Higher Rates for Additional Dwellings

Finance (No. 2) Bill – in the House of Commons at 9:00 pm on 18th December 2017.

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Question proposed, That the clause stand part of the Bill.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

With this it will be convenient to discuss the following:

That schedule 11 be the Eleventh schedule to the Bill.

Clause 41 stand part.

Amendment 2, in clause 8, page 4, line 16, at end insert—

“(4A) Regulations under this section may not increase any person’s liability to income tax.”

This amendment provides that the power to make regulations in consequence of the exemption from income tax in respect of payments of accommodation allowances to, or in respect of, a member of the armed forces may not be exercised so as to increase any individual’s liability to income tax.

Amendment 3, in page 4, line 17, leave out from “section” to “may” in line 18.

This amendment is consequential on Amendment 2.

Clause 8 stand part.

New clause 4—Review of Relief for First-Time Buyers—

“(1) The Commissioners of Her Majesty’s Revenue and Customs shall undertake a review of the impact of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003.

(2) The review shall consider, in particular, the effects of the relief on—

(a) the public revenue,

(b) house prices, and

(c) the supply of housing.

(3) The Chancellor of the Exchequer must lay a copy of a report of the review under this section before the House of Commons no later than one calendar week prior to the date which he has set for his Autumn 2018 Budget Statement.”

This new clause requires a review to be published prior to the Autumn 2018 Budget on the impact of the relief for first-time buyers, including its effects on house prices and on the supply of housing.

New clause 10— Annual Report on Relief for First-Time Buyers—

“(1) The Chancellor of the Exchequer must prepare and lay before the House of Commons a report for each relevant period on the operation of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003 not less than three months after the end of the relevant period.

(2) The report shall include, in particular, information in respect of the relevant period on—

(a) the number of first-time buyers benefiting from the relief,

(b) the number of purchases benefiting from the relief,

(c) the average age of first-time buyers benefiting from the relief,

(d) the effects on the operation of the private rented sector,

(e) the effects on council housing and other social housing,

(f) the effects on the supply of affordable housing, and

(g) the effects on the operation of collective investment schemes under Part 17 of the Financial Services and Markets Act 2000 in the provision of cooperative housing.

(3) For the purposes of this section, “relevant period” means—

(a) the period from 22 November 2017 to 5 April 2018,

(b) each period of 12 months beginning on 6 April during which the relief is in effect, and

(c) the period beginning on 6 April and ending with the day on which the relief ceases to have effect.”

This new clause requires an annual report on the operation of the relief for first-time buyers, including information on the beneficiaries and effects on different aspects of housing supply.

New clause 5—Parliamentary Scrutiny of Regulations Relating to Armed Forces’ Accommodation Allowance—

“(1) Section 717 of ITEPA 2003 (regulations made by Treasury or Commissioners) is amended as follows.

(2) In subsection (3), leave out “subsection (4)” and insert “subsections (3A) and (4)”.

(3) After subsection (3), insert—

‘(3A) No regulations may be made under section 297D unless a draft has been laid before and approved by a resolution of the House of Commons.’”

This new clause requires that regulations setting conditions relating to the availability of the income tax exemption in relation to armed forces’ accommodation allowance shall be subject to the affirmative procedure.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The Budget set out an ambitious plan to tackle the housing challenge—a plan that will raise housing supply by the end of this Parliament to its highest level since the 1970s. However, the Government also recognise that we need to act now to help young people who are trying to get on to the housing ladder. This Bill therefore introduces a permanent relief in stamp duty land tax for first-time buyers, which I will turn to shortly. Alongside that, I will also cover clauses 8 and 40, which respectively introduce an income tax exemption for accommodation payments made to members of the armed forces and make minor changes to the higher rates of stamp duty land tax.

Home ownership among young people has been falling. Today, the average house in London costs almost 12 times average earnings, nearly 10 times average earnings in the south-east and more than eight times average earnings in the east.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Does the right hon. Gentleman not accept that the only solution to the housing crisis is to build millions more houses, not to pump demand into the demand side, which just pushes up prices in the end?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Gentleman makes an important point. We announced plans in the Budget along the exact lines that he has suggested in order to free up the supply side and to increase supply to 300,000 units by the mid-2020s. In the last 12 months, we have achieved 217,000 new builds, so we are on our way, although it will take time. He is quite right that the supply side matters.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Brexit) 9:45 pm, 18th December 2017

Does the Minister accept that, although it is important to increase the supply of houses, this measure has been welcomed by young people who see this as at least an opportunity for them to be able to get a deposit for a house and to have fewer up-front costs?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My hon. Friend is entirely right. The point about up-front costs—alongside the costs of conveyancing, surveyors and so on—is a critical one, particularly for young people getting on to the housing ladder.

Photo of Gareth Snell Gareth Snell Labour/Co-operative, Stoke-on-Trent Central

Average wages in Stoke-on-Trent are £100 a week lower than the national average, and the average house price is only £123,282, so will the Minister tell me the tangible benefits of lifting the stamp duty threshold to £300,000 for my constituents in Stoke-on-Trent?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

There is not an area or region of the country that will not see benefits for first-time buyers. [Hon. Members: “Yes, there is.”] No, I am afraid that that is simply not the case. This measure will benefit first-time buyers in every single region of the country. It is the case that property is a lot more expensive in some parts of the country than in others. Arguably, that is where the particular need is. As I have said, the average house price in London is 12 times average earnings, and it is 10 times average earnings in the south-east.

Photo of John Spellar John Spellar Labour, Warley

Can the Minister give us any indication of his Department’s estimate of the cost of this measure and of the incidence—how it falls— in different regions of the country? In other words, how much is it going to cost globally and what other housing could the Government have built with that money? Equally importantly, how much of this will be in the south-east and how much in other regions?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

In addition to what I just said about every region seeing benefits, I can tell the right hon. Gentleman that the average benefit for the average first-time buyer will be around £1,700, which is a significant amount. For people purchasing a property at the £300,000 to £500,000 level, the benefit is no less than £5,000, which is a considerable sum.

Photo of Lloyd Russell-Moyle Lloyd Russell-Moyle Labour/Co-operative, Brighton, Kemptown

Does the Minister disagree then with the Office for Budget Responsibility, which says that the measure will actually increase house prices by 0.3%? Is the OBR wrong?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

As the hon. Gentleman may know, the figure of 0.3% takes a static view of this policy and its effect on house prices. It does not take into account the supply side changes that I have mentioned. As we increase supply, prices will inevitably begin to fall. There is no single solution to this challenge and no magic bullet.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I will make a little progress, if I may.

The Budget announced an ambitious package of new policies to tackle the housing challenge, including planning reform; spending; and a new agency, Homes England, to intervene more actively in the land market. Together with the reforms in the housing White Paper, the housing package announced in the Budget means that we are on track to raise annual housing supply by the end of this Parliament to its highest level since 1970 and to 300,000 a year on average by the mid-2020s. That means that housing supply is on track to be higher over the 2020s than in any previous decade. However, it will take time to build these new homes, and the Government want to act now to help those young people who are aspiring to take their first step on to the housing ladder. That is why the Bill permanently abolishes stamp duty for first-time buyers purchasing a property for £300,000 or less. First-time buyers purchasing a house that is between £300,000 and £500,000 will save £5,000. To ensure that this relief is targeted at those who need it most, purchases above £500,000 will not benefit from the relief.

