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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I remind the House that the 10-minute limit on speeches has now come into operation.
7.6 pm
Mr. David Kidney (Stafford): If we were to go outside the House and ask people to tell us what they believe should be the core values of our society and what they think are the basic needs of people in our society, I believe that at the top of their list, or very close to it, would be shelter: access to a home for all those who want one. I should like to concentrate on the Budget's consequences for housing policy.
First, however, I should like to say how very much I disagree with Opposition Members who complain about lack of transparency in the Budget. Perhaps they think that, last Tuesday, the Chancellor should have stood at the Dispatch Box and read out the Red Book, so that no detail was left unmentioned. I welcome the openness that the Chancellor has introduced into the Budget process, just as I applaud the Government's code for fiscal stability, the golden rule on investment and the sustainable investment rule. I welcome the Government's publication of pre-Budget reports. I also remind Opposition Members that, this year, there have been two detailed consultation papers, on the proposed business energy tax and on the variable vehicle excise duty.
The accent in this year's pre-Budget report was on productivity measures. In most of the first 30 minutes of the Chancellor's Budget speech, he concentrated on enterprise and business. He announced in his speech yet further consultation on new measures, such as the all-employee share ownership scheme. It is therefore not right for Opposition Members to complain of a lack of transparency or openness.
In the world of housing, we do not seem to use the term "boom and bust" which is so popular in the world of economics. Why not? Was not one of the legacies of the previous Tory Government a great boom and bust in housing, in the late 1980s and early 1990s? Was there not a huge house price explosion at the end of the 1980s, followed by a great recession--in which people lost their homes, with record numbers of mortgage repossessions and cases of negative equity?
Almost 70 per cent. of households are owner-occupiers, who welcome economic stability, just as businesses do. The Budget made little mention of housing, and two specific provisions were probably unwelcome to people in the housing world--the end, next year, of MIRAS and higher stamp duty for the few who buy houses worth more than £250,000. However, there are countervailing forces at work on those measures. The interest rate cuts of the past six months have already brought substantial gains to those with variable rate mortgages. With higher stamp duty comes greater price stability at the higher end of the market, avoiding the excessive price increases of the past. The surveys by the Halifax and the Nationwide for the past year disagree, putting house price inflation at 4.4 per cent. and 7.4 per cent. respectively. Looking forward to this year, the Royal Institution of Chartered Surveyors forecasts house price inflation of 4 per cent. The Council of Mortgage Lenders and the Association of British Insurers made an announcement shortly before the Budget speech about an accord on what I might call MPPI 2--a second variation of the mortgage payment protection insurance policy that has been in circulation for some time. I hope that the scheme will be widely taken up and will protect more people from losing their home when they lose their employment.
In the Red Book and the second of the two press notices from the Department of the Environment, Transport and the Regions came the announcement of a forthcoming Green Paper on housing policy. That is welcome, because although the Government introduced the capital receipts initiative soon after coming to office, providing a boost for housing finance, there has been a lack of debate about the direction of housing policy. I think that there is a lot to look forward to in and outside the Green Paper. For local authorities, there is the duty to achieve best value, the difference that resource accounting might bring to housing finance and the new housing inspectorate. For the registered social landlords sector there will be a change to rent structures. I sincerely hope that there will also be an increase in the grant rate for building new homes for rent. We know what the Government are likely to announce on the funding of supported housing. We have seen a Government consultation paper on modernising the buying and selling process for homes. I hope that during this Parliament we shall achieve justice for all leaseholders. Lastly, the most knotty problem to overcome is the reform of housing benefit. My right hon. Friend the Secretary of State for Trade and Industry made a significant announcement the day after the Budget that comparative information will be published for customers on mortgages and those on other credit.
That might sound like a list of positive measures, but there is no reason for complacency. Last year there were 59,700 mortgage repossessions and 31,000 households in the social and private rented sector suffered eviction orders. Homeless households continue to present themselves to local authorities at a rate of 100,000 a year. Hidden homelessness is probably much greater.
Against that background, spending on housing has been encouraging, but not great. In revenue terms, Government spending on local authorities and registered social landlords is about £2 billion a year. Housing benefit costs the Government about £11 billion a year. Income support mortgage interest payments cost the Government about £500 million a year. MIRAS will cost the Government £1.4 billion next year. On top of that, the capital receipts initiative will raise £5 billion for spending during this Parliament. The comprehensive spending review brought £3.9 billion extra for the next three years. However, it is a pity that the announcement of the end of MIRAS does not coincide with an announcement on additional resources for housing.
My pessimism increased when I read the weekend news reports that my right hon. Friend the Prime Minister is leading the drive to reduce spending on housing benefit. I hope that the Chief Secretary will deal with that point when he replies to the debate. We all expect the crackdown on housing benefit fraud to continue, but I hope that the Green Paper also leads to several desirable outcomes for those at the sharp end of reduced investment in housing. The attack on homelessness that was set out in the social exclusion unit policy on rough sleepers should be driven home relentlessly. I want wider choice to enable people to have the housing that they want. That means that local authorities and registered social landlords will have to build more homes. We need greater flexibility of tenures. I sincerely hope that there will be greater provision of social housing in rural areas. I also hope that
housing finance will be reformed to end the current labyrinthine systems. We need more transparency, so that we can see where we get value for money.
