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Several reforms are clearly urgently needed and I want to mention some of them. Structured investment vehicles—SIVs, as they are known in the trade—collateralised debt obligations and all the other fancy, new-fangled financial derivatives through which the sub-prime securitised contagion was carried across the world should surely now all have to be approved, if they are to be approved at all, by a much revamped and more robust FSA. Otherwise, when the economy eventually recovers—it will, even if it is several years down the line—will we not return to where we are now? Where is the evidence of a fundamental rethinking?
Credit rating agencies, staggeringly, are now paid by the institutions they assess for creditworthiness. That is almost like something out of “Alice’s Adventures in Wonderland”. It is extraordinary that that has gone on for so long. Those agencies should clearly be regulated to ensure that they are wholly independent with no conflict of interest. That is obvious, but where is the evidence that that will happen?
Investment banks should be legally separated from commercial banks. That was exactly what happened in the US in an earlier era and we have to look again at that precedent. The financial system, which has been recklessly overextended in recent years almost like a giant pyramid selling scheme to fund the enormous City bonuses, clearly needs urgent regulation. I am not objecting to high pay or a pretty good bonus as long as they genuinely reflect public welfare and are not a creaming-off of wholly artificial financial froth, which is what so many of the current payments are.
Robust capital adequacy ratios are also clearly urgently needed if western banks are not going to need increasingly to be bailed out. Only yesterday, we saw Barclays being bailed out by a Qatari bank and sovereign funds from China, Asia and the middle east.
We need to spend a lot more time in the next year on banks. They should also understand that they have responsibilities besides their drive for self-enrichment. They should be required to co-operate in establishing a public mortgage bank—I am rather sorry that Northern Rock did not stay in the public domain to do exactly what I am proposing—focused on credit provision for households with low incomes or irregular work. The banks should also have an obligation—I do not say this to be radical or to speak out of turn—similar to the one in the United States, where banks have to contribute at least 2 per cent. to 3 per cent. of their lending to community projects or social enterprise. If they do that in the States, the apogee of capitalism, why in goodness’ name do we not do it in this country?
We need much more public debate on the subject. It is astonishing that since August, when the crisis began, there has been virtually no systematic discussion of it in this House. We need that debate, and preferably a high-powered committee of inquiry to investigate the whole range of problems. There is not just one problem; they are all interconnected—the lack of prudential controls, the regulatory capture, the obscure accounting, the absence of auditor independence, and the existence of an economic élite driven by reckless short-term profit-making at the expense of taxpayers, who then have to bail them out.
The third area of serious breakdown is the housing market. I welcome the proposed housing Bill, which will do some useful things. It will give social housing
tenants more influence over the management of their homes, which is fine, and give people in general more influence over decisions made by their local councils. I am sure that we would all applaud that. However, it does not begin to address the depth of the crisis that is now enveloping housing in this country.
There has never been a time when the divide between rich and poor has been as great as it is today. I say that with great sadness. I am in favour of people getting better off, and I am not opposed to people being rich, but I am opposed to the enormous gulf between the people at the bottom and those at the top.
Mr. Purchase: Does my right hon. Friend share my revulsion at the sentiment that the Labour party is
“intensely relaxed about people getting filthy rich?”
Mr. Meacher: I believe that my hon. Friend is referring to a statement made by a previous Labour MP, who is now a Trade Commissioner in Brussels, shortly after we came into government in 1997. I was saddened by a current Minister commenting that we should celebrate people being very wealthy. I certainly do not object if people become wealthy by honest work, but the Labour party did not come into existence, and it is not its rationale, to celebrate the very wealthy. It is there to protect the poorest, give them more opportunity and reduce the divide between rich and poor.
Against that background, the epicentre at which the credit crunch will strike the poorer half of the population hardest is housing. There are already 4 million applicants on lists for council and housing association accommodation. That is an average of more than 6,000 per constituency. Obviously the situation varies a great deal in different parts of the country—in my constituency, it is double that number. There are 80,000 people registered homeless nationwide. One way of preventing that huge pool of housing need from ballooning even further—this is a radical proposal, but I would like it to be considered seriously—would be to allow houses at risk of repossession to be bought by public authorities and their owners converted to tenants until such time as they are able to buy again. I should like that possibility, and the economics that might bring it about, to be considered very seriously.
The Government have made a commitment to build an extra 15,000 social or affordable houses a year by 2016. That is probably less than half the number necessary to remove the backlog, but it is very welcome. Yet the housing situation is desperate because, tragically, even that lower total is disappearing before our very eyes.
The Government’s objective is to build 240,000 houses next year, and we would all like that to be achieved. Like me, however, other hon. Members will have read the announcement about a week ago from the House Builders Federation that it expects the total to be only 80,000—that is, one third of the objective.