Photo of Gareth Snell Gareth Snell Labour/Co-operative, Stoke-on-Trent Central

I thank the Minister for taking a second intervention from me. To my earlier point, though, there are fewer than 15 properties currently on the market in Stoke-on-Trent between the value of £250,000 and £300,000. I say again: the average wage in Stoke-on-Trent is £100 a week less than the national average. How will young people in Stoke-on-Trent benefit, when the housing supply does not exist and the wage level will simply not allow them to purchase a property of that value?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The figures the hon. Gentleman chose to use were, I think, a range between £250,000 and £300,000, and he says there are 15 properties in that category. Of course, stamp duty kicks in at £125,000, so it is the range from £125,000 to £300,000 that we would actually be considering in that example.

First-time buyers are typically more cash-constrained than other buyers, and stamp duty requires cash up front, on top of a deposit and conveyancing fees, for purchases over £125,000. The Government think it is right to reduce the up-front costs that first-time buyers need to pay, giving them an advantage over the rest of the market.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

I thank the Minister for giving way, but he simply did not answer the question from my right hon. Friend John Spellar, who quite legitimately asked him where the money from this cut is going. The Minister talked about the average gain that will be made. Will he tell us the average benefit to a first-time buyer in the west midlands?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

As I say, the average across the piece will be £1,700 per average first-time buyer. I also stated quite clearly that, in every region of the country, there will be those who benefit from this measure.

Photo of John Spellar John Spellar Labour, Warley

I thank the Minister for giving way, but surely his Department must have done an analysis, first, to convince the Treasury of how much this would cost and, secondly, to work out how much this would affect each region—in other words, how much benefit was going to the south-east, how much to London, how much to Yorkshire and how much to the west midlands. Why is he so reluctant to open up about those figures?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

What I am able to tell the right hon. Gentleman is that, as I have said, the average benefit will be £1,700 for the average first-time buyer. Every region in the United Kingdom will see benefit from this measure, and those regions—particularly in the south and south-east—where the ratio of salaries required to mortgage levels is particularly high will especially benefit.

However, the other thing we need to do as a Government, as I have already stated, is to make sure we get the supply of housing right. That is why we will be moving from the current level of 200,000 new builds a year up to 300,000 in the middle of 2020s.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

It is important to put on the record that Northern Ireland probably benefits disproportionately as a result of this measure, compared with any other part of the United Kingdom. The average house price in Northern Ireland is £128,650—in some areas west of the Bann, it is about £109,000—so hitting house prices over £300,000 would involve such a limited market. Many, many people in Northern Ireland are going to benefit from this, and I welcome the move the Government have made.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I thank my hon. Friend for those comments, which illustrate the point that there are benefits accruing across all regions of the United Kingdom.

The changes made by this Bill include the largest ever increase in the point at which first-time buyers become liable for stamp duty. This relief will help over 1 million first-time buyers who are taking their first steps on the housing ladder during the next five years. It provides immediate support while our wider housing market reforms take effect.

The changes made by clause 41 ensure that over 95% of first-time buyers who pay stamp duty will benefit by up to £5,000, including 80% of first-time buyers in London. That means that over 80% of first-time buyers will pay no stamp duty at all, and it saves the buyer of an average first property nearly £1,700, as I have said.

In summary, this change to SDLT will help millions of first-time buyers getting on to the housing ladder. Together with the broader housing package we have announced, we are delivering on our pledge to make the dream of home ownership a reality for as many people as possible.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I am going to make further progress.

I will now move on to other changes relating to stamp duty. Clause 40 brings forward some minor changes to the higher rates of stamp duty land tax for additional properties, which will improve how the legislation works. The changes help in a number of circumstances, including in relation to those affected by divorce or the dissolution of a civil partnership, where they have had to leave a matrimonial home but are required to retain an interest in it, and in relation to the interests of disabled children, where a court-appointed trustee buys a home for such a child.

We will also close down an avoidance opportunity. The Government have become aware of efforts to avoid the higher rates by disposing of only part of an interest in an old main residence to qualify for relief from the higher rates on the whole of a new main residence. This behaviour is unacceptable, and the Government have acted to stop it with effect from 22 November.

Clause 8 introduces a new income tax exemption for payments made to members of the armed forces to help them to meet accommodation costs in the private market in the UK. The exemption enables them to receive a tax-free allowance for renting accommodation or maintaining their home in the private sector. The allowance will also be free of national insurance contributions. That measure will be introduced through regulations at a later date. By using the private market, the Ministry of Defence will be able to provide access to similar accommodation, but with more flexibility.

Opposition Members have tabled amendments 2 and 3 to the armed forces accommodation clause, and I look forward to hearing about them in the debate. The amendments seek to prevent the Treasury from laying regulations that would increase the liability of a member of the armed forces to income tax. I am happy to reassure the Committee that the Government do not intend to use the power to increase tax liabilities either now or in the future. The regulation-making power is retrospective so that the allowance can be provided tax free before regulations take effect. As a standard safeguard, the Bill expressly provides that the Government would not retrospectively increase tax liabilities. I hope that, in the light of that, hon. Members will not press their amendments.

New clause 5, also tabled by Opposition Members, would require the House to expressly approve any regulations made under the clause. The Bill provides for regulations to be made under the negative procedure. Regulations made under the clause will align the qualifying criteria for the proposed exemption with the Ministry of Defence’s new accommodation model once more details are available. Any future regulations will ensure that the tax exemption reflects changes to the model. It would be a questionable demand on Parliament’s time, particularly over the next two years, for it to be called on to expressly approve regulations in these circumstances. The negative procedure provides an appropriate level of scrutiny. I therefore urge the Committee to reject the new clause.

The stamp duty relief for first-time buyers is a major step to help those getting on to the property ladder, and one that has been widely welcomed. The other changes made by these clauses provide relief from some tax costs associated with housing for several groups that deserve them. The clauses also tackle avoidance. I commend clauses 41, 40 and 8, and schedule 11, to the Committee.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

This country is in the grip of a severe housing crisis that the Conservatives have allowed to spiral out of control over the past seven years. Making sure that people have a roof over their heads and can raise their families somewhere safe, decent and affordable is more than just a matter of sound public policy—it is surely a yardstick of a decent society. At the moment, we are falling short of this yardstick to a degree that is shameful for one of the world’s most affluent nations.

Now, after seven years of Tory government, the Government say that they have noticed the problem, yet it is not on the brink of being resolved but rather exacerbated. The Chancellor’s autumn Budget, from which the measures in the Bill are drawn, falls woefully short in addressing the scale of what is needed. Since 2010, house building has fallen to its lowest level since the 1920s, rough sleeping has risen year on year, rents have risen faster than incomes and there are almost 200,000 fewer homeowners in the UK.

