarify exactly what different areas and combined authorities can expect to achieve from devolution if they do not opt for a mayor?

Housing

Debate between Richard Fuller and Emma Reynolds

Wednesday 10th June 2015 Commons Chamber

[Emma Reynolds]

I will take our record on building affordable homes over the Government’s record at any time. We had the decent homes programme—[Interruption.] Well, we built over half a million affordable homes in our term in office, and we have seen the number of homes built for social rent under this Government fall to a 20-year low. We have transformed the lives of all the people living in council houses when they were left to rack and ruin after 18 years of a Tory Government.

The scale of the challenge ahead is therefore huge, but are the Government’s policies up to the task? Let us consider them in turn. First, we have the Government’s proposal to deliver 200,000 starter homes at a 20% discount. When questioned earlier this year on where the discount was coming from, the right hon. Member for Welwyn Hatfield (Grant Shapps) was completely unable to answer—and no wonder. The Government have said that the 20% discount will save the average first-time buyer £43,000. The likely overall cost would therefore be £8.6 billion. They claim that this will be paid for by removing levies for affordable housing and infrastructure, but their own figures suggest that the average cost of affordable housing contributions accounts for only a third of the proposed discounts. How would the rest of the discount be paid for?

This also poses the question of who will pay for the vital infrastructure that we need in new housing development—a topic on which the Minister for Housing and Planning often speaks. After all, when it comes to new development—he and I know this very well—many people are concerned about the pressure on existing roads, schools and other services. When the Secretary of State responds, will he give us proper answers to these questions?

Secondly, there is the proposal to extend the right to buy to housing association tenants. The Labour party is on the side of those who want to buy their own home. We want as many people as possible to fulfil that aspiration, but the Government’s current proposals raise more questions than they answer. The hon. Members for Stafford (Jeremy Lefroy), for South Dorset (Richard Drax), for Salisbury (John Glen), for Uxbridge and South Ruislip (Boris Johnson) and the right hon. Member for Cities of London and Westminster (Mark Field) have all raised concerns about the ramifications of the Government’s proposals.

The right hon. Member for Cities of London and Westminster said that the Tory party had pulled a rabbit out of the hat in the final weeks of the election campaign, and needed time

“to iron out its obvious iniquities”.

The hon. Member for South Dorset said only last week:

“There is no doubt that the first generation would be extremely grateful, but what about those who follow?”,

and he expressed concerns about the proposals leading to a shortage of affordable homes. The hon. Member for Uxbridge and South Ruislip has said that these plans amount to “insanity”—his characteristic turn of phrase—if more council houses are not built in the areas where they are sold. He also expressed concerns about this policy eroding the mixture of socio-economic groups in London.

Conservative peers in the other place have also expressed concern. Baroness Byford described the proposals as an

“absurd attack from a Conservative Government on the property rights of some of the most needed and respected charities in this country”—[Official Report, House of Lords, 2 June 2015; Vol. 762, c. 391.]

The former head of the civil service and permanent secretary from the Secretary of State’s own Department, Lord Kerslake, and Lord Turnbull, the former permanent secretary to the Treasury, have both said that the Government should think again.

Beyond Parliament, other bodies have raised serious concerns. The CBI has said the proposal does nothing to “solve the problem” of the housing crisis, while the Chartered Institute of Housing said the figures “did not stack up”. We have also seen those well-known socialist publications The Economist, The Spectator, The Daily Telegraph and the Evening Standard raising concerns.

The Secretary of State thus needs to provide answers to the following questions. How much will this policy cost? The Conservatives refused to answer that question during the election campaign. The Department has also blocked, after an FOI request, the release of a secret document detailing the policy’s costs and economic consequences. How will it be paid for? The Conservatives claimed during the election campaign that they would force councils to sell off their most expensive properties and use the proceeds to pay for the right-to-buy discount. However, the Government have no idea whether these 15,000 properties will become vacant every year, let alone whether £4.5 billion would be raised.

In a response to a recent written parliamentary question, in which I asked the Secretary of State what estimates the Department had made about the value of these homes and the number that would become available each year, the Housing Minister admitted in his response that it simply did not know. Perhaps the Secretary of State will tell us how on earth the Government know how much money they will raise if they do not know how many of these properties there are, how many will become available and how much they are worth. Given that there will be a time lag between forcing councils to sell off expensive council properties and funding the discount, will the Treasury step in to fill the gap? What is the plan to replace the homes sold?

The Government have yet again promised a one-for-one replacement on council homes sold—despite the Secretary of State claiming on the “Today” programme only a few weeks ago that no such promise was made in the last Parliament. I hope he has now had a chance to catch up on Tory party policy. It was their policy and it failed badly. For every 10 council homes sold through the right to buy in the last Parliament, only one council home started to be built. The question thus arises of why anyone should believe the Government’s promises now.

Serious questions have also been asked about the impact of the policy on the ability of housing associations to borrow money and build new homes. Moody’s is now the third credit rating agency to warn about this policy’s impact. It said that it could hit the financial viability of housing associations, risking their ability to raise private finance to pay for new house building. Here in our capital, the biggest group of housing associations has plans to build 93,000 new homes, with the vast majority of the funding coming from borrowing against future rental streams, but how many of those new homes will now be put at risk given that the rental streams and assets are so uncertain?

Legal experts have expressed doubts about forcing independent charities to sell off their assets. Some have said these assets are not the state’s to sell. Some will have been donated through their wills by individuals—some in their dying days—who wanted to provide homes for the most vulnerable people, such as those with disabilities, autism and indeed the aged or the homeless. Perhaps the Secretary of State could tell us whether these housing association properties will be included in the scope of the legislation.

Other experts have suggested that this level of Government involvement with the assets of private independent charities will lead to the reclassification of the £70 billion-worth of housing association debt being reclassified as public sector debt. Have the Government assessed that risk? Ultimately, we will have to see what the Government bring forward, but the test for any housing policy of this Government must be whether it eases rather than deepens the housing crisis.

[Richard Fuller (Bedford) (Con)]

The hon. Lady and the motion talk about us facing a housing crisis. The social landlords are owners of a substantial balance sheet of housing assets. What I want to get clear is whether the hon. Lady is stating the Labour party’s opposition to the extension of the right to buy in principle, or is she criticising on the basis of whether a practical solution could be brought about. It is important to get the best use of all balance sheets of housing, whether they be social tenants or otherwise.