I hope that there will be a change to housing benefit so that it supports the Government's welfare-to-work policies rather than hampering them. We need changes that protect the lowest income households from the risk of losing their home. Those are the developments that I hope for in the housing policy Green Paper later this year. I urge the House to ensure that housing policy gets its fair share of time in this place, reflecting the priority that I believe that the public give to it.
Finally, I should like to stray from the subject of housing to a more general consideration of the effect of the Budget. The hon. Member for Gordon (Mr. Bruce) rightly identified that--
Mr. Deputy Speaker:
Order. I am afraid that the hon. Gentleman's time is up.
Mr. Dafydd Wigley (Caernarfon):
I am pleased to follow the hon. Member for Stafford (Mr. Kidney), because housing is very important. I shall deal later with the need for adequate resources for housing renovation, which is a considerable problem in many areas, particularly the old industrial areas.
The Budget is a parson's egg that pretends to be an Easter egg. It is, to say the least, a scrambled egg. It is difficult to see the various parts of any egg that has been scrambled so comprehensively; only after adequate scrutiny do bits of the egg become more apparent. As matters become clearer, the worst parts of the parson's egg will become more evident.
There are some measures in the Budget that everyone welcomes, including the winter allowance, the provision to help small businesses and the support for renewable energy. However, there is a fundamental dishonesty in the way in which the Budget has been put together--or at least in the way in which it has been projected. We heard the Chancellor predicting increasing current surpluses year on year. The Red Book shows increases in public expenditure of £30 billion or £40 billion a year. The Prime Minister has claimed that there is a £4.5 billion net tax cut. Those three factors cannot simultaneously be true. They do not add up. We are comparing different aspects of the figures that are not comparable. That will catch up with the Government sooner or later.
There appears to be a fundamental shift in new Labour's philosophy away from an emphasis on public services towards the Tory policy of lower direct taxes. We do not find that attractive. The proposed reduction in income tax from 23 to 22 per cent. will cost £2.2 billion. That money could have been better spent on other areas. To compensate for that, indirect taxes are being raised by enough to reduce the national debt. However, there is a higher calling for that money than using it to reduce the national debt.
If every Member of the House put his hand on his heart, he would say that it was difficult to remember people coming to his constituency surgeries over the past two years to press him for a reduction in the standard rate of income tax. Equally, he would know that, in every surgery, every week, people asked for assistance with
student fees or grants, help for pensioners and disabled people, improvements to the health service and increased expenditure on housing renovation.
Spending is required on a plethora of desperately needed services. The £2 billion represented by a reduction of 1p in income tax could have been much better spent on those matters. That would be the priority of my constituents, and we would rather that the £1.8 billion used to introduce the 10 per cent. tax rate had taken people out of tax altogether.
The proportion of gross domestic product represented by general Government expenditure is still 1 per cent. below the level under the last Tory Government. In 1996-97, the figure was 40.4 per cent. For the coming year, it is projected to be 39.4 per cent. That 1 per cent. difference represents £8 billion, which is needed for health, education, housing and other services in my constituency. It would have been much better had that money been used to avoid taking £700 million a year away from disabled people, as is implicit in the Welfare Reform and Pensions Bill.
I wish to refer to the way in which the Budget will impact on rural areas, such as mine. The great increase in petrol prices will be the last straw for many rural areas, particularly those areas where there are low incomes. In the western part of Wales--the old counties of Gwynedd and Dyfed, for example--income per head stands at 75 per cent. of European GDP per head. In these scattered communities, people must travel far to find work and to find shops. The increased fuel charges will mean increased costs in the shops, exacerbating the problems in rural areas in a way that could have been avoided. This year, it is one step too far.
We need some thinking on how to improve transport and to get transport that is environmentally acceptable for rural areas, rather than using a tax mechanism that hits the poorest hardest, and makes it more difficult for them to find work.
I am concerned also about the effect of the Budget on the parity of the pound. My worry is that the value of the pound will remain too high. We know what that has done to manufacturing, tourism and agriculture--all three of which are the bases of the economy in my area. The Bank of England guidelines need to be broadened so that employment, as well as inflation, is taken on board.
How will the Budget help the economy of the poorest areas? I am thinking of those areas awaiting an announcement on objective 1 status within the new EU structural funds--an announcement which may come later this month, although it may be delayed until May. Are we to get objective 1 status for the western part of Wales and the old coalfield areas? That is justified, as Wales has the lowest GDP of any country or region in Britain, but it has not yet had objective 1 status. To take advantage, it will be necessary to get matched funding--as will be the case for Merseyside, South Yorkshire or Cornwall.
Unless there is additional Treasury money, in terms of the EU additionality rule, to provide that matched funding--or at least a good proportion of it, as we cannot look to the private or voluntary sectors to raise more than a small proportion--we will not be in a position to take up the objective 1 funding that may be available. Between 2000 and 2006, as much as £1.5 billion to £2 billion may be available for Wales, and equal sums may be available
for the other areas to which I have referred; yet we will not be able to take it up if we cannot find the matched funding.
The Treasury has consistently refused to show a willingness to find that matched funding, and we need a statement that the Budget's provisions are adequate to meet those requirements. The money is needed to increase living standards and incomes per head in some of the poorest areas of these islands.
Equally, we need a statement on the implications of the Budget in terms of regional assistance. We know that the Department of Trade and Industry is reconsidering its regional map, and we need to know how that will work, what assistance will be available for companies and whether those companies in objective 1 areas will be eligible for full development area status. Again, that will have implications for the Treasury and for the Budget.
7.17 pm
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