Photo of Lucy Frazer Lucy Frazer Conservative, South East Cambridgeshire

Can the hon. Gentleman confirm whether Labour built houses when it was in office or house building fell when Labour was in office?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

Labour’s record in office is 2 million more homes, 1 million more homeowners, and—something that is particularly important to me as a Labour councillor during some of that time—an incredible investment in social housing. In local government, we used to ask whether we could ever fulfil the backlog in repairs that the Thatcher and Major Governments had created, but we did, and it made a tremendous difference to people’s lives.

The one headline-grabbing move that the Chancellor made in the autumn Budget was the abolition of stamp duty land tax for first-time buyers up to the value of £300,000. I acknowledge that this was a Labour policy included in our manifesto for the June 2017 general election, but we were very clear in that manifesto that the measure should be proposed only if there were accompanying measures to increase supply. Without these, stamp duty land tax cuts risk further inflating a housing bubble that is snatching the idea of home ownership out of reach for the younger generation.

Photo of Anne Main Anne Main Conservative, St Albans 10:00 pm, 18th December 2017

In St Albans, we are very grateful for the Chancellor’s abolition of stamp duty. Is the hon. Gentleman saying that the Labour party is against it, and that he does not wish it to happen?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I have just explained that the policy was our idea to begin with, but it is effective only if it is accompanied by measures to increase supply.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

The hon. Gentleman says that he will support the policy if it is accompanied by measures to increase supply. That is exactly what the Chancellor has introduced in the Budget, so will the hon. Gentleman support the measure, or is he against cutting stamp duty for first-time buyers?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

No, we are not, as I have just explained, but there have to be measures that genuinely increase supply. I will explain to the hon. Lady that the measures in this Budget do not in any way contribute to that, and we will get on to the Office for Budget Responsibility’s definition.

Photo of Lucy Frazer Lucy Frazer Conservative, South East Cambridgeshire

The Budget states that 300,000 houses will be built every year. That is a measure to increase house building, so will the hon. Gentleman commit to supporting the stamp duty measure?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

Members have become accustomed to the fact that the number of homes that the Government claim to build is not always the actual number that are built. I will get to some of that record of failure later in my speech.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does my hon. Friend think it is a bit ironic that when a similar measure was proposed in 2015, it was derided as a gimmick by the then Chancellor?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

My hon. Friend is entirely correct. As we know, sometimes the situation in the Government means that they tend to look around for ideas, and they often find best practice in the Labour party.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Brexit)

Does the hon. Gentleman accept that the additional capital that is being put into housing, the attack on companies that engage in land banking and the aid to enable small builders to build more houses are all supply side measures?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

We will get on to whether those measures will be effective, based on the assessments that have been made. I am old enough to remember when a tax on land banking was described as Venezuelan-style socialism, so it is good to see some permutation of that idea among Government Members.

The analysis by the OBR on the likely outcome of the policy shows that it will push up prices by 0.3% in 2018.

Photo of John Spellar John Spellar Labour, Warley

My hon. Friend is talking about land banking by the big house builders. Is not the evidence of that the utterly obscene bonus being paid to the chief executive of Persimmon, which is so outrageous that the chairman of the company has seen fit to resign in disgust?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

My right hon. Friend identifies another feature of a dysfunctional market. That will be corrected only by a change in Government policy, but we have not seen one in the Bill.

Conservative Ministers’ review of a previous stamp duty cut concluded that the tax relief, in itself, had

“not had a significant impact on improving affordability for first time buyers”.

That is why Labour has tabled an amendment calling for the publication of a review prior to the 2018 Budget on the impact of the relief on first-time buyers, including its effect on house prices and the supply of houses.

The Minister, as usual, talked an extremely good game on funding for new housing, which he said would help to ameliorate the supply issue. On further scrutiny, however, we find that no measures in the 2017 Budget will directly increase house building. Only one third of the £44 billion announced in the Budget is genuinely new, and there is no extra Government investment in new affordable homes. That builds on a legacy of failure. Let us remind ourselves that not one of the 200,000 starter homes promised by the Tories three years ago has yet been built. That lack of action is having a serious impact across every part of our society. During the Government’s seven years in power, homelessness has doubled. Shockingly, recent statistics from the Department for Communities and Local Government show that nearly 80,000 households were homeless in September; that includes 120,000 children. The situation is extraordinarily urgent.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does my hon. Friend agree that one of the mistakes that former Chancellor Osborne made was the cap on rents, which threw into complete chaos the planning of social landlords and housing associations in budgeting for building new houses? It had the effect of reducing the supply, rather than increasing it.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

Absolutely. A combination of policy measures—not just the failure on new housing completions, but a range of other measures—has contributed to this toxic situation. We see it perhaps most visibly in Greater Manchester—I live there and represent part of it—than in any other part of the country, and thank goodness that we in Greater Manchester have a Labour Mayor in Andy Burnham who is so determined to make a difference on this matter. If Labour was in power, we would set up a taskforce, led by the Prime Minister, to end this, and we would start by setting out plans to make available at least 4,000 homes for people with a history of rough sleeping.

The homelessness statistics obviously include the hundreds of families who tragically lost their homes in the Grenfell Tower disaster in June, four-fifths of whom are still living in temporary accommodation. Although Labour welcomes the additional funding for mental health services for those affected by Grenfell, we have profound concerns about the fact that no new money has been allocated for fire safety throughout the country. The Government ignored calls to fit sprinklers to all social housing tower blocks in 2013, after the disastrous and fatal events that happened at Lakanal House and Shirley Towers, so it remains the case that only 2% of tower blocks in the UK have sprinklers installed. That figure should be of serious concern to us all.

We can see that the measures included in the Bill fall far short of what is needed to fix the housing crisis in Britain. We want in particular to discuss one measure that the Opposition are concerned may be being used as a fig leaf for just another cut. This is in regard to clause 8, the income tax exemption for the armed forces accommodation allowance, which the Minister mentioned. The explanatory note to the clause states that this is

“to allow members of the armed forces to give up their entitlement to accommodation in exchange for an allowance to be used to rent or maintain accommodation in the private market.”

Labour is concerned that this manoeuvre is designed to force more servicemen and women into the private rental sector, as part of a Government shift towards selling off the military housing stock in which armed forces personnel would ordinarily be housed.

Photo of Lucy Frazer Lucy Frazer Conservative, South East Cambridgeshire

The hon. Gentleman has mentioned that Andy Burnham is the Mayor of the area he represents. Does he remember that, in 2010, when Andy Burnham was standing for the leadership, he said:

“These issues are important, particularly stamp duty as it stands in the way of young people getting on in life”?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I commend the hon. and learned Lady for googling that so fast. I do not think that Andy Burnham’s resolution to tackle homelessness should be laughed at; it is admirable. As someone who has lived in Greater Manchester for nearly 20 years now, I see the scale of the social and urban decay on the streets around us. Anyone who travels to Manchester and moves a short distance in any direction from Manchester Piccadilly station will see what an appalling state of affairs we have reached. It is simply the case that every time the Conservatives are in power, they increase homelessness. For me, that is the most visible sign of a Conservative Government in office, and I commend any politician—Andy Burnham is leading on this for us in Greater Manchester—who makes the difference.