Although the financial backdrop is very difficult, the Government recently promised an extra £200 million for housing. I would be the first to say that that is very welcome, but it is only enough to build around 1,000 or so extra homes. There are also plans for more shared equity, an objective that the Conservative party shares. However, that is almost irrelevant to the core of housing deprivation today.
The hon. Member for North-West Cambridgeshire (Mr. Vara) can correct me if I am wrong, but the Conservatives have made it clear that they would not build a single new council house. They are completely opposed to building council houses, but they are obsessed with home ownership. Home ownership is fine for those who can afford it, and all of us in the Chamber are probably home owners, but a quarter of our population cannot afford it. All that they get is a cavalier, ideological dismissal of their very great needs.
We are all aware of the state of the public accounts. Given that, the only way out of the present housing crisis that I can see is to allow local authorities to build social or affordable housing by borrowing against the collateral of their housing stock. That is how it should be done, and I desperately hope that the Government will consider that.
In conclusion, I am sure that the Government wanted this welcome debate on the draft legislative programme to restore some momentum to their direction. I strongly urge them to pursue many of the matters that I have raised, as that would significantly help them to achieve that purpose.
3.22 pm
Sarah McCarthy-Fry (Portsmouth, North) (Lab/Co-op): I, too, am delighted to be able to take part in this debate about our draft legislative programme. This is only the second year that this debate has been held, and I am disappointed that more of my colleagues have not taken the opportunity to speak.
This opportunity to look at the Government’s draft legislative programme is very welcome. I never saw the point of revealing the legislative programme as one would drag a rabbit out of a hat, with no chance of consultation before it was finalised. We last debated the draft programme last year, and there has been a very big change in the economic backdrop since then, but I am certain that only a Labour Government can see the country through and deliver for families and fairness. When people consider what is really important, I think that they will see that the Conservative party has not changed, and that it cannot be trusted with our public services. The Labour party is the only party that is truly progressive, and we have a really good record of delivering on public services.
The American sub-prime mortgage market was not something that many of us gave a great deal of thought to. Whatever the problems in the US, even fewer of us expected them to erupt into a financial crisis here—a crisis that has coincided with a huge rise in the world price of crude oil. We acknowledge that people everywhere are struggling and finding that filling the car with petrol—or getting the essentials from the supermarket or even paying gas bills—has become harder to do. However, we have the right policies to see the crisis through. We have the depth and strength of commitment to steer Britain through these difficult times.
I am pleased that the Government and the Prime Minister have made the economy their absolute top priority. I remember the bad old days and, without the stewardship of our Chancellor and his economic team, I know that we would go back to the bad old days of the triple whammy, when inflation and interest rates were both three times higher than today and 3 million people were unemployed.
It is clear what the Government have to do and what the people of this country are asking them to do: to get on with the job, to steer the country through the difficult times and not to be distracted from the bigger picture. Most people acknowledge that there have been significant improvements under Labour. However, it is also true that there has not been a strong enough narrative from us about what we are doing and how we are trying to change Britain. That is what this draft legislative programme is about—bringing forward Bills to help people, such as those who live in my constituency in Portsmouth, to have the opportunity to succeed.
This is also about bringing our legislative programme together into a coherent sense of something bigger, so that people can see that we are not just being driven by daily events or a crisis, but honing a thoughtful agenda, with people’s everyday concerns as our top priority. A solid economy is the bedrock, but fairness is a key aim.
Mr. Purchase: I thank my hon. Friend for bringing out that flavour of a coherent programme. However, I would like her to develop that further and give a little more detail about how to make that narrative understandable among the general public—Labour supporters in particular—as the kind of Labour programme that I referred to earlier. The programme needs to relate to the kind of things that my hon. Friend is talking about, which are relevant to her constituency and others, such as housing problems and the other matters that she mentioned. We need to hear a little more detail about how that progressive narrative could be developed.
Sarah McCarthy-Fry: I ask my hon. Friend to be a little patient and allow me to develop those points. At the moment I am setting the scene, but he has mentioned exactly the point that I am trying to put forward. My hon. Friend said that he was disappointed because he did not feel that this was necessarily a true Labour programme. Through my discussion of the two particular Bills that I want to emphasise, I want to make the point that it is absolutely a Labour programme.
I want to focus on one particular aspect of the programme and, as I said, on two Bills in particular. I want to focus on the part relevant to the people whom I represent and to the reasons why I came into politics—that is, making the most of our potential. If one thing inspired me to be a politician during the 18 long Tory years, it was seeing the waste of talent and the young lives blighted by lack of opportunity and lack of work. We have made massive strides. We have created the jobs so that people can work. There were 3 million unemployed; now, more people are in work than ever before, and under a Labour Government. We have better-educated young people through our investment in schools, which has increased the number of teachers. We have also recognised the value of teachers by improving their pay.
We have a healthier population thanks to investment in hospitals, primary care and an emphasis on preventive health care—and that against a backdrop of a rising elderly population and of more new drugs and treatments, the cost of which were unenvisaged when the national health service started.
