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It is not that the Bill is inherently evil, or that the Minister and the Government are intent on destroying homes and creating bureaucracies that will prevent people from being able to live in affordable housing; they just fundamentally misunderstood the best way of delivering their objectives. They know that they have a lamentable record on housing delivery over the past 10 years. We know that the average number of homes built every year during our time in office was 176,000, and that the figure is only 146,000 under this Government. Social housing, which was mentioned today and many times in Committee, is being built at a very limited rate. We were building more homes on average in each of our 18 years in office than Labour built in any of its 10 years—a situation that has greatly frustrated Labour Back Benchers, as the Minister knows. In addition, homelessness among children has risen dramatically under this Government. There are twice as many homeless children as there were 10 years ago. The figure has doubled to 130,000.
We know that there are all sorts of problems in the supply and provision of housing, but the Bill does very little to resolve them. It seeks to resolve them through more top-down management—exactly the kind of problem that got the Government into a low-level house building programme in the first place. The Bill is Whitehall driven, centralised and bureaucratic, and it gives powers to a new quango. We do not know how that quango will behave in future. The Minister mentioned earlier that Sir Bob Kerslake, the new chief executive of the Homes and Communities Agency, said that the agency would be able to act on local vision and work with local partners. That may well be true, but that is not what it says in the Bill. The problem is that despite the fact that one chief executive thinks that he can act in that way under the terms of the Bill, what matters is what is actually in the Bill and the way in which it is written. It has been written to dictate centralised targets from above to people down below.
However one cuts it—however one reads the Bill—one realises that it is about creating targets and the Government trying to drive through their famous target of 3 million homes by 2020. Never mind the fact that the Government are already missing the target that enables them to reach that 2020 target, or the fact that they have missed their targets for the past 11 years, as I described; misguidedly, they still think that the solution is to put a top-down weight on local people. What came out most clearly both in Committee and—to a limited extent, because of the brevity of this debate—today is the idea that there is a better way of doing things.
We could work with, trust and rely on local communities by incentivising them to build the housing that we need. For some reason, the Government feel that that is a dogma that they could not possibly adopt. The idea of working with, rather than against, local people—the idea that people should not have to create campaigns to try to protect their local area—is anathema to the Government. It does not need to be like that. We can encourage local communities to create the homes that are needed by incentivising them. We can do that by ensuring that infrastructure follows housing, and by ensuring that local communities are financially benefited as and when housing comes to an
area. There must also be joined-up thinking, so that when the people in an area agree to build more housing, there is something in it for local people.
When we ask ourselves honestly what incentive the Bill provides for local people to agree to or even encourage the building of housing in their areas, the answer is “Absolutely none.” The truth is that it will invariably destroy the quality of life rather than enhance it. We do not believe that things need to be like that: housing and development should not have a bad name. It is the policies that have been followed for the past 10 years, gold-plated by the Bill, that have got us into this mess.
What has happened in this instance is a bit like what has happened to the word “consultation”. Under the present Government, no one believes that a consultation is genuine. The very meaning of the word—its definition in the Oxford English Dictionary—has been degraded by the sham “consultations” of the past few years. The same muddied cloud now hangs over the word “development”, and the Bill does nothing to address that.
It could all be so different. Local areas could vie with each other to build sustainable housing in which everyone would want to live. Existing communities could benefit, enjoying the extra services and improving their areas by backing developments. However, the Bill does nothing to favour that approach. Instead, it looks to the heavy hand of top-down government from Whitehall. When local people object to development proposals, the Homes and Communities Agency will have the power to override their objections. There is very little to commend the Bill to the House. We had a great opportunity to provide the amount of housing that we know we need to accommodate a nation, but that opportunity has been missed.
The Minister claimed today that the purpose of all those amendments had been to take account of the will of the Committee and the House, but he was unable to answer a simple question about the number of Opposition amendments that he had accepted. In fact, the reason there were so many amendments is not that this is a tremendous Bill, but that the Minister has dithered a great deal.
Mr. Iain Wright: May I point out to the hon. Gentleman that he has not once mentioned the creation of Oftenant? Are tenant standards so low on the Conservatives’ agenda?
Grant Shapps: I do not want to take up other Members’ time. I will simply say that it is difficult to understand why Oftenant should apply to some houses and not others. The Minister was unable to explain that in Committee, and he has been unable to explain it today. The Bill is, if nothing else, inconsistent.
9.57 pm
Lembit Öpik: I enjoyed serving on the Committee with the Minister. I think that he has genuinely listened. Above all today, I have accepted—and respect—the fact that the specific case that I raised in relation to amendments Nos. 14 and 15 will be considered. I think that that will prove to be a valuable step forward.
I approve of the creation of Oftenant. We felt that the name was faulty, but the best alternatives that we
could come up with were Ofsquat and Ofhome, so we will stick to Oftenant for now.
The Bill has become complicated. We did not have enough time to examine the details, and I think the Minister will admit privately that the Government crammed an awful lot into a very short time today. The problem was exacerbated by the urgent question that was debated earlier. I hope that that means that the Government will show patience in another place, and will allow proper scrutiny of the parts of the Bill that we could not scrutinise here.
