Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Government Capital Expenditure

Part of Opposition Day — [3rd Allotted Day] – in the House of Commons at 6:14 pm on 2nd February 2009.

Alert me about debates like this

Photo of Sarah Teather Sarah Teather Shadow Minister (Communities and Local Government) (Housing and Planning) 6:14 pm, 2nd February 2009

This has been an interesting, albeit short debate. I am aware that I have very little time to wind up, as we would like to finish by half-past 6 to ensure that House staff can go home.

My hon. Friend Dr. Cable opened this debate by making a case for sensible public investment that would create jobs today and build assets for tomorrow. However, in the interventions that we have heard today, many of my hon. Friends, as well as colleagues in other parts of the House, have pointed out examples of programmes that have stalled. In particular, my hon. Friend Annette Brooke mentioned building projects for colleges in her constituency. I was surprised by the response from the Minister, who said that those projects were steaming ahead, because it is self-evident that they are not.

Mr. McCartney said in his contribution that the Government would be judged on how they make a difference to people's lives on the ground. Unfortunately, that was not the tone of the Minister's response. He agreed with almost everything that my hon. Friend the Member for Twickenham said about the need for a fiscal stimulus, the need to invest in social housing and the need to invest in insulation, but he made no new announcements. We are talking about an issue of scale. Ticking a box and saying that the Government have a programme is not going to help us out of recession.

The Conservative spokesperson, Mr. Gauke, rightly pointed out the inconsistencies in the Government's position. However, he said nothing about how the Conservatives would lead us out of the current recession and seemed to misunderstand the point that my hon. Friend the Member for Twickenham was making. He has consistently argued for borrowing to invest in capital projects, not borrowing to fund tax cuts or current expenditure. Those things are different, and the hon. Gentleman should be aware of that.

My hon. Friend made the point, which others made too, that unemployment involves a large cost. Doing nothing is not a cheaper option, and I wish that the Conservatives would be aware of that. As for railway redevelopment, the hon. Member for South-West Hertfordshire perhaps gives us credit for having more cunning than my colleagues are capable of. However, now that he has acknowledged on the Floor of the House that Liberal Democrat projects will make an immense difference to many of my hon. Friends' constituents, I am sure that his words will be quoted in Liberal Democrat "Focus" leaflets in no time at all.

Nowhere is there a more urgent need to invest than in housing. There are 1.77 million households on the housing waiting list in England. Far from the need declining, more and more families are struggling to afford private rents or mortgages. The Council of Mortgage Lenders has estimated that 75,000 families will have their homes repossessed this year. Many will arrive at their council's door with their belongings in one hand and their children on their other arm. Councils will have nowhere to house those people, because housing projects have been drying up.

Demand for housing does not dry up because house prices are falling or because banks have stopped lending. As soon as lending recovers, the real and present danger will be that we might end up with hyper-inflation in the market, because we will have failed to keep pace with true demand in the meantime. As my hon. Friend the Member for Twickenham said, the truth is that house building in both the public and private sectors has stalled. Figures from the National House-Building Council suggest that the industry started fewer than 30 per cent. as many homes in the last quarter of 2008 as it did in the last quarter of 2007.

In an intervention, my hon. Friend Chris Huhne mentioned developments in his constituency. Many such developments are now being mothballed, which is why my hon. Friend the Member for Twickenham has been arguing for a dramatic increase in the amount of funding available for councils and housing associations to buy up such properties. The Minister said that that money had been made available, but only £200 million has been made available through the national clearing house scheme, most of which has been spent. Surely that demonstrates the need for more money to be made available.

The problem with housing associations being able to build is partly to do with lending and partly to do with the model of cross-subsidy that has been used for a decade to fund social house building. That model will simply not work in the current climate. Private sales have dried up. Housing associations that previously relied on being able to sell homes off plan cannot even sell them when they are fully built. Furthermore, low-cost home ownership lending products are no longer being offered by banks, so all the options for housing associations to cross-subsidise their social housing, affordable housing and housing for rent are just not available.

As a consequence, many housing associations have stopped building—they have certainly stopped building shared ownership homes—because they know that mortgages are not available. The consequence for them, as for the construction industry, is that they are making many staff redundant. The Government will have to accept that Treasury subsidy-per-unit targets will not work at the moment. The Homes and Communities Agency says that it will make more flexible funding available, but we need that funding to get to housing associations quickly, so that they can take advantage of it. Delay is costly for those people waiting for social housing.

I said that a consequence of the fact that building has stalled is that construction workers are being laid off in their thousands. The Federation of Master Builders predicts that job losses in the construction industry could reach 90,000 this year. The consequence is not just short-term, and it is not just misery for families whose major breadwinner has lost their job. The costs will be felt in the British economy for at least a decade, because even when the money to build again becomes available, the country will have lost vital construction skills, and it will take a decade, or possibly even a generation, for us to recover. Families, certainly in my constituency, cannot wait that long for house building to begin again.

In the face of that, the Government have been tinkering at the edges. They are bringing forward £400 million in the next 18 months for social housing providers to deliver just 5,000 homes, but 1.7 million households are on the housing waiting list. A further £150 million was announced in the pre-Budget report, but reports from the Department for Communities and Local Government suggest that it has not yet even worked out how to allocate that. It is a drop in the ocean given the fiscal stimulus that is needed for the recession, and given the number of families desperate for housing.

Some £12 billion was frittered away on a VAT tax cut that made little or no difference to most families; that money would have been better used in putting unemployed people back into work, and in leaving a lasting legacy that would save energy, reduce bills and fight climate change. With the money used to make a tiny VAT cut, we could have insulated every school and hospital in the country, funded insulation for a million people languishing in fuel poverty, and have built 40,000 extra zero-carbon social homes. The Conservative spokesperson said that that was not a response to the recession; well, it is certainly a response to need, and he has come up with no response to the recession whatever.

If the Government really wanted to cut VAT, how much more useful would it have been to cut the rate of VAT for rebuilding and renovation? My hon. Friend Bob Russell made a point about the number of empty homes that are left derelict, not just in the private sector, but often in the public sector. There are more than 700,000 empty properties in England—enough to make a sizeable dent in the amount of housing needed in this country—yet the Government are not prepared to take the action necessary to bring those homes back into use. What is needed from the Government is a dramatic building programme that focuses attention across all Departments. They need to get the public sector to release land now. They need to bring forward substantial amounts of new money, and money in the existing comprehensive spending review, to make sure that housing associations and councils can buy up land and property while prices are cheaper.

Embed this video

Copy and paste this code on your website