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The difficulty is that the Government’s analysis is economically illiterate. They believe that the determinant of house prices is how many new houses are built. Unlike the market for most goods and services, the housing market is mainly driven by second-hand homes. Most of the homes that are bought and sold each year are houses that were built quite a long time ago, and only a marginal amount is made up of new homes that are constructed. It has been a very marginal amount under this Government because not that many homes have been constructed. The Government say that if only they could make a quantum increase in the number of new homes built,
they could create a hugely disproportionate effect on the market, leading house prices to fall enough to be affordable. I just do not think they have done the maths. They do not understand the balance between second-hand homes and new ones.
More important, the Government clearly have not understood the first fundamental of how a housing market works in a free enterprise society with a big banking sector, such as the United Kingdom. Thanks to the work of the Prime Minister when he was Chancellor, we have lived through a credit boom and bust. We had several years of massive boom because interest rates were kept extremely low, inviting banks to lend huge sums of money against property, bidding the prices up. In the last three months, we have had a credit bust, which was very visible with a run on a leading mortgage bank, and people now have great difficulty in getting access to the mortgages they might need.
If the Government are serious about wanting people to be able to buy homes, they must first of all look at their lurch from boom to bust in the credit market, and they have to get the credit and mortgage markets going again. Through the Chancellor, they need to have conversations with the Bank of England about why there was such a catastrophe in Britain—worse than anywhere else in the world—over the summer, and about how they can secure sufficient liquidity for the banking system again, with an interest rate structure that makes sense.
During that period, the famous, so-called independent Bank of England has turned out not to be independent at all, as some of us always suspected. It turns out to be part of a tripartite arrangement with the Treasury and the Financial Services Authority. We now know that most of the crucial decisions taken during the summer were either actively taken by the Chancellor and the Treasury, or were heavily influenced or cleared through the Chancellor and the Treasury, illustrating that the Bank was not truly independent.
What do the Government need to do from here? There should be a Bill in the Queen’s Speech to introduce proper independence for the Bank of England so that we can pursue a more sensible monetary policy. I am not sure that the Chancellor’s interventions during the past few weeks have been at all helpful. It would be good if the Bank of England were to re-establish control over interest rates in the money markets.
All the attention is focused on the monthly deliberations of the Monetary Policy Committee. During the past couple of months, its deliberations have been academic seminars. It has fixed a rate, but it is not the rate at which transactions are taking place. The rate at which transactions are taking place has shot up considerably above the rate recommended by the committee because the Bank has not been doing the other part of its job. It has not been using open market operations, supplying liquidity or getting the banknote issue and the supply and trading of bills right in order to ensure that market rates are in line with Monetary Policy Committee rates. If the Government want to continue to believe in the Monetary Policy Committee, they must learn how monetary policy works so that the committee can once again be the main driving force for
interest rates in the economy, not an academic spectator making interesting observations about it.
The Government have to learn that if they want to price people back into the property market, they have to do something about money supply, credit and their mismanagement of the banking system. Promising, or threatening, some increase in the rate of new house building in two, three, five or 10 years’ time will not have an impact on the current situation. The numbers are too small in relation to the total number of homes in the economy, and the delay will be such that it will have no immediate impact on the state of the property market today.
I welcome the Government’s belief in aspiration. I have always believed that home ownership is the best form of tenure. It is the preferred form—around half the people who do not own their home would like to do so. It is not the other way round: half the people who own their home would not rather rent. People who were in that position could, of course, easily sell their home and rent instead; that would not be a difficulty. I wish the Government well, but I hope they will study carefully what I and others are saying because they are not embarking on a policy in the Queen’s Speech that will remedy the lack of affordable housing and the current crisis in the mortgage and housing market.
Mr. Hands: Does my right hon. Friend agree that the Government may inadvertently be exacerbating the problem by setting the artificial 50 per cent. limit for subsidised housing that we have in London under Mayor Livingstone, and that de facto it will reduce the amount of market housing in the supply, which will surely only drive up prices still further?
Mr. Redwood: I agree. Such an artificial target or limit is foolish. I remind the Government that the true aspiration is to own. If one way to promote ownership is encouraging part ownership as a bridging point, so be it; but let us remember that that is not the preferred outcome for people. The preferred outcome is to own the whole thing.
