Westminster Hall

Tuesday 28th June 2011 Westminster Hall

Tuesday 28 June 2011

[Martin Caton in the Chair]

Social Housing (England)

Tuesday 28th June 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Vara.)

09:30

[Jeremy Lefroy (Stafford) (Con)]

It is a pleasure to serve under your chairmanship, Mr Caton, for the first time.

I sought to have this debate for a number of reasons. The first is that housing, particularly social housing, is an important part of the lives of people in this country, so much so that it ought to be the subject of frequent debate in this House. I might be wrong, but I do not recall a full, major debate on housing in the main Chamber so far in this Parliament. The second reason is that housing, particularly social housing, affects and is affected by so many other areas of Government policy that it needs constant attention at a time when other policy is changing rapidly. The third reason is that I am a new Member, and as such housing forms a substantial part of my constituency case load.

I am no housing expert, but I am fortunate enough to have an excellent senior caseworker, Pauline Ingall, who has made it her business to work with my constituents and with local social housing providers to solve problems, bringing to my attention inconsistencies and unintended consequences of policy that cause distress in people’s lives. Some constituents, in particular John Turner whom I thank for his encouragement to seek this debate, have also pointed out anomalies, and I pay tribute to Karen Armitage, chief executive of Stafford and Rural Homes, for bringing a number of matters to my attention.

I know that other Members wish to contribute to the debate, and I will therefore seek to limit my remarks to certain areas of this vast subject. I am sure that they will be able to fill in the gaps and add much local detail from their own experience. I will not tackle the question of supported housing, not because it is unimportant—far from it—but in the hope that others will refer to it. However, I will make, as I am sure will others, a number of suggestions to the Minister for Housing and Local Government. I know that he will take them seriously in his usual generous manner.

It will continue to be the case that most people in this country will wish to, and be able to, buy their own homes, or rent them in the private sector. It is also clear, however, that increasing pressures will mean that demand for social and affordable rented housing will continue to rise. I say “continue to” rise because despite the relatively strong economic growth between 1997 and 2007, the numbers on council waiting lists rose from 1.02 million to 1.67 million, and by 31 March 2010 they had reached 1.75 million. Over the same period, social housing stock declined from 4.38 million to 4.03 million, so only half the increased demand was accounted for by a reduction in supply.

We live in tough economic times, and although I expect Britain to return to relatively strong growth within one or two years, this experience tells us that the rate of increase in demand is likely to slow rather than be reversed. Added to that, we have the pressures of an increasing population, estimated to be 65 million by 2018, and 70 million by 2028. We therefore have a serious imbalance in supply and demand, which is likely to increase in the coming years.

The Government’s approach is twofold: to encourage the increase of supply, and to help registered social providers and local authorities to take a more flexible approach to housing, so that this very valuable national asset can be put to best use. I welcome that general approach, but before I look at it more closely I wish to emphasise that housing can never be considered as just an asset. In fact, one of the main causes of the financial crisis around the world was the failure by financial institutions, Governments and property owners to recognise that viewing a home solely or substantially as a financial asset was very short-sighted.

A home is a vital aspect of someone’s place in the community. Understandably there is great emphasis these days on mobility, but people staying for a long period—perhaps their whole life—in the same place is just as valid a choice. My family lives in the house in which my wife grew up, and our children attended the same schools as she did. The big society is more likely to flourish in places where people stay put rather than where people move frequently and hardly know their neighbours, and that is why we need to be careful about making changes to social housing tenancies. We are dealing with not just bricks and mortar but with people’s lives, and I would like to hear the Minister’s comments on how he sees the balance between stable communities and the understandable need to make best use of social housing.

The Government recognise the need to build more social housing. The target of 150,000 new homes—37,500 a year over the next four years—is ambitious, and represents a substantial increase over anything achieved by the previous Government, under whom completions ranged from 14,000 to 26,000 a year. I welcome that target; the key is how it is to be achieved. I understand that because of the current financial circumstances capital funding has been reduced from £8.5 billion in the previous spending round to £4.5 billion, and that the difference is to be made up by allowing housing associations to introduce affordable rents of up to 80% of the market rent—recent figures show an average of 67%. Capital subsidy would be replaced by revenue funding from higher rents, combined with increased borrowing by housing associations against the value of their stock, and, of course, Government capital grants.

