UK Relations with China

Debate between Simon Hughes and Mark Pritchard

Tuesday 19th November 2013 Westminster Hall

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I am grateful to the hon. Gentleman for his measured, balanced and important speech. On Tibet, many of us are very supportive of better links with China. London South Bank university in my patch has the Confucius institute, which is very positive. We also represent Buddhists in this country. The Chinese do not yet appear to understand that nobody is seeking to threaten China’s control of Tibet; we are just seeking, with the Buddhists, to argue for their religious freedom and for a certain degree of autonomy for them to live their lives in the old parts of China, as they would choose to do.

[Mark Pritchard]

My right hon. Friend makes an important point. We are hopefully arguing for the upholding of the Chinese constitution itself. The Chinese authorities need not fear freedom of religion. The suppression of religion, not the freedom of religion, is what causes instability in societies.

I have my Tibet notes, so I will hopefully have some added value later, but first I will speak briefly on animal welfare. As I mentioned, China probably has the worst animal welfare record of any country, yet it is known as the country of the dragon. I fear that, if dragons existed, they too would probably be cruelly reared and cut down in their prime for their teeth and claws, or be caged throughout their life without any care or compassion. In a world in which dragons lived, the country of the dragon would be pre-eminent in their slaughter. The country of the dragon would slaughter the dragon to extinction.

China’s demand for ivory is a major factor in the demise of elephant and rhino populations across the world, often for alternative medicines and therapies, some with unproven benefits, and with the false claim that those and other such medicines improve libido—science has proved quite the opposite. The Chinese Government should educate their population on the threat to some of the world’s most endangered and vulnerable species and unblock websites so that people may access that information themselves. Even the Tibetan antelope has been driven to the brink of extinction due to the Chinese authorities destroying its habitat with forced land use changes and unregulated hunting.

The Chinese invasion of Tibet has resulted in the death of hundreds of thousands of Tibetans and the imprisonment and torture of thousands more. In 1959, the Dalai Lama, Tibet’s political and spiritual leader, fled into exile in India followed by more than 100,000 Tibetans, and established the Tibetan Government in exile.

China must end its economic strangulation of, and mass economic discrimination against, Tibet. That deliberate policy has forced thousands of Tibetans to abandon their traditional rural lives and move into new housing colonies in urban areas where non-agricultural jobs are controlled by the Chinese state. Tibetans are now a minority in such urban centres because of China’s encouragement of mass Chinese migration.

The Buddhist religion continues to suffer. The Chinese have destroyed more than 6,000 Tibetan Buddhist monasteries and shrines since 1949. Today, the number of monks allowed to enter monasteries is strictly controlled and limited. Any references to, or images of, the Dalai Lama are banned. As I mentioned, I have had the privilege of meeting the Dalai Lama twice, and I have made it clear whom I will meet and not meet.

Chinese political oppression—and that is what it is: oppression—has responded to uprisings with extreme violence. Some 300,000 Chinese soldiers are now posted in Tibet. China has repeatedly violated UN conventions through the extensive use of torture against Tibetan political prisoners, including monks and nuns. The Chinese regime has also wreaked huge environmental damage throughout Tibet.

The third plenary of the 18th central committee of the Communist party of China met last week. Many of the decisions made at that important gathering are welcome, but those decisions must be implemented, not just announced—the Chinese are very good at press releases, but we need to see action on the ground that changes people’s lives for the better.

Foreign-owned UK Property

Debate between Simon Hughes and Mark Pritchard

Thursday 20th June 2013 Commons Chamber

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Through you, Madam Deputy Speaker, I thank Mr Speaker for granting me this Adjournment debate. I welcome the Minister for Housing to his place and am grateful for the opportunity at the end of today’s business to consider the purchase of housing in the United Kingdom by people or companies based abroad.

When I was first elected—a long time ago now—the London Docklands development corporation was in charge of some of the dockland areas, including parts of my constituency. One of the most successful things it ever did was to have a scheme of building new homes and offering them for sale to people locally at discounted prices—or, at least, prices that did not make so much profit. There were huge queues of people and the homes were snapped up. There was a restriction on onward sales, whereby people had to live in the houses for a certain amount of time, and they met a lot of the unmet housing need of people who wanted to stay in Bermondsey, Rotherhithe or Surrey Docks but who could not afford to live there.