Photo of Gareth Snell Gareth Snell Labour/Co-operative, Stoke-on-Trent Central

The shadow Minister is making an excellent contribution. I want to point out, as he has in relation to Andy Burnham in Greater Manchester, that continual cuts to local government are forcing many local authorities to disinvest in their homelessness prevention services. For example, Stoke-on-Trent—a Conservative-run council—is cutting £1 million out of its homelessness prevention budget in the next five years. What does he say about such a situation, and what does he think could solve it?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I agree with the point my hon. Friend has made. The fact is that we know the impact that a series of Government measures have had, and we can reverse or improve on them. Fundamentally, we can change the availability of housing stock, but we can also create a policy framework that prevents people from being made homeless in the first place, and that is what we need to do.

Photo of Lloyd Russell-Moyle Lloyd Russell-Moyle Labour/Co-operative, Brighton, Kemptown

Does my hon. Friend agree that some of the wider measures, such as forcing through universal credit and local housing allowance caps, are forcing large numbers of people out on to the streets?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

Absolutely. There have been 13 consecutive cuts to housing association budgets, the cumulative impact of which is exactly as my hon. Friend describes. As constituency MPs, we are left requesting our local housing association simply to try to absorb the costs of this Government policy failure. In many cases, the housing association does so, but there is ultimately a cost. The cost is taking away available resources to build further houses, thus getting us into a situation in which the problem is never truly resolved.

I will return to the armed forces accommodation allowance. The Ministry of Defence has a target in the 2015 national security strategy and strategic defence and security review to sell off 30% of its estate by 2040, but the Conservatives have a track record of making poor decisions on selling off service family housing in the name of short-term savings. Annington Homes bought most of the service family accommodation from the Ministry of Defence for £1.6 billion in 1996. A 999-year lease was granted back to the Ministry of Defence at a discount, with the stipulations that the MOD would be responsible for maintenance and that Annington Homes could terminate individual leases and had the right to include five-yearly rental reviews and a breakpoint at 25 years. The National Audit Office has said that the MOD has therefore not benefited from the rise in house prices since the agreement and, in fact, has paid higher rental costs to Annington Homes. In 2016, Annington’s annual statement estimated its property portfolio to be worth £6.7 billion.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Having tried to get out of the Annington Homes contract when I was responsible for armed forces housing, may I say that the situation is worse than my hon. Friend describes? The MOD is still paying not only for empty houses, but for houses that have been demolished. It was the worst deal possible for the taxpayer.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I am grateful to my hon. Friend for sharing his expertise with the Committee. It truly is an appalling record of failure.

As every Member knows, there are enormous problems in the private rented sector in respect of affordability, quality and security of tenure. By forcing service families into the private rented sector, we risk reducing the quality of their accommodation and their quality of life. It might therefore impact on recruitment and retention rates.

The Government have so far offered little detail on which members of the armed forces will be entitled to the new allowance or what the rate will be and have not said whether the Treasury has done an impact assessment on local housing supply. The proposal ignores the fact that there is not a supply of affordable housing to buy or rent near many military bases.

It seems clear that the Government are attempting to rush the proposal through to make short-term savings, without considering the potential repercussions. Labour is demanding more consultation with armed forces personnel and a full and robust impact assessment of any proposed changes. Clear communication with armed forces families must be a top priority throughout this process and their long-term interest must be considered, as well as the long-term value for money for the taxpayer. Committing to sell this Government-owned housing risks shackling the public purse to ever-rising rents, as well as poor outcomes for armed forces personnel.

Given Labour’s concerns over the lack of detail over the armed forces allowance and any potential safeguards for members of the armed services in the private rental sector, Her Majesty’s Opposition have tabled an amendment that calls on the Government to publish a review of the measure to Parliament before it is enacted.

Overall, the measure forms part of a housing package that barely scratches the surface in addressing the country’s housing crisis. All the measures are too minimal to make a serious difference to the housing pressures that people face and too late to make up for the Government’s lack of action over the past seven years.

Photo of Robert Courts Robert Courts Conservative, Witney

It is a great pleasure to speak in this debate. I only wish to make some very brief comments because I have already spoken this evening and I am conscious of the fact that other Members wish to speak.

I will make a few comments about the armed forces exemption that we have just been discussing, because it has particular relevance to my constituency, where a great amount of the Royal Air Force is based at Brize Norton. We are awaiting the redevelopment of the two REEMA sites, which are particularly important. Already, a great number of Royal Air Force and Army personnel live either on the base or outside it, in particular in Bampton, Witney, Carterton and Brize Norton village.

I am glad that the Government have proposed this welcome measure. It falls into a similar bracket as the Armed Forces (Flexible Working) Bill, which we have discussed in the House over the past few weeks and months. It is important that we understand that expectations are changing. The armed forces offer must be able to stand alongside what can be received in the civilian world. This measure has the potential to provide exactly that.

At the moment, there is the anomaly that if personnel live in Ministry of Defence accommodation, it is essentially provided tax free, but if an armed forces allowance is given, there is taxation on it. That is how the rules work at the moment, so clearly personnel would be disadvantaged. We have to accept that in many cases, armed forces personnel wish to live outside a base, perhaps close to where their spouse works or where their children go to school. I welcome the measure because it moves us a step along the road towards realising that.

Photo of Mike Penning Mike Penning Conservative, Hemel Hempstead

The people who serve in our armed forces today—I have some experience of this—are looking for a different model and a different way of life for their families to grow up in. In the old days, they would have been in the garrisons or the ports. My constituency is further from the sea than anywhere else in the country, yet I have Royal Marines bringing their families up in the town. They are penalised for doing that because of the way the scheme works now. The new scheme will help them and they tell me that they are looking forward to it.

Photo of Robert Courts Robert Courts Conservative, Witney 10:15 pm, 18th December 2017

I am very grateful to my right hon. Friend for making that point. His constituency is very similar to mine in that respect. I welcome this measure and I anticipate that my constituents will as well.

Those brief comments are the only ones I wish to make. I very much welcome this measure because it is in the interests of west Oxfordshire, in particular Brize Norton. It helps to bring forward the offer to which my right hon. Friend refers. We have to accept that there is a change in expectation on the part of many members of the armed forces and this is welcome.

Photo of Sandy Martin Sandy Martin Labour, Ipswich

I am concerned about the lack of impact that financial incentives for first-time buyers appear to be having on encouraging housebuilding. The recent pay-offs for Persimmon Homes executives are surely good evidence that a substantial proportion, if not all, of the Government’s money is going into exceptional profits for private housebuilders, rather than genuinely making homes more affordable. We need to know that any money or tax incentives that the Government put into housing will genuinely help people to achieve the housing they need.