When I was a Minister and trying to switch some homes from rentals in the social sector to shared ownership in docklands, the housing professionals advised me that there was no demand for such things and that people wanted the rented accommodation. However, I insisted and some such properties were constructed. I went to see them when they had been sold; I knocked on the first door, completely at random. A charming lady answered and I asked, “Did you have any problems? Was buying a shared ownership home something you wanted to do?” She replied, “Yes, it’s really what I wanted to do. I’m very grateful, but I had a problem—they didn’t let me buy a big enough share.” That was a wonderful response from my point of view because all the housing experts were with me and, if looks could kill, that poor lady would have been dead. She was a star because she spoke for the community in docklands, which had exactly the same aspirations as my community in Wokingham, and it was good to play a small part in trying to make those dreams come true.
I am sure that the Government want more such dreams to come true, but they must examine housing finance and stop playing silly politics with planning, in the hope of tripping up the Conservatives. They should sort out the existing housing market in a way that satisfies more dreams and ambitions.
Stephen Pound: I appreciate that the right hon. Gentleman is not speaking ex cathedra, but, in his response to the hon. Member for Hammersmith and Fulham (Mr. Hands) on social housing as a proportion of new build in London, thanks to our enlightened Mayor, was he dissociating himself, if not his party, from the policy of including a social housing element in planning, which is the best way—and in many cases the only option that my constituents have—of getting on the housing ladder? Is the right hon. Gentleman for or against that social housing element?
Mr. Redwood: Like my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), I do not welcome a blanket overall percentage that has to apply to all developments over a certain size. That is neither appropriate nor helpful for getting more housing built and more people into the sort of housing that they want. Within the social component, we need to strengthen the element that gives people a ladder of opportunity to ownership. Part ownership is always better than renting, given people’s preferences.
The Gracious Speech tells us that the Government wish to raise the school leaving age to 18. Indeed, the Prime Minister started to say that but corrected himself and said the “education leaving age” because he realised that “school leaving age” would put off an awful lot of 16 to 18-year-olds. Many 16 to 18-year-olds would dread having to spend another two years at school. It is difficult to persuade many 14 to 16-year-olds that school is the right place for them. They do not find it relevant, interesting, exciting or worth while. If young people do not believe that something is interesting, relevant, exciting or worth while, they will not do it well and perhaps they will not do it at all. That is the reason for quite high truancy rates and poor performance in some schools in several places in the country. School is not firing young peoples’ imagination and it is not what they want. I believe that the Government will rue the day that they took the line of compulsion—telling 16 to 18-year-olds what to do.
I do not normally praise the BBC because I do not often have reason to do that. However, there was a cracking good programme before the Queen’s Speech, which gave us the debate that it would have been nice to have here first. A 22-year-old man who left school at 16 had been invited into the studio. From memory, I think that the programme said he had already sold his first business for a large sum of money. He was invited to comment on whether it would have helped him to be told at 16 that instead of leaving school and setting up a business he had to stay on at school, or that he could set up a business but that he would need to go on a training scheme at the same time which would take him away from his business at a critical point in its fortunes. He was wonderful and said, “No, of course it would have been absolutely disastrous.”
That young man said that between 14 and 16 he chose to take business studies at school because he
always knew that he wanted to be entrepreneurial. He said that those two years of business studies were off-putting, because all he was taught was how to fill in a VAT form and how to comply with all the regulations that the Government have imposed. He wanted to know about buying and selling, serving customers, providing new products and offering new services, because he was genuinely entrepreneurial. It was all right for that young man, because he was talented and energetic and he broke free. It would be more difficult for people like him if they had to comply with regulations that said they could not concentrate on their businesses entirely but had to do other things in those two formative years between 16 and 18.
That young man’s testimony should also lead the Government to ask themselves whether they could improve what is currently on offer in the schools. He is but one, but I have met many young people who do not find the diet served up from 14 to 18 in schools interesting, challenging, exciting or relevant in a way that it needs to be if we are to motivate them and offer them a good future and a good career. Compulsion is not the way. The problem is that the courses do not suit, the style of teaching does not suit and the formal education does not suit.