Sadly, the situation is now completely different. I want to talk about the problem first before suggesting some solutions, based on comments made to me once people knew the debate was happening and on documents that have been in the public domain or press in the past few days. Let me start with two e-mails that I received before the debate.

The first e-mail is from somebody in Battersea:

“Good to see someone at least talking about the housing crisis in London.

As an architect, part of my job is designing apartments in central London that I know are being sold off plan to buyers in China.

Sometimes whole developments are sold in a day, with Chinese buyers paying in cash.

That is before they are ever offered to the UK market, but should they ever be offered they would only be affordable to barristers and traders, not middle income workers like myself.

It infuriates me, as I am still in a share house after 7 years of being in London.”

[Mark Pritchard (The Wrekin) (Con)]

The right hon. Gentleman mentions units being sold off plan before being offered to the UK market, but does he agree that by doing that some new home developers are discriminating against UK citizens?

[Simon Hughes]

That certainly appears to be the case. Let me give a constituency example. At the Elephant and Castle, just over the bridge, as people know, there is a controversial development of a former council estate, the Heygate estate, that is being done by Lend Lease, an Australian company. The first phase was either first put on the market in Malaysia or put on the market in Malaysia at the same time as it was advertised here. My constituents, who are desperate for the housing that was meant to replace the council estate, were more than angry to think that not only were they not getting the affordable housing they were promised at the promised levels but the property that was made available for private sale first was being block-bought off plan in Malaysia. This morning I went to look at an estate development in my constituency that has, I understand, been marketed principally in Thailand.

To show the other side of the coin, let me cite a second e-mail that I received unprompted in the past couple of days, entitled “Housing developers targeting foreign buyers”. It states:

“I am British and live in Singapore. Even though I have a work permit, the Government put an extra high stamp duty on property, and also restrict me from renting out a property I buy for the first three years of ownership.

I gather that the first phase of the Battersea development was out-sold in Singapore with over 800 units going to Singaporeans. The main reason is the devaluation of Sterling combined with the rising costs of housing in Singapore. Why buy a two bed in Singapore for £1 million sterling when you can buy two in London for £800,000?”

So in this country properties are increasingly being sold abroad and in other countries Governments are realising that they need to have some restrictions on the inward investment into their housing in order to look after their own people and ensure that they, or residents in these countries, who may not have been born there but have settled there, have opportunity in the market.

The Mayor of London this week produced a document “The greatest city on Earth: ambitions for London”. I share that view of London, as I think it is the greatest city on earth, and also the ambitions for it. I am hugely proud to be a London Member of Parliament and to represent my constituency. In the same month as that was produced, the Bureau of Investigative Journalism published an article headed “The housing crisis: Westminster hit by soaring costs as it struggles with homeless crisis”. Today’s Evening Standard headline is “Rough sleepers double in 5 years: Mayor under fire after pledge to eliminate problem”. It gives the explanation as follows:

“Experts said the increasing numbers were a consequence of housing benefit cuts, soaring rents and the closure of a dozen hostels and day centres”.

Soaring rents are absolutely one of the reasons why people cannot find homes that they need.

As hon. Members would imagine, a lot of work has been done in this area. I am grateful to Savills Residential, with which I have met. It produces regular reports and is about to do another one on who invests in this country, where and how. A very good report was produced by the Smith Institute in July 2012 entitled “London for sale? An assessment of the private housing market in London and the impact of growing overseas investment”. Deloitte produces an annual prediction and has just done so. Knight Frank has accurate, up-to-date figures, which I have looked at and drawn on.

I have also looked at other articles, with titles such as “More restrictions on foreign property buyers in Switzerland” and “Property purchases: who can purchase property in Denmark?”. The Danes have clearly thought that they need to address this problem. I have looked at other general assessments—for example, an article in April entitled “Buyers not wanted: restrictions on international property investors”. It stated:

“While the world’s investors are busy snapping up property in London, other countries are putting up barriers to foreign ownership”.