The cost of housing for residents is not just about the building itself, but the costs of running the building. New houses are still being built which make short-term savings for the builders at the cost of a long-term expense for their owners or tenants, and also at a long-term cost to the environment. Ipswich Borough Council had a substantial plan to install solar PV panels on all suitable roofs on its substantial council housing estate. It was all set to go in 2013 when the Government moved the goalposts and blew a hole in the business case. The Government seem to be willing to promise vast sums as guarantees for new nuclear powers stations, but they are not willing to use the extensive potential tax powers at their disposal either to incentivise housebuilders to install photovoltaics in original buildings or to adequately incentivise owners to install them on existing buildings.

Increasing the number of solar panels on the roofs of this country would be one of the most cost-effective ways of generating the electricity we need. It would be more beneficial to the residents of those buildings. It would take effect far sooner than waiting for the construction of nuclear power stations and it would predominantly employ working people and small businesses in this country.

Many of us were hoping that the Government would have found further substantial incentives for solar panels in the Bill. I can only hope that a review of the operation of housing finances and an equality impact assessment of the way the Bill will affect low-paid people might encourage the Government to look again at how they can make housing less expensive for those who live in it.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

I want to talk about the cut to stamp duty for first-time buyers, but before I do so I would like to take the opportunity to briefly remind Ministers on the Treasury Bench that in March my constituency suffered a terrible disaster: the gas explosion in New Ferry. The Department for Communities and Local Government currently has Wirral Council’s plan for the rebuild. I trust that, in the context of discussing new housing, Treasury Ministers will look kindly on the plan should it come before them.

I want to argue against the cut to stamp duty and for the Opposition amendment, which calls for a review of the policy, and a review of the place of first-time buyers in the housing market and the supply of housing. My argument against this specific policy is, first, that it looks set to fail against the targets the Government have set themselves; and secondly, that in the current economic context it is simply the wrong policy priority. Perhaps we might consider this policy if we were experiencing the same growth as other countries in Europe or we had dealt with our budget deficit, but even if it was not set to work against what the Government have tried to achieve, it would still be the wrong policy because it is not the country’s priority.

I imagine this policy coming before Treasury Ministers during the Budget preparations and their thinking to themselves, “Well, this might be attractive on the face of it, but ought we not to ask our bevvy of economists here in the Treasury what the likely impact might be?” Kwasi Kwarteng just rolled his eyes at me, and he did so because he knows as well as I do—we have debated it often enough—that the advice from the OBR was entirely predictable.

It was entirely predictable that anyone looking at the policy in the current economic climate would say that we have clear, credible evidence from previous changes to stamp duty that the value of this tax change will accrue not to first-time buyers but to those who already own properties. That is what the OBR says, and it is what advice from the specialists in the Treasury would have told Ministers. I do not know—I have no evidence of this—but I have confidence in the Government Economic Service and I think they would have told Ministers that.

Furthermore, it is very unlikely that the Treasury does not have the full analysis requested by my right hon. Friend John Spellar. All Members across the House know in their own minds whether their constituencies will benefit from this, and all members of the Cabinet know whether constituents in their constituencies—which are largely in the south-east of England—will benefit. Those of us who have watched house prices in our constituencies barely grow at all in the past 10 years will know that our constituents will benefit very little from this very expensive tax change.

Photo of Anne Main Anne Main Conservative, St Albans

I am listening carefully to the hon. Lady, because obviously I have a constituency in one of the higher value areas. I am confused. The shadow Minister just said that the stamp duty cut was not appropriate because the right measures were not in place for affordable housing, whereas she seems to be saying that a stamp duty cut is not what she would like to see. Which is it? Does she think that the stamp duty cut should not happen at all? I would like a simple yes or no answer.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

I thank the hon. Lady for that intervention, but I have already answered her question. I said that in better economic circumstances this might be something that we might want to do, but it is not a priority for now. I answered her question before she even asked it.

Given what the OBR has said, I ask Ministers once again to look at that and at the evidence. The value of this tax cut will not go to first-time buyers. That is absolutely clear. If Ministers think that they can come back to this House after having a review and persuading the OBR that the Treasury is correct and the OBR is wrong, then fine, we can look at it, but I see no reason to think that, and here is why. When we asked the Chancellor about this measure in the Treasury Committee, he gave the same line as the Minister just gave at the Dispatch Box. He said, “Ah, yes, but the OBR assessment —their model—doesn’t take into account our reforms, which will make a huge difference to the supply of housing.”

Anybody can look at page 28 of the Budget—at the Budget scorecard. This year, the stamp duty land tax cut will cost us £125 million. How much extra will we spend on the housing infrastructure fund? A big fat zero. Next year, 2018-19, the stamp duty land tax cut will cost us a whopping £560 million. How much extra will we spend on the housing infrastructure fund? A big fat zero. In fact, according to the Budget we will not spend anything on extending the housing infrastructure fund until 2019-20, when we will spend £215 million. In the same year, we will spend £585 million on the tax cut. And so it goes on, and on. We are frontloading a tax cut and pushing back spending on housing infrastructure. How can the Chancellor come to this House and say, “Oh no, the OBR has got it all wrong, because we are going to build all these houses and that will sort out the housing market”? Honestly, Mr Owen, I do not know what he is talking about.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Brexit)

Does the hon. Lady not accept that, for a variety of reasons—planning permissions, procurement, or whatever—the capital expenditure cannot be turned on immediately? There is always a delay. It is not a question of “pushing it off”; it is simply a fact of life.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

The hon. Gentleman seems to be arguing that it takes a little bit of time for capital expenditure to get going. That is an argument for us to increase capital expenditure now, and wait until we have increased supply to make the tax cut. It is the front-loading of the tax cut versus pushing off our investment until sometime in the future.

In proposing the stamp duty land tax cut, the Government have admitted that they have no further ambitions to rebalance our economy between the regions, and no further ambitions to tackle the disgraceful inequality between different parts of the country. In the north-west and the north-east, house prices have grown barely at all, whereas in the south-west, for example, they have shot up and wages have been held disgracefully low. This policy gives money to those who already have assets. It is a charter for inequality, and if it is ever to be implemented, it should not be implemented now.

The number of children in poverty is due to increase by nearly half a million: there will be 400,000 more children in poverty over the period of this Budget. The Government may say, “That is unfortunate, but benefits have to be frozen, and we need to focus on investment so that we can build our way out of these difficult economic circumstances.” This tax cut, however, is not investment. It is just a revenue cut—a tax giveaway—at a time when we could be ensuring that child poverty does not increase. The two-child policy that the Government have stuck to is an absolute disgrace. It shames our country that we are saying, “If you are the third child in a family, in poverty, the Government have nothing to say and will do nothing to help you.”

If the Tories who are now in power actually believed their rhetoric of compassionate conservativism, they would agree with me that if there were ever a time for this tax cut, it would not be now. Let me leave them with this comment. They may think that they can get on with this, and that they will have decent headlines on the front pages of the newspapers because newspaper editors might like the idea of first-time buyers being able to buy properties that they, perhaps, own. They may think that they will get a fair wind because tax cuts of this kind are popular.

