Higher Education Bill

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Mr. Tim Collins (Westmorland and Lonsdale) (Con): The hon. Lady deserves the Committee's congratulations on raising this issue. I suspect that she will not have carried all Committee members with her on how the problem should be tackled, but she is quite right to address a problem that is of concern in many parts of the country.

I thought that the hon. Lady underestimated her contribution to proceedings when she made her comment about how interesting it had been to observe how the Government's proposals had evolved since the original White Paper. That is slightly to understate the pressure that she and a number of Labour Members put Ministers under. I am not quite sure that it was so much a process of smooth evolution as of complex negotiation. It is precisely because she has made a significant contribution to the evolution of policy in a number of respects that what she is saying is of particular importance.

It was clear from a few interventions that the hon. Lady took from Labour Members that some people will be a little sceptical about whether it is possible to address the issue on a regional basis. For example, in my region—the north-west—there is a huge distinction between the property prices that apply in the Lake District national park in my constituency, and those that apply in the middle of inner-city Merseyside or Manchester. As other people have mentioned, there would be major distinctions even within some local authority areas or constituencies. In my case, the distinction between properties in the national park area and outside is dramatic. It would therefore be quite difficult to deal with the problem on a regional basis.

Having said that, it is worth while addressing not only the exact text of the amendment but the spirit behind it, and I hope that the Minister will do that. That is important, because there are huge differences in the housing costs faced by people in different parts of the country, and that clearly makes a huge difference to their disposable income and therefore to their prospects of providing significant support to their offspring as and when they decide to go to university. That subject needs to be tackled.

I will be candid with the hon. Lady: I am not sure that there is an easy way of doing what she suggests. The Government have chosen to go down the route of providing support on the basis of income. That is objectively measurable: it is fairly easy to ascertain the difference between people who are on high, middle or low incomes. She is right to address the difficulties that arise from the possibility that a big chunk of that income is consumed by housing costs, but there would be difficulties in some circumstances, even within the

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same ward, in measuring differences in housing costs, for the reasons that I and other hon. Members have cited.

I suspect that we all have areas in our constituencies in which there is a big, or at least measurable, difference between the value of houses on different sides of the same road. The issue would get very complicated. That is not to belittle the point that the hon. Lady makes, which is legitimate and important. However, if we are in the business of finding practical solutions, I take the view that trying to address the problem at regional level would create more anomalies than it would resolve. To be perfectly candid, I have some scepticism about whether trying to address it even at local authority level would resolve the problem rather than making it worse.

I look forward to what the Minister may be able to say about the matter. Perhaps he will be able to say that the Government will reflect on it. I do not think that there is an easy answer. I have expressed reservations about the hon. Lady's solution, but I do not pretend to have a magic-wand solution myself; I suspect that none of us has. However, if the Government were to deploy great and weighty minds to think about this issue, that would be widely welcomed.

Mr. David Chaytor (Bury, North) (Lab): I entirely understand the concerns of my hon. Friend the Member for Cambridge (Mrs. Campbell). I commend her for her research and for the statistical analysis that she presented to the Committee. However, I am mindful of the comment made about an earlier amendment by the hon. Member for Ceredigion (Mr. Thomas). He described it as ''anti-devolution''. Given the prospect of successful referendum results on devolution to the north of England later this year, I describe this amendment as ''anti-devolution'' also, because it works against the interests of people in the northern regions.

Although I accept the detailed analysis given by my hon. Friend, I am also mindful that such statistical projection based on house prices is exactly the sort of projection given by the Conservative Government in 1990 to justify the standard spending assessment regime, and particularly the area cost adjustment component of that regime, which for more than a decade systematically discriminated against regions in the north of England. I am therefore sceptical about whether such a solution is fair or workable.

If we base anything on house prices, we base it on shifting sand. As we know, house price differentials are not stable. What might be an enormous differential one year can turn out to be different the following year. If there is any house price trend at the moment, it is that the rate of increase in the south-east is slowing, while in the north it is increasing. We may see a convergence of house prices across the country. That is testimony to the fact that prices have been overheating in the south-east and have become unsustainable. Nevertheless, it would be misguided to legislate on the basis of a differential in 2004 that may have disappeared by 2007.