I think that the most important point to be made is that if the HCA works properly, it will help the Government to meet the target that we all want to meet—the provision of 3 million new homes. As the hon. Member for Welwyn Hatfield (Grant Shapps) observed, if it is given free rein to wander into the activities of other quangos it may become a great, burdensome monster that will get in the way. However, I am choosing to be an optimist. Having listened to the Minister’s elucidation of how much he loves the Bill, I feel that I am looking at its parents sitting proudly on the Front Bench after nurturing it thus far.
The Liberal Democrats want the Bill to work. We want it to be successful, and we want to meet that target. We want both a good quality of life and high standards of community development, and I think I can say with confidence that if the HCA achieves that, the months we have spent improving the Bill will not have been wasted.
9.59 pm
Sir George Young: I congratulate the Minister on a very sure-footed performance. I say that while his boss, the Minister for Housing, the right hon. Member for Don Valley (Caroline Flint), is sitting next to him. He did an heroic job in Committee, and I am sure he has been earmarked for promotion to other Departments that are more accident-prone than the one in which he currently serves. He did a first-class job.
The Minister will have noticed that there has been a total change in the housing climate since we debated the Bill on Second Reading in November. It is now a much colder climate than when we started. The base
rate has gone down, but the borrowing rates have gone up. If we look at reports of house builders, we find that they are less optimistic; and 50 per cent. of the Housing Corporation’s target is now on the back of market housing—
It being Ten o’clock, Mr. Deputy Speaker put the Question already proposed from the Chair, pursuant to Order [27 November].
Bill read the Third time, and passed.
10 pm
Simon Hughes (North Southwark and Bermondsey) (LD): On a point of order, Mr. Deputy Speaker. I seek your guidance as a result of frustration. I appreciate that this may not be a matter that you can deal with now, but four of the groups selected by Mr. Speaker for debate were not touched on at all and in one group we debated only one provision and the bulk of amendments and new clauses were not debated. In addition to taking other steps outside this place, I seek your guidance on whether it would be possible, if the Government were minded to do so, to change the timetable for debate on Report. Could a motion to change the timetable be brought forward when it was absolutely obvious, once Report stage had started, that nothing like the bulk of the work set out was going to be done? Will you confirm whether that would be acceptable, Mr. Deputy Speaker, as it would help us to understand how to deal with Bills that have so many Government amendments and new clauses appended to them in future? The Leader of the House said that she was willing to look further into that as a major parliamentary issue.
Mr. Deputy Speaker (Sir Alan Haselhurst): In all these matters, the initiative lies with the Government. There may be occasions on which they may wish to put a different or amended programme motion before the House, but as the hon. Gentleman knows, I am afraid that that is not a matter for me. We are getting used to the procedure of programme motions and it is all a matter of judgment on each occasion as to whether sufficient time—in the eyes of the whole House—has been provided.
Northern Rock
10.1 pm
Mr. Mark Hoban (Fareham) (Con): I beg to move,
That an humble Address be presented to Her Majesty, praying that the Northern Rock plc Transfer Order 2008 (S.I., 2008, No. 432), dated 21st February 2008, a copy of which was laid before this House on 21st February, be annulled.
The timely publication this morning of Northern Rock’s business plan and accounts again calls into question the Government’s decision to nationalise the bank. As one reads through the documents, the gamble that the Prime Minister and the Chancellor took by nationalising Northern Rock last month becomes clearer and clearer. Whether we get back all the money lent by the taxpayer depends on Ron Sandler’s being able to turn around the business, shrink the mortgage book and rebuild the deposit base.
Yet it has taken the Government since September to get us to this point and it took them five months to decide the future of Northern Rock—five months from when Northern Rock was offered emergency funding to the point of nationalisation and five months of uncertainty for its employees, customers and the business. Although the problems at Northern Rock were a consequence of the management’s strategy, it is clear that the Government exacerbated the problem through their handling of the crisis.
Let us look at the way the Government handled the decision to provide Northern Rock with emergency funds. The announcement triggered a run on the bank, which could be stemmed only by a guarantee of retail deposits, but as the Treasury Select Committee made clear in its excellent report “Run on the Rock”:
“The cumulative effect was... to make the run on the deposits of Northern Rock more prolonged, and more damaging to the health of the company, than might otherwise have been the case.”
It will therefore be harder for Ron Sandler and his team to rebuild the vital retail depositor base, which will play an important role in refinancing the business on more conventional lines and also in repaying the loans to the taxpayer.
Mr. John Redwood (Wokingham) (Con): Does my hon. Friend agree that there is a contradiction in that rapid repayment of the Treasury money requires contracting the business, whereas fattening the business up for resale requires growing it? It is quite difficult to understand how the management can do both.
Mr. Hoban: Indeed. My right hon. Friend identifies an important issue at the heart of the matter. The business plan before us today in the form of the Chancellor’s written ministerial statement talks about repayment of the loan, but does not provide a date by which Northern Rock will exit public ownership. There is a contradiction there, but the first priority must be to repay the loans to eliminate the taxpayer’s exposure.