I will tell you what is really unpopular in our country, Mr Owen. As we heard earlier from my hon. Friend Jonathan Reynolds, what is really unpopular in our country is having to step over rough sleepers while walking home. What is really unpopular in our country is having to watch other parents taking paper into schools because our schools cannot even afford the basic necessities. And what is deeply unpopular in our country is watching the number of food banks grow because jobs do not pay enough.

People will remember that while all that was going on, the Tories were busy cutting stamp duty for people who could afford to buy houses. I do not think they will ever forget that.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I agree with Robert Courts and Sir Mike Penning about the armed forces allowance. In my experience, as in theirs, the modern member of the armed forces, whether male or female, wants choice. I have nothing against that, but I think that this is the wrong way of providing it. As we heard from my hon. Friend Jonathan Reynolds, the problem now is that much of our military housing stock was locked into what was a terrible deal for the taxpayer during the last year of the Major Government, who sold most of the housing stock in England.

Photo of John Spellar John Spellar Labour, Warley

May I correct my hon. Friend? In the last few months of the Major Government, Michael Portillo, in a hugely criticised deal at the time, basically gave Nomura the deal of the century.

Photo of Kevan Jones Kevan Jones Labour, North Durham 10:30 pm, 18th December 2017

My right hon. Friend is right: the taxpayer got about £1 billion and it has been a shoddy deal, because not only did it lock us into a long-term contract, but it locked us into a ludicrous situation whereby, once houses became surplus and were given back to Annington Homes, the taxpayer had to refurbish them and also in some cases—when they were having to be knocked down, for example—if they were within the wire of a base, we were still paying the rents on what were basically empty spaces. I had a look at this when I had ministerial responsibility in the Ministry of Defence, and I am sure my friend Sir Mike Penning did as well. We must not blame Nomura; it made a great deal for itself, but it was a bad deal for the taxpayer.

The right hon. Gentleman and Robert Courts raised an interesting point: the way our armed forces operate these days has changed. Many more people travel long distances at weekends: it is not unusual for servicemen and women who live in the north-east to travel to the south coast at weekends and back again. When Labour was in government, we put a lot more money into single living accommodation; that was the way forward.

We have been promised the new housing model by the MOD, but it has not yet materialised. I was working on that at the time, because I, like the right hon. Gentleman and the hon. Gentleman, recognised that the fit we have at the moment does not work. The Army did not like it, because the Army—or a certain general—held the very traditional view at the time that we needed the regiment around the base.

I cannot understand why this is being done in advance of that new housing model being brought forward. The hon. Member for Witney raised a point in respect of his area that I have also looked at: if we are going to bring in this change, we will have to bring it in over a number of years and provide housing locally, to ensure there is a supply of housing locally for those who want to live locally. We were looking at working with local housing associations and others to provide that.

There is nothing wrong with the model of this housing allowance, therefore, but if it is done in the vacuum in which it is being done, it can lead to situations whereby people take their housing allowance and then find that they are at the mercy of the over-inflated local housing market in and around some of our garrison towns and ports.

Photo of Mike Penning Mike Penning Conservative, Hemel Hempstead

The hon. Gentleman—my friend—and I agree on most things, but no one is going to force people into doing this. We must wait for the model to come forward, and I would not vote for something where we forced people into such a scheme, as the Opposition Front Bench claimed. But my friend is wrong to say we will have to address this just around the localities: we will have to do that, but these people often want to find accommodation in their own home towns, so they can be around their family structure. That is the way the armed forces are now, rather than just having the garrisons, and the super-garrisons, which are coming.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I do not disagree with the right hon. Gentleman, but unless we do some work on where we are going to house these people and families, we will be throwing them out to the market. That is why the last Labour Government introduced the early support for members of the armed forces who wish to purchase their own property, a move that was cancelled in the first Budget in 2011. There is a mixture here: some members of the armed forces want to buy, while others will want to rent as they move around.

To do this without any thought about how we are going to provide the housing behind it is a little strange, and I cannot understand why this measure is being brought in now. The right hon. Gentleman said people are not going to be forced, and I agree, but if they think it is attractive and then suddenly realise it is not, will they be able to go back?

Instead of having a piecemeal approach like this one, or putting the cart before horse, we should have waited for the new housing model before this proposal was brought forward. As part of this mix, I would also like people to be able in some cases to opt not for rental allowance, but for support for mortgage payments; we introduced that, but it was cancelled in the first Budget in 2011.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I am doing the armed forces parliamentary scheme, which gives me the opportunity to speak to Army, Royal Navy and Royal Air Force personnel. The issue that comes up all the time is accommodation for families. If we do not get the accommodation right for families, we will not retain the personnel. We need to retain the personnel, so does the hon. Gentleman agree that we need to work on those issues and that the introduction of this policy could provide an opportunity to ensure that Army personnel can be retained and that the accommodation is up to standard?

Photo of Kevan Jones Kevan Jones Labour, North Durham

I do agree with the hon. Gentleman. Anyone with a close involvement with the armed forces, as he has, will know that we rely on those men and women to go on operations and that a key issue for morale is to ensure that their families are supported during those times.

I am a bit wary about this proposal for another reason. When the Australians introduced this type of rent allowance, they did it gradually, over a 10-year period. There was therefore a transition period with new starts and other people coming in. The proposals in the Bill seem a bit piecemeal, and if they are not done in a thought-out way, we could end up in a situation in which Annington Homes retracts the existing accommodation and people’s options become limited. Again, I think this is the right move forward but it is not being done in the right way. Anything that the Treasury can do to extract the Ministry of Defence from the Annington Homes contract would be universally welcomed—[Interruption.] The right hon. Member for Hemel Hempstead is shaking his head. He has obviously looked the same thing as me. Let us wait and see what the new housing model delivers, but let us hope that it adopts a joined-up approach that will be of benefit to members of our armed forces.

I want to turn now to stamp duty. My right hon. Friend John Spellar asked the Minister which regions would benefit the most from this proposal. The Minister, as usual, sidestepped the answer, but it is in fact quite clear. The average house price in County Durham is £138,000. In London, it is £488,000, so it is quite clear where the money will go. As my hon. Friend Alison McGovern said, the Government are completely ignoring the idea of trying to eradicate inequalities throughout the regions. Indeed, they will actually increase them through these moves.

There is a broader point, however. I passionately believe that people who aspire to own their own home should be able to do that, and we should be able to help them to do it. The problem with this Government, however, is that they have one trick in their armoury, which is the idea that the private sector should deliver all this. They believe that the only way to achieve the mythical 300,000 new homes is to allow the private sector to deliver them. Well, I am sorry, but if they are going to rely on the private sector to do that by supplying 300,000 new homes for purchase, that will not deliver the homes that we need in most areas—not just in London but throughout the regions.

Photo of John Spellar John Spellar Labour, Warley

Does my hon. Friend agree that the underlying problem is that the private sector supply side is becoming increasingly dysfunctional? Indeed, it is becoming an oligopoly, and many of the companies involved are no longer construction companies but just land banks.