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My second objection is the impossibility of generalising across regions. A few kilometres from the town in which I live, there are communities in which one can still buy a terraced house for £25,000. If one travels four or five miles in another direction, the typical price for a terraced house is similar to that cited by my hon. Friend the Member for Reading, West. It is utterly impossible to generalise across regions. As several hon. Members have already said, the variations within regions are enormous.

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I do not deny that there is difficulty for low-income families in certain towns throughout the country, but almost by definition, families earning £20,000 or £30,000 a year cannot buy terraced houses that cost £150,000, because they could not secure a mortgage. It does not necessarily follow therefore that those families who live in rented accommodation, often in social housing of one sort or another, will be at such a disadvantage, because the rents are not directly proportionate to the capital value of house prices.

Mrs. Campbell: I am grateful to my hon. Friend for making that point. Does he agree that housing associations and local authorities will not accept for properties families with incomes above £18,000 a year? Moreover, people may have qualified for that low-cost property some time ago when they were earning that amount, and continued to live in it when they have increased their incomes. Does he also accept that there is a strong relationship between the rents in the private rented sector and mortgage costs? I have undertaken research and found that, to pay the rent for a two to three-bedroom house in the city centre of Cambridge, a person would have to find about £900 a month.

Mr. Chaytor: I do not deny the validity of the first of my hon. Friend's points, but I say in response to her second point that it is highly unlikely that many people on low incomes would be living in the centre of Cambridge. Her example is not sufficient for a generalised argument.

For those who are living in houses that are currently valued at £150,000 in Reading or £235,000 in Cambridge, it follows that they bought them some time ago. Therefore, they have the benefit of a significant windfall capital gain by virtue of having lived in the houses for a certain time. When discussing the matter with my hon. Friend the Member for Reading, West, I said that the difference between someone on a low income in Reading and someone on a low income in one of the towns in the north is that the family in Reading has the choice, if they choose to exercise it, of selling their house, moving to a different region and pocketing the capital asset. That choice is not available to someone in a small town in the north of England, whose capital assets are about £25,000.

My hon. Friend the Member for Cambridge has identified a problem, but her proposed solution is not appropriate. It would establish a remarkable precedent for the way in which the Government—or any Government—established a framework for all other forms of benefit payments. Does she similarly

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argue that there should be regional variations for child benefit, the minimum wage or tax and pension credits? That is the logic of her argument.

Mr. Rendel: I have much sympathy with the hon. Lady's amendment. Like me, my hon. Friend the Member for Harrogate and Knaresborough comes from an area in which housing costs are extremely high, and we are both aware of the particular problem that she has highlighted. However, as has been said, there are good reasons for supposing that this is not the right way of tackling it. We keep addressing the difficulty of high house prices by providing more resources for people who live in high-cost areas to meet those prices, as a result of which house prices continue to increase. In a sense, we make the problem worse each time we provide more resources to pay for house prices rather than trying to do something to bring them down or at least make them more even throughout the country.

In the end, to a large extent, house prices are a matter of supply and demand. The fact is that many people want to live in high-cost areas and there are not so many who want to live in low-cost areas. While supply and demand are out of kilter with each other, and more money is pouring into areas where supply is low and demand high, that simply enables people to pay ever higher house prices in those areas. We have tried that with various cost of living allowances: we have given such allowances to a large number of public sector workers in London. We must do that: I have myself argued in favour of special living allowances for high-cost areas in my area and others. In the short term, that is the only answer. However, we must surely consider longer-term solutions that will provide more housing to meet demand, or change the areas where demand exists. Perhaps we should try to generate higher demand in areas where house prices are currently comparatively low, and put jobs back into areas of high unemployment where it is more difficult to obtain work so that there is lower demand for housing. If it can be tackled in that way, it will be a much more effective long-term solution to a genuine problem.

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