That is the backdrop to this. I want to say a word about the politics and then where we ought to go. I am very clear that the UK has prided itself always on its international connections. London is a great global city, and my wonderful constituency has been a destination and place of passage for people from all over the world for centuries. Nobody I know in public life, in my party or in my constituency, does not appreciate the contribution that foreign investment has made into our country in the past and will continue to make in the future. We have also historically prided ourselves on being a country based on the free market, from which UK citizens and residents can acquire interests abroad, and where non-UK citizens and residents, and companies registered outside the UK can acquire interest in property in this country. Most people know that many, if not most, of our leading companies now have foreign owners. I often raise the issue of Thames Water and its failure to pay adequate taxes, but it is, in effect, an Australian company and many of our other utilities are also run by foreign owners.

The reality is that my country, my city and my constituency are desperately short of homes. In particular, we are desperately short of homes to rent, for shared ownership and to buy at prices that are affordable to the average income earner or average family.

[Simon Hughes]

The hon. Gentleman makes a good point. We do not always agree, but he makes a good point. Many of the properties that are being built are specifically built with the probability that they will be sold easily in the foreign market. These are not family houses; these properties are mainly flats, often studio, one-bedroom or two-bedroom flats—small flats—which will either be buy to rent, will be used occasionally by somebody from abroad who might come here a couple of times a year on business or will be just kept as an investment. There is evidence that a lot of these places have nobody in them at all; they are simply bought as an investment in this country and will be sold later at a higher price. I agree with the hon. Gentleman.

I checked the Office for National Statistics figures today. The average house price in the UK this year is £238,000, in London £414,000 and in my borough £389,000. Median employee earnings monthly in the UK are £505, in London £613 and in my borough £630. It will not surprise anybody in the Chamber to know that the gap between earnings and cost is growing and growing, and London is the place where the difference is greatest.

In London, just to keep pace with demand, best estimates suggest that we need at least 50,000 more homes each year, twice as many as are currently being built, and 20,000 a year more than the Mayor of London’s target. Central London, which for housing purposes often includes part of my borough and my constituency, is now an area where, according to the best figures, more than one third of all buyers are from overseas, and two thirds of all new-build property is sold to non-UK purchasers—a third of the total and two thirds of the new-build property. Over a third of properties are sold to companies from China and the Asia-Pacific region, more than one in 10 to buyers in the middle east and north Africa, and about 8% each to purchasers from western Europe, and to eastern Europe and the former Soviet states.

I understand why London is a popular place for investment—the value of the pound, the fact that it is outside the eurozone, very low interest rates, and the fact that it is a world-class city with English as its main language. According to Knight Frank, average prices in prime property—property priced at more than £1 million —in London have risen by 50% from 2009 and more than 7.5% in the past 12 months alone. Compared to New York or Singapore, it is clearly a much more successful investment. Some purchasers buy these homes to live in, some to let, some as a home additional to their principal home or as a third home, and some buy simply as an investment.

These purchasers are on to a good thing for them, and the developers who sell to them are on to a very good thing for themselves as well. Developers find foreign purchasers—this relates to the question from the hon. Member for Hammersmith (Mr Slaughter)—often more willing than UK purchasers to buy straight from plan. They pay their money up front, which helps fund the development as a whole. London property commands good prices in the global market, so this maximises the returns and therefore the profits of the developers. It is a very successful response to international housing demand. It does not help the people I see in my surgery every week who want a first home or a home they can afford.

[Mark Pritchard]

I am grateful to the right hon. Gentleman for giving way—he is being very generous. Does he agree that there would be a little more understanding of new home developments such as those being built by Barratt if the units, when they became available, were offered to everybody, wherever they live, at the same time, rather than some that are left over being offered to local British buyers?

[Simon Hughes]

This is a real issue. I shall put some suggestions to the Minister, of which I gave him notice earlier today, so I hope I am not taking him completely by surprise.