Photo of Kevan Jones Kevan Jones Labour, North Durham

They are indeed. My hon. Friend Sandy Martin mentioned the example of Persimmon earlier. Many of those companies are no longer housebuilders in the traditional sense. They are employment agents who employ contractors to do things. In my own constituency, some of the complaints about new builds are pretty horrendous, and I think that that experience is shared across the House.

Photo of Gareth Snell Gareth Snell Labour/Co-operative, Stoke-on-Trent Central

Where private developers are developing houses, they are all too often quick to run to the district valuer to argue that affordable and social housing makes development schemes unaffordable, so fewer affordable social houses are being built through private development.

Photo of Kevan Jones Kevan Jones Labour, North Durham

My hon. Friend makes a good point. Added to that is the fact that the definition of “affordable” in London is completely out of reach for most people.

The Government have this one idea that we are going to solve our housing problem through the private sector. I accept that it has a part to play, but the social sector, meaning both councils and very good housing associations, could step up to the mark and actually provide houses where we need them. If we look at the amount of money that is going into the subsidy, as mentioned by my hon. Friend the Member for Wirral South, we would not even have to spend money directly on social housing. We could provide new housing by just underwriting the debt of some of the social housing providers. In my area, Derwentside Homes and Cestria have now come together as an organisation called Karbon—I emphasise the k for the Hansard reporters, but I think it is a stupid name—which has been able to do small-scale developments by borrowing against its assets. If it had Government support for that borrowing, it could do a lot more.

Helping local authorities to take a share in things by putting land into deals or by setting up their own corporations of social landlords and councils could lead to the development of the houses that we need. Social housing is not a static model. People think that social houses are just for rent, but Karbon has a good subsidiary called Prince Bishops Homes, which allows people to start by renting and then, as their circumstances change, purchase the house and convert their rental into a mortgage. We need to look at schemes like that. Are they expensive in terms of what my hon. Friend the Member for Wirral South referred to? No, I do not think they are, and they will provide housing where we need it. I accept the particular pressure on housing in London, but there is pressure everywhere, not just from first-time buyers, but people who want to rent for the first time.

If the Government put their ideological baggage away and said, “Are we actually going to do what we say and produce the houses that people need?” they could do things in a different way. The Minister can talk about 300,000, half a million or a million homes—I say the same to my Front-Bench team—and it is fine to pluck figures out of thin air, but delivering them is a different thing altogether. If we look back at the history of housing in this country, we only actually build large numbers of houses when we have direct Government intervention, and we need that direct intervention now. It is easy for the Government to argue that the previous Labour Government failed here, but we did not. We actually transformed a lot of social housing. Two housing associations in my constituency received over £100 million to bring their stock of homes up to a decent standard, which was transformative for residents and tenants. Houses with 40-year-old bathrooms had them changed. There were new rooms, new central heating systems, new kitchens and more energy-efficient measures. I am not going to shy away from talking about what the Labour Government did when we were in power to change the lives of many people in this country.

Turning to land banking, there is evidence that certain companies are using land banks. In some cases, companies submit planning applications and then just sit on the land. I welcome any approach to deal with that, but we need to be a bit more imaginative about allowing local government to be a bit more forceful with their planning powers. When Labour was in government, I was a huge critic of something called the regional spatial strategy, describing it once as Soviet-style five-year planning. It was too blunt an instrument.

We need to allow Country Durham and other areas like mine to expand housing, because we are increasingly becoming commuter belt for Tyneside and Teesside. Somehow restricting the allocation of housing to the urban conurbations fails to understand that, without new houses, a lot of villages and communities in my constituency will struggle to survive. More powers should be given to local authorities not only to form local plans but to implement them, too.

My final point would, again, be easy to implement. As a few other Governments have, this Government distrust local government, which should be given real powers to issue compulsory purchase orders on empty properties. One property in my constituency has been empty for nearly 10 years without any use, but it is a perfectly good house.

I am not suggesting for one minute that we take houses off people in a draconian way but, where houses are sitting empty on somebody’s books after having been bought in a basket of property—where the houses are not a top priority—we need to give local councils the ability to try to bring them back into use. If it were done in a targeted and effective way, it could increase the housing supply in most areas without building a single extra new house.

Photo of John Spellar John Spellar Labour, Warley 10:45 pm, 18th December 2017

I start by welcoming the service accommodation proposals. I echo the comments of my hon. Friend Mr Jones on the short-term gain taken by the Ministry of Defence and the Treasury in a bid to shore up the finances of the Major Government, which did them absolutely no good in the 1997 election. Service personnel and their families have been suffering from the impact of that ever since.

On the basic question of the stamp duty measure, I suppose that it could be welcomed, superficially, as a reversal of the intergenerational transfer of wealth, but in fact, as my hon. Friend Alison McGovern said, the reverse is the case, as the main beneficiaries will be the existing owners of housing. In a tight housing market with a large amount of stock and limited flow, the net effect of adding extra liquidity into the system is most likely to be an increase in the price of housing.

The other beneficiaries will be not just individual householders who seek to trade down, or even up, but private sector landlords who have been buying up property and forcing up prices. Many youngsters are not able to get together the sort of deposit that is now required unless they can go to the bank of mum and dad. With the average house price in London at nearly £500,000, they are having to find a deposit of some £50,000. We are targeting a considerable public subsidy towards one small group without actually dealing with the problem.

It was very instructive that the Minister was unable—or probably unwilling—to give the figures I asked for about how much the measure will cost in aggregate and how the costs will break down by region. It is inconceivable that such analysis was not carried out as the policy was drawn up and ground through the mills of the Treasury. To save me from tabling a parliamentary question, I urge the Minister to come up with those figures in his winding-up speech. I think that the figures will show a considerable disparity between regions, which is not uncommon under this Government, much as they seek to hide it. Just recently, a letter from the Secretary of State for Transport told us that we had it all wrong and the average spend on transport was roughly equal between the north and the midlands, and London and the south. The only issue was, as my hon. Friend the Member for North Durham found out, that the Government had omitted to include the £32 billion—I believe that is the figure—for Crossrail from the London figures, because that had somehow been designated as a national scheme.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I can inform my right hon. Friend that it was actually worse than that, because the Government had also deemed the north as being the north-west, the north-east and Yorkshire.

Photo of John Spellar John Spellar Labour, Warley

I do not get involved in those arguments.

In essence, we are seeing major transfers of wealth to areas that the Government see as their political homeland. However, let us also look at the big house builders, as they are euphemistically called—really they are land bankers and, as my hon. Friend said, employment agencies. They also indulge in a number of other unsavoury practices. Several of them have now been exposed for their involvement in the racket of escalating leaseholds, which they have now been forced to back down from. They have had to pay considerable sums to buy back those leases from individuals—speculators—who bought them and were then exploiting residents on that basis. Is that not a symptom and a symbol of the dysfunctional nature of our housing market? The Government are not tackling that in any particular way.