However, when there is generational unemployment and lack of hope, is it any wonder that people lack the confidence and self-esteem to believe that they can achieve? Whatever the protestations of the Conservative
party, we cannot change that generational feeling overnight, in a few years or even over 10 years; it will take generations to change. The best route to a well-paid job and achieving all we want is through education, and that is the main reason why we are raising the education participation age to 18. That is not an easy task to set ourselves, because we have committed to making the training places available and offering alternatives to school and college post-16 so that everybody—not just the academically able—can participate.
Some people may seem not to be academically able, but they may not have had the same life chances and opportunities as others. That was brought home to me in my constituency last month when I visited the Paulsgrove Baptist church project, where young people who find the school environment difficult are being taken into a church hall. The project is working closely with the school. A dedicated group of teachers is painstakingly working on a one-to-one basis with those young people, who had previously been totally written off, and getting them through their GCSEs. I had a splendid morning at the project. The kids were really feisty and bright, but they did not believe in themselves; they thought they were thick because people had told them they were thick. It just took some encouragement and support to show them that they were not thick—that they had a bright future in front of them and could achieve things. That is what we mean by unlocking Britain’s talent.
Mr. Meacher: I am interested in my hon. Friend’s argument. I have always thought that what happens outside the school classroom as regards relationships with the wider community, particularly with the parents, is extremely important. As she rightly says, the lack of motivation that comes from young people feeling that they are not up to it has a devastating effect on morale. We have put huge resources into buildings, but does she agree that it is important that we should put more resources into improving educational performance not only through targets or buildings but by building on the relationships of those around the children, which mean so much to them?
Sarah McCarthy-Fry: I could not agree more. When we talk to young people, we understand some of their problems. In some cases the school was too big, in other cases it was too impersonal, and in other cases they were being bullied by other kids because they were slightly different. When young people are given the opportunity of that little bit of extra support through one-to-one tuition, we can see the light shining through as they think, “Oh, maybe I can do it after all.” Unlocking Britain’s talent sounds like just a phrase, but it is more than just words from a party that has been in power for a decade. It is what I passionately believe in and what drove me as a Labour MP—that everybody should be able to achieve all that they aspire to, irrespective of their background, but also that Government have a role in making that happen.
Work is the best route out of poverty—we all acknowledge that—but it is more than that. People need good jobs in which they can see that there is a career ladder that they can climb, and something they can aspire to. Having a job can be part of the social glue that binds a community or a family together. Parents who aspire and can see a future for themselves are much
more likely to help their children to aspire. As my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) said, parental involvement is one of the key factors in driving educational achievement.
Turning to the Bills in the draft legislative programme, I want to concentrate on two, both of which are very much about people making the most of their potential. One of the most important things that any Government can do is to free up the system so that those with talent can rise as far as they can without any barriers to success based on class, race, gender, educational background or social background. That is why I welcome the Education and Skills Bill. People in my constituency will welcome its focus on promoting excellence in schools and ensuring that every school is a good school. In my area, we have seen a huge improvement since 1997, with the number of children leaving school with five good GCSEs doubling from 25 per cent. to 50 per cent. However, that still means that 50 per cent. of young people are not getting those necessary qualifications.
Mr. Purchase: May I refer my hon. Friend to the work, surprisingly, of Sir Keith Joseph and his senior researcher, Rodney Lord? They found, many years ago when Sir Keith Joseph was at the Education Department, that the key elements to successful outcomes were absolutely committed parents. Using a statistical analysis called multiple regression analysis, they looked at a number of factors and put them together to show what the relationship was between one particular element and the outcome. Parents came out on top every time, and the second most important factor was experienced teachers. That shows that we have to give full commitment to teachers and parents to get the very best opportunities for our children. I recommend the work to my hon. Friend, who may find it still relevant today.
Sarah McCarthy-Fry: I thank my hon. Friend for his intervention. I certainly notice that when I go into schools. Many of my local schools have programmes for bringing parents into the school in order to help them. Often, parents who have had a bad experience at school themselves are remarkably reluctant to go into the school and help their children. Programmes with a bit of psychology that tell parents they are coming into school to help their child, while helping them with their own educational attainment, remove the stigma and work remarkably well.
The other important aspect is that of skills and apprenticeships. I welcome the right for those already in work to take time off for training and development. It means that young people, whether they go down the academic or vocational route, will find that both have the same respect and value. They will have the opportunity to develop skills that are useful to a current employer, but also to their personal development later on. Strengthening workplace training can only help that process, and by allowing people time off to train, we are recognising that it is no good saying, “Yes, you did have the opportunity to gain skills at school and in higher education, but you didn’t take it up, so forget it.” Many people do not take up that opportunity, and we are now saying that people who did miss that chance will have the opportunity to take it later in life, when they are ready.
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