Of course the problem that Northern Rock will have after the five months of dither and delay is that the business itself has made no progress in that time, as the interim management waited for the Treasury to decide what it would do with Northern Rock. The way in which the Government handled Northern Rock stands
in stark contrast to the prompt action on Bear Stearns by the US authorities, which were able to organise a private sector solution over a weekend. Of course, we know from the Treasury Committee report and elsewhere that a private sector solution was on the table for Northern Rock before September, but it is clear that the Government turned it down. I wonder how much the Chancellor regrets making the decision back in August, when he washed himself of all sorts of problems, not to accept the offer that was apparently on the table at the time.
Stewart Hosie (Dundee, East) (SNP): I share the hon. Gentleman’s frustration about the use of the weekend takeover as an excuse not to act earlier. I think that I share his frustration that a Lloyds TSB bid was not accepted. I certainly share the frustration of many people that the Bank of England did not increase liquidity late last summer, when it could have done so. I understand what the Opposition are trying to do with the annulment motion today, but does he not feel that, if they annul the order, it might further weaken confidence in the banking sector, which is—how can I put this gently?—rather brittle at the moment?
Mr. Hoban: It would be to the benefit, because there are better solutions to Northern Rock’s problems than the one before us today. We have argued that case for some time, and I shall touch on that briefly towards the end of my speech.
To go back to the comparison with the US, Bear Stearns shareholders now have certainty over the value of their shares—unlike Northern Rock shareholders, who have to wait until the independent valuer tells them how much their shares are worth. Of course, JP Morgan Chase will pay for the compensation and buy the shares, not the US taxpayer; whereas, in the UK, the UK taxpayer will have to compensate Northern Rock shareholders for the nationalisation.
In reality, although for some people nationalisation was the end of the story and the solution to the problem, it is not an end in itself and the publication of the business plan and accounts today demonstrates that. The two documents clearly point out the risks that the taxpayer has assumed as a consequence of nationalisation. The order transfers ownership of Northern Rock from its shareholders to the taxpayer, but it transfers the risks, too. The regulatory impact assessment published alongside the order gives no assessment of the risks assumed by the taxpayer. When the Chancellor signed off the RIA, he said that it represents a reasonable view of the likely costs and benefits, yet no numbers were attached to the RIA to back up that assertion, whereas the accounts and the business plan make plain the scale of the challenge that faces Northern Rock and therefore the risks borne by the taxpayer.
The Chancellor in his written statement today supports the objective that Northern Rock repay its loan to the Bank of England by 2010 and release guarantees by 2011, so we know that taxpayers’ exposure to Northern Rock will continue beyond the next general election. But as the business plan makes clear on page 8, the repayment of the loans by 2010 is an assumption that is part of the base case of the management’s plans. I wonder whether the Chief
Secretary can tell us how long it will take to repay the loans using the management’s worst case scenario? The Treasury has access to the forecasts that the management prepare, so she should be able to tell us the worst case scenario for repaying the debt.
Yet even the statement that the debt will be repaid by 2010 is at odds with the views of Ron Sandler, who wrote to Northern Rock customers—I have here a letter that was passed to me by a mortgage holder at Northern Rock—about repaying the bank’s debt in full and said:
“We aim to achieve this over the next three to four years”.
That is by 2011 or 2012—a much more pessimistic assumption than the line that the Treasury has been spinning today. Can the Chief Secretary explain the discrepancy between the Treasury line put out today and the line that the man whom they handpicked to run Northern Rock has taken in talking to customers?
Let us be clear: we want the loans to be repaid as soon as possible. We expect the Government to stand by the commitment that the Chancellor gave on 19 November:
“we fully expect to get”
“back.”—[ Official Report, 19 November 2007; Vol. 467, c. 972.]
However, we recognise that the changes that need to be brought about to achieve that will lead to job losses in the north-east. They will come about as Northern Rock wants to shrink its mortgage book over the next three years. In 2011, its share of the mortgage market is forecast to be about 2.4 per cent. compared with 7.5 per cent. last year, and its assets will shrink from £107 billion to £49 billion.
To achieve that, Northern Rock customers coming to the end of their fixed terms will need to be encouraged to move to other providers. In the current circumstances, that will be relatively straightforward for customers who present a low risk, who have low loan-to-value ratios on their mortgages, or who have good credit histories. Is there not a danger, however, that the more risky customers will have to stay with Northern Rock, thereby reducing the overall quality of its loan book and exposing taxpayers to greater risk of defaults—and defaults would, of course, be a cost we would pick up? The overall quality of the loan book will deteriorate as people who cannot find an alternative are forced to stick with the standard variable rate that Northern Rock offers. Therefore, there is a risk to the value of the assets.
Will the Chief Secretary clarify what the table on page 10 of the business plan means? It refers to net assets before fair value adjustments. Is that to do with further write-offs of structured investment vehicles, or is it to prepare us for the write-off of further Northern Rock assets? If there are further write-offs, will the taxpayer not have to pick up the tab?
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