Nor are the Government tackling the increasingly oligopolistic nature of the house building industry. There has been a significant decline in medium and small builders, who used to be the backbone of the building industry and of many towns. Building, by its nature, is subject to cycles, and banks have been incredibly reluctant to lend money to small builders, who have steadily either gone out of business, or been absorbed into the big builders. That has flowed into the lack of training that has taken place, because so many of the big house builders are mainly just the name outside a project and are not particularly interested in the small sites—brownfield sites—around our towns. With the breakdown in training, we then have the cry from those same builders that need to bring in more and more builders from abroad because of insufficient supply in this country. That is because over several years, if not decades, they have not been training people.

Nor do the Government have any programme, as far as I can see, that is equivalent to the better homes programme which, as a number of colleagues have said, contributed enormously, not only to bringing many properties back into effective use, but to improving the lives of many of our constituents. Finally, what we see here is figures being plucked out of the air. This is reminiscent not of an efficient market, but very much of Soviet planning, with declarations of 300,000 houses but no visible means by which that will actually be achieved.

Photo of Lloyd Russell-Moyle Lloyd Russell-Moyle Labour/Co-operative, Brighton, Kemptown

I will try to be brief, because we all want to get to the vote and then move on, but I will say that the measures we are considering are far too little and far too late. Homelessness has doubled in Britain, and in Brighton it has tripled, with 10% of adults now on the housing register. How do these proposals help them? The measures will increase house prices for first-time buyers. I know the Minister says that he has better data than the OBR, but I tend to believe the OBR, which was set up by the Conservative Government to provide independent analysis, over the books that are cooked in the Treasury—[Interruption.] Yes, the books that are cooked in the Treasury. What we need are clear supply-side measures—[Interruption.] The evidence for cooked books is that the OBR does not believe the Government’s figures. The evidence comes from the independent regulator. Let me get back to what I want to say, otherwise I will be distracted and we will be here for longer.

We clearly have a problem with young people and first-time buyers getting into the property market. In my constituency today, only five studio flats are on the market for less than £200,000. With average earnings in Brighton lower than the average for the rest of Britain, the introduction of a stamp duty waiver will make not one jot of difference, because people cannot afford to raise money for a deposit and to go to banks to ask them to lend. What we really need is decent social and council housing so that people can move into secure tenancies. I asked the Prime Minister whether she would lift the housing revenue account cap. We see in the Bill that there will be a lift to the value of £1 billion, if councils apply, but of course £22 billion would be made available, at no direct cost to the Government, if they just lifted the cap completely. Why will they not? Because they are scared—they are chicken—to allow working people to have decent homes. Clearly they want to keep people subjugated and in poor-quality rented private property. That is the only conclusion I can draw from their miserable set of proposals.

Another thing we need is planning regulation that is stronger, not weaker. Until very recently, I sat on my local council’s planning committee. Time and again we were toothless in enforcing the social and affordable housing requirements. We do not need to give councils less power to enforce those requirements; we need to give them more powers to enforce them. The measures in the Bill to try to deregulate the planning sector go in completely the opposite direction.

I could make other points, but I am not going to talk anymore—let us go home. It is quite clear that I will be voting against the Government’s measures, because they are absolutely useless for dealing with homelessness and house building. In fact, they will make matters worse.

Photo of Ruth George Ruth George Labour, High Peak

I echo my hon. Friend Jonathan Reynolds in saying that I am proud of Labour’s record on housing. I am proud of how we invested in 2 million more new homes, increased home ownership by 1 million, and made sure that more than 1 million homes were brought up to a decent standard, fit for human habitation, which is what we need to see now.

Since 2010, we have seen home ownership fall by 200,000 as house prices have risen by an average of 32%. Of those homes that have been built, less than 20% have been affordable, as councils’ rights to impose affordable limits have, as my hon. Friend Lloyd Russell-Moyle said, been taken away, with the rug pulled out from under their feet. What have we had instead? We have had £10 billion invested in the Help to Buy scheme, which even Morgan Stanley said has almost entirely gone towards raising house prices and increasing the share prices of the biggest house builders.

In my constituency, those house builders are not content with all the assistance from Help to Buy. Almost all their new homes are sold on leasehold—or fleecehold, as it has been called—so people do not feel that they actually own the home in which they live, despite having paid an inflated price for it. They still have to pay ground rent; they are still being fleeced with maintenance charges; and they still have to pay fees to a third party. It does not feel like home ownership any more. This is actually private rental as well as home ownership.

With the lack of housing supply and the decrease in home ownership, we have seen the number of households in private rented accommodation soar to more than 5 million, and the figure is set to rise to 6 million by 2021. That would not be a problem if private landlords were forced to make their homes fit for human habitation and if, in an era when we are moving nearly 8 million households on to universal credit, we had landlords who had faith in the Government’s universal credit system. Landlords’ right of redress to reclaim rent arrears has been removed under universal credit, so it is no wonder that 73% of them do not feel comfortable that the Department for Work and Pensions will enable them to recoup their arrears.

Photo of Steve Pound Steve Pound Shadow Minister (Northern Ireland) 11:00 pm, 18th December 2017

I hope my hon. Friend will forgive me for interrupting her flow. She is making a precise and pertinent point. Would she not wish to encourage all people of good heart here present to support the Bill that has been presented by my hon. Friend Ms Buck on this very subject?

Photo of Ruth George Ruth George Labour, High Peak

Absolutely. I hope that Members on both sides of the House will give their encouragement to that Bill so that we can make homes fit for human habitation.

On the subject of universal credit, whether or not homes are fit for human habitation, unfortunately landlords are not prepared to rent. A representative of a lettings agency came to my surgery just last week and showed me the books for its tenants. At the moment, 20 tenants are on universal credit—we still have not seen it rolled out—of whom 18, or 90%, are in huge arrears. Nine of them—45%—have had to be evicted because landlords cannot get any redress for arrears. They cannot afford to see those arrears build up. Now that they no longer claim mortgage interest relief, they know that they will have to pay a big tax bill come the end of January, so they need to ensure that they can make their homes pay.

This Government’s housing policy is simply racking up disaster on disaster. Homelessness is doubling and home ownership is falling, and universal credit is yet to come. We needed big ideas from the Chancellor, as the Secretary of State for Communities and Local Government told him in no uncertain terms. We see nothing in this Bill but tinkering at the edges that will do nothing to help to solve the enormous housing crisis in this country.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

We have been debating important measures. Clause 8 introduces an income tax allowance for members of the armed forces to help them to meet the cost of accommodation in the private market in the UK. Clause 40 makes sensible legislative adjustments to the additional rate of stamp duty land tax to ensure that people in some specific—often disadvantaged—circumstances are not unduly penalised. Clause 41 announces the Government’s abolition of stamp duty land tax for first-time buyers purchasing properties under £300,000. This key part of the Government’s drive to ease the burden on young first-time buyers will go a significant way towards levelling the playing field in those people’s favour. It is notable, and equally lamentable, that this particular policy, which predominantly assists the young, appears to be something that the Labour party rejects and indeed derides. I commend the clauses and schedule to the Committee.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Schedule 11 agreed to.

Clauses 41 and 8 ordered to stand part of the Bill.

New Clause 4