As someone who did perfectly well out of exams in my youth, I think that there are too many exams. Every summer term is written off by the need to revise, to do the exams and to relax afterwards. There are too many teachers who teach for a test, because they are under the cosh of centralised targets. They know that they have to ensure that the children and the students pass, so they teach only for the test. They no longer educate the children because there is no time for that, because they have to teach exam technique and the minimum number of things that the student needs to get through the test. Because teaching is done in that spirit, the students get wise at loading up the information before the test, downloading it in the test and, when they leave the test room, saying, “That’s done; we don’t need to know that anymore. Now we go on to the next year’s test.”
That is not education as it should be understood; it is a testing system based on targets and centralisation, the very thing that dogs the Government in everything that they try to do. They have to let go a bit, trust the teaching profession and the schools more, let people have more choice of school and let 16 to 18-year-olds have more choice. The Government should of course promote apprenticeships and promote the idea that going to university can make sense, but they should not force people to go and they should not set artificial targets.
The Labour party will obviously want to tease out the Conservative position on whether 50 per cent. of all students should go to university. I have a simple answer to that. I would welcome it if 50 per cent. of all school students reached university level. Then I would of course want them to have a university place; but it would be stupid just to say that the top 50 per cent. are going to university anyway, whether they are prepared for it or not. There used to be a rough tariff, whereby if a student could not get two A-levels, they did not go to university. It was not that demanding a tariff—in some cases two grade Es would do it. If there is no longer any general tariff, people can turn up at a university
not having mastered level 3 and so not having the intellectual equipment or knowledge that one would expect an undergraduate to have to make a success of university.
I am not speaking as someone being academically picky, but as someone who cares very much about those young people, because the way to make young people unhappy is to put them into something that they are not equipped to do well at. That is why, even with well below 50 per cent. going to university, we already have such a high drop-out rate in some of our universities.
David Maclean: On that point, is it not the case that, when some of our young people are going to university ill equipped for courses that are of no interest to them or that they are not suitable for, we have drop-out rates of 30 to 40 per cent. and that they are dropping out with a £6,000 debt millstone round their necks?
Mr. Redwood: My right hon. Friend is absolutely right. This is the tragedy: these proposals are not good for young people and not good for the system. They have been put forward just to satisfy some stupid ministerial target. People will say, “Haven’t we done well, getting this extra number of people to go to university?” The Government will not have done well unless all those people really get something out of going to university and end up with a qualification that they are proud of and, more important, a qualification that will enable them to command a better salary in the market.
Of course, at the top and middle levels of the university system, that still happens. A degree can give people cachet, knowledge and habits of mind that employers find worth while. However, the more that young people are invited into universities without having met that minimum level 3 requirement, the more difficult it will be for the universities to teach them to the required degree standard, and the less value those degrees will have. As my right hon. Friend the Member for Penrith and The Border (David Maclean) said, more people will then drop out with a debt round their neck and absolutely nothing to show for it.
I hope that the Government will understand that they cannot simply legislate to make everyone a graduate. They have to work away at it, and that will require reform in our schools and in our education system generally. I hope that they will be successful in that, because I would like to live in a world in which many more people have the opportunity to gain a high level of education as well as to buy a home and to get a decent job. Those things are, of course, all related in this expensive, complex and technical world.
The problems for health are exactly the same as those for education, including top-down targets and Ministers desperately wanting to do the right thing but ending up doing the wrong thing. The central irony in the Queen’s Speech is that the Queen, on advice from the Government, has told us that we are going to have cleaner hospitals. How many times have we heard Ministers promise cleaner hospitals? The Gracious Speech tells us that we shall achieve that by having a new, tougher and more impressive regulator to regulate the hospitals to make sure that they are clean. If the problem at the moment is that standards are not high
enough and not being policed enough, why do we need to wait a year for another piece of legislation, a new quango, a new chief executive, a new logo and a new set of management consultancy papers? Why can these steps not be taken now? Nobody in the House would mind if the Government just got on with introducing the required standards through the existing mechanisms and making sure that they were met.
