Welfare Reform and Work Bill — House of Lords, 2016-01-12
Topic: Housing
John Horam (Conservative, Centre-right): I am very sympathetic to the views put forward by the noble Lord, Lord Kerslake, in moving his amendment. All noble Lords are aware of the acute difficulties in rented accommodation and housing to buy, particularly in London but also elsewhere. I am delighted by the dynamism which the Government are trying to inject into this area. This is, perhaps, not the occasion to look at the full dimension of housing policy because we are considering only one aspect of it in relation to the proposed amendments. None the less, there is a bigger picture which should be taken into account. The noble Lord, Lord Kerslake, made the point that the Bill contains a very abrupt reversal of the position under the coalition Government when there was a 10-year guarantee of the 1% a year increase in rents. Frankly, it was rather foolish for any Government to give a guarantee of that kind. By their nature, these things are very hard to sustain through different economic circumstances. I genuinely wish it could have been carried on, because it was helpful to have that length of forward planning time. In the past, I have been a critic of the failure of Governments—Conservative and Labour and the previous coalition one—to plan ahead on investment. As a devout Keynesian, this is something on which I have been critical of my own Chancellor of the Exchequer in the past. There needs to be one view about current spending and one about capital spending: the two are not necessarily the same thing at the same time I understand all that very well, but the reality is that all Governments, of any political complexion, have to take the bigger picture into account. That picture is that the Government are still spending substantially more than they are raising in taxation. At the moment, the figure is approximately £70 billion a year. Let us not forget that under the previous Labour Government this huge deficit was £150 billion at its maximum. This was brought down only by half during the coalition period and the Chancellor of the Exchequer now hopes to bring it down and eliminate it during the course of this Parliament. I am sceptical about whether he will achieve that. As all noble Lords are aware, the economic recovery in this country is rather fragile. At the moment it is in the order of 2% a year and although it would be very good if we manage to achieve that year after year, I am not sure that we will. The winds of economic force around the world are looking difficult. I have for long felt that China was heading for real problems and now it really has them. Its growth has come down to something like 6% from 9% or 10% the previous year. Other countries have massive deficit problems. China has a deficit of over £250 billion: 250% of its GDP as opposed to our 8% of GDP. Japan’s deficit is over 200%; Brazil’s is huge. There is almost a tsunami of debt around the world. This is extremely important in terms of our economic performance and no Government could ignore it. To ask this particular sector to make a contribution—of £12 billion as the noble Lord, Lord Best, pointed out—is responsible. To use a phrase much used by the former Chancellor, Gordon Brown, it is prudent in these circumstances. That is the reality which a Government have to face, so I am not surprised that they have reversed this particular housing policy and gone to a managed 1% over the next four years Not to beat about the bush, it is a difficult economic situation. I am not as pessimistic as the noble Lord, Lord Kerslake, and others, or the Office of Budget Responsibility, which talks about 43,000 fewer houses. Indeed, I am rather sceptical about these forecasts as well. I note that the housing association movement, which has entered into a voluntary agreement with the Government, is not itself as pessimistic as that. As the noble Lord, Lord Kerslake, mentioned, there are quite a lot of possibilities for greater efficiency within the movement. I have had talks with housing associations; I was once the chairman of a housing association; I know something about this area. There is certainly a greater possibility of them reacting by improving their efficiency, by mergers, by some of the larger associations taking over some of the smaller ones. All that is possible and it is necessary if we are to make progress The way out of the acute economic dilemma which this country and the world face is greater productivity. That is what it is lacking. You get greater productivity by pressing down on costs and achieving greater efficiency. That is what the Government are hoping that the housing association movement and individual housing associations will do. Given what I know about housing associations, and what they are saying to me, I am not pessimistic: they can achieve that. I do not think they believe that there will be the dramatic reduction in the number of houses they produce to rent or buy which the Office of Budget Responsibility has forecast, and they are right not to. We should not be so pessimistic about the effect on housing associations. I hope they can increase their contribution because we need that if we are to meet the ambitious targets which the Government are now setting. Realistically, we have to take all that into account I agree with the noble Lord, Lord Kerslake, on the question of exemptions. If you are taking a tough line, as the Government are, on the 1% reduction in rents year by year, you can afford to put in certain exemptions for disabled facilities and other kinds of supported accommodation. This will be discussed when we come to Amendment 109, but it is not enough to give guarantees of a certain kind. This comes back to the question of the certainty you should be able to create for housing associations to plan ahead. It is much better to have something in the Bill, in clear black and white, which they can plan on, rather than some possibility that the Government may waive the situation and decide that, in the eventuality, a certain scheme may pass their test and not be subject to the Bill. It is much better to have something concrete on which a housing association can possibly plan I am, therefore, sympathetic to the exemptions talked about by the noble Lord, Lord Kerslake, and other noble Lords. I hope the Government will listen to that argument carefully. If they do, they will show their real intention of being as fair-minded and sympathetic to these real problems as they possibly can. The general attempt to roll back the clear policy on handling private rents is a mistake in the wider context of the economic situation that we face. This area has to make a contribution to our economic success. It ought to be able to do this by increased efficiency and productivity and I very much hope that it will.