People who have lived here for five years, 10 years, 15 years or all their life now cannot find a place they can afford. More offensive, even if they see them, they suddenly discover that the properties have been offered for sale abroad and are not available, or by the time people in this country can get their finances together, somebody has bought the lot. That is an unacceptable practice. Free market economics is a good starting point for the global economy, but responsible Governments, including I hope those with my colleagues in Government, should always be willing to intervene in the market where there is good reason and where the market is not working for the purposes that are the priority. Meeting housing need is now the priority, not meeting global housing demand.

We cannot go on as we are. We do not have enough land to build on at a reasonable price, there is much too little building of affordable housing, and now there is increasing purchase by foreign owners of the property that does become available. We need more supply and we need to moderate the demand that is forcing up prices even more. The purpose of this debate is to put down a marker that there needs to be a response at central Government level, at London government level and at local government level as well. I am not the only person who thinks that. Colleagues across the House and in different sorts of constituencies share my view. Even if I cannot get all my wishes announced in the spending review next week, I hope that at the latest by the time of the Budget next year I can persuade colleagues to make the sort of changes we need. I hope also that I can get the two Select Committees—Treasury and Communities and Local Government—and the National Audit Office to look into the subject, because I know they have an interest and think they would do a good job.

We want a change of policy, a change of strategy. We want a big change in the number of affordable homes available for residents of these islands, and we want it now. I will give the Minister my shopping list now, so that he has time to respond.

I hope that work outside this place and by the Select Committees and the NAO will be helpful on this, because I would like the Government to compile a report on legislation passed elsewhere to tackle this problem. As I said, Singapore and Denmark have taken action in recent years, and I understand that Australia, Canada, Thailand and some states of the USA have done so, too. Those are not socialist republics; they are countries with free-market economies that understand they have to do something to look after the people within their shores, to whom they have an obligation.

I should be grateful if the Government, over the next few weeks, commissioned up-to-date research, using all the sources available, into the extent to which residential property acquired by individuals who are not domiciled or resident here or companies that are not registered here is: acquired for investment only and kept empty; occasionally used; occupied primarily by staff; a home other than the principal home; or rented out. If the information could be broken down by local authority and postcode, that would be helpful. This is not just a London issue; it affects the west midlands and many of the big cities in England and other parts of the UK.

There may be policy and tax changes we could make. We cannot discriminate between UK and other EU citizens on the basis of their citizenship—I understand that entirely. However, it seems to me that we could have differential stamp duty or council tax, or another form of acquisition or disposal tax, or an annual asset tax, on properties held by non-EU citizens or companies based outside the EU. Secondly, we could have differential council tax or other tax by category of use, so a second or third home or a company-let flat, for example, would be in different categories. I am less certain that this would be the answer to many of the problems, but we could have differentiation of tax or council tax by price, with the aim of adding an extra tax on the middle-ranking properties, which are the ones that our constituents want to buy. That might have adverse knock-on effects, so I am not categorically proposing that, but I think the idea should be considered.

I believe it would be possible to have priority bidding for rent, shared ownership or purchase for people who have lived in the area for a certain period. We could not do that by nationality, probably, but we could do it by length of residence. Councils are now allowed to give priority on their waiting lists to people who have lived in the area for a certain period, so surely we could do the same in the sale, shared ownership and rental sectors. We could require residential properties to be advertised in this country at the same time as or before they are advertised anywhere else. We could do what the London Docklands development corporation did, which is ensure that properties are initially offered locally. There would be legal questions to deal with, but we could consider it. Finally, we could give tax incentives to people or companies willing to invest in affordable housing for rent, shared ownership or sale at below-average prices, rather than give them only to those who want to build expensive properties. We could incentivise the right sort of investment.

We could pilot these proposals, or give powers to the Mayor or local authorities in London and elsewhere to try differential planning and council tax arrangements, to see the effects on the market. As the Mayor of London has suggested, we could ask the Government to make sure that any taxation—for example, stamp duty—generated in a particular local authority from a certain type of property goes into the housing fund for that local authority.

I am open to any solution that works. I hope that the Minister and his Department are open to helping us to tackle this major and growing concern to voters of all parties and none, and all our constituents. I do not think we can say that nothing can be done.