The Government have desperately been trying to do that in a top-down way for many months now, and it simply is not working. Perhaps they should ask themselves whether that is the way to run a large national health service, or whether what my right hon. and hon. Friends have been saying about devolving more power, responsibility and authority to hospitals and to clinical and other staff at local level might not make more sense.
I cannot believe that the Government wish to preside over a national health service in which 6,000 people a year die and have a hospital-acquired infection on their death certificate. I have to keep pinching myself to remind myself that that has actually happened. I cannot believe that Ministers find it satisfactory to have to make statements to the House about a hospital group in which 90 people died as a result of hospital-acquired infections. Somehow, because nobody could believe that 90 people could die in the same place in a relatively short space of time, that case has been treated more seriously than the hundreds and thousands of people who are dying month by month and year by year and who are being ignored.
I am sure no one in the House wants such things to happen. We do not want this to be a party political football; we want the problem to be solved. All our constituents need it to be solved. They are now getting worried about even being admitted to an NHS hospital when they are in need or in danger. They are worried that getting something quite moderate sorted out will result in their getting something far worse. There must be a solution, and it does not involve legislation or a new quango. Among the most worrying aspects of the Queen’s Speech are the chilling phrases that imply that the problem can wait 15 or 18 months—or however long it takes to get the new legislation through and to set up the new quango—and the Government’s naive belief that the new quango will have the magic solution that has so far escaped all the quangos and all the Ministers who have looked at the problem. This is extremely worrying and it sums up exactly what is wrong with the state of the Government today.
I will vote against the Queen’s Speech because I see nothing in it to solve the main problems facing the country. I will vote against it because it does not strengthen our democracy; it undermines it further. I will vote against it because it does not tackle the lack of trust in politics; it accentuates it by not offering us a referendum or sorting out the English problem. I will vote against it because I do not think that it contains solutions to the problems in our large public services, and because I do not believe that it truly meets the aspirations of the British people. If the Government believe that they can play silly party political games with those aspirations, they will fail.
5.40 pm
David Wright (Telford) (Lab): I pay tribute to the right hon. Member for Wokingham (Mr. Redwood), who makes a significant contribution whenever he speaks. I seldom agree with him, but it is important to have parliamentarians like him in the House. He gave an excellent and comprehensive speech, even though I did not agree with much of the content.
It is traditional at the start of debate on the Queen’s Speech to pay tribute to Members who passed away in the previous year, as well as to talk a little about our armed forces. I would like to break only slightly with that tradition by paying tribute to two local councillors in my area who passed away during the last year. Peggie Harrison passed away in the last few weeks. She was an excellent leader of education on Telford and Wrekin council. She did a great deal to modernise education in the area and was well respected right across the political spectrum. She is a great loss to our community. Councillor Jim Hicks also died a few weeks ago. Jim was a man who served on the county council and the West Mercia police authority. He made a very significant contribution to public life in Telford. I am very sad that we have lost both those councillors.
I also pay tribute to our armed forces. A few weeks ago, I visited a family living in Aqueduct in my constituency. They were supported by an organisation that had provided a dog to help one of their children with hearing and other problems. When I visited the family, I saw a terrible situation. The child had been knocked over and terribly injured on the road. As I talked to the family, I found out that the other son was serving in Iraq. The family has faced enormous pressure over recent months, thinking about their son and having to cope with caring for another family member as well.
I want to pay tribute to every serviceman and woman in the Telford area who is serving our country in Iraq or Afghanistan. I have to say that I did not vote in favour of the Iraq war, but I believe that our service personnel are doing an outstanding job out there and that we now have to stay the course. We cannot set an arbitrary date for withdrawal. We need to ensure that there is stability in the country before we withdraw: pulling out on a single arbitrary date would be wrong; we have to see the job through.
Stephen Pound: Next Sunday morning on the 11th hour of the 11th day of the 11th month, virtually every Member will be at their local war memorial. Does my hon. Friend feel as I do that it would have been good to have within the Queen’s Speech some explicit comment about honouring the military covenant? Is he as confident as many in the House that financial stability, underpinned by the Queen’s Speech and the Government’s actions, provides the best possible avenue for honouring and meeting that military covenant—the debt of honour that we owe to our armed forces?
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