[Mr John Leech (Manchester, Withington) (LD)]

Does the hon. Gentleman agree that if rents are set at 80% of market rents they will simply be unaffordable for a lot of people in some areas?

[Jeremy Lefroy]

I do, and that is why the flexibility in the policy is very important.

Some people have asked whether the result of increased rents for new tenants will be to transfer capital subsidy to the cost of welfare because much of the increase will be covered by housing benefit. There is a clear difference of views here, with the Government saying that there is likely to be little or no increase in the cost of housing benefit, and others estimating the annual cost after four years to be up to £1.5 billion. This issue cannot be brushed under the carpet as a minor detail, and I ask the Minister to update the House regularly so that we can see the true consequences of the shift in funding new affordable rented housing more out of rental income and less out of capital grants. This is an important policy change, and we need to evaluate it.

In passing, I also wish to ask about the model used to calculate market rent. I understand that a model is being suggested that will cost housing associations some £40,000 to £50,000 a year to use. The main housing association in my constituency, Stafford and Rural Homes, says that it will perhaps be more straightforward and cheaper to use the local housing allowance as an indicator. I also ask the Minister to work closely with banks and housing associations to see how the obstacles to borrowing for building can be overcome. From anecdotal evidence I have heard, it is becoming more difficult for housing associations, especially the smaller, local ones, to borrow at reasonable rates from banks to build new properties.

With council housing, the proposals for self-financing are a continuation of the previous Government’s plans, and they make good sense. The figures from the past 10 years show that the current arrangements are complex and provide few incentives to increase housing stock. Some people have argued, however, that councils should be able to retain 100% of sales proceeds rather than the proposed 25%. It might be sensible to look at enabling councils to retain 100% for the medium term—or at least more than 25%—and to roll the money into new properties when demand is strong, in return for agreeing to release the funds to the Treasury at a later date. In effect, they would issue bonds to the Treasury, and I would welcome the Minister’s comments on those proposals.

There are strong arguments for local councils and housing associations looking more seriously at entering the bond market more substantially than at the moment. The central grip of the Treasury on the finance of public capital is too strong. Some housing associations, such as Places for People, have already taken that initiative, but there is surely scope for more. Local bonds issued by local bodies and taken up by local people would be a fine example of localism in practice.

Those who look back at the ’70s and ’80s and point to irresponsible local authorities, fail to take into account the great strides taken since. Local government, in my opinion as a former council cabinet member for finance—I declare that interest—is far more prudent than national Government, and council balance sheets are generally in reasonable health. I welcome the commitment to build 37,500 new social and affordable rented homes a year and urge the Government to set their sights even higher by working with councils and housing associations to tackle the financial and planning obstacles that stand in their way. Both sides need to be engaged in doing so day in, day out, rather than awaiting the next set of statistics. There is another important reason for encouraging construction: it will boost the economy and employment. Everybody will gain: more people will be properly housed, more income will go to housing associations and local authorities, more people will be in work and fewer will be on benefits.

The second arm of the Government’s approach is to encourage flexibility and ensure that social housing is available to those who need it. Allowing local authorities to increase rents for those on high incomes surely makes sense. It is hard to justify subsidising housing for someone earning £50,000 a year or more. Other measures are more problematic. It seems that 430,000 social homes are under-occupied, with two or more bedrooms in excess of requirements, but in practice there might be few opportunities to move to smaller accommodation within the same area. It is key to make it easier for people to move to smaller homes rather than penalising them. One main obstacle preventing people from moving is a shortage of suitable accommodation. There is a severe shortage of single-bedroom accommodation and homes designed for older or disabled people. Many local authorities and housing associations, including in my constituency, have recognised that and are responding with additional extra care and similar housing, but we are still well behind the demand posed by demographic trends in this country.

In a recent debate on food production and security, I said that agriculture is the business of the future. I believe that more people in rural areas will be employed in coming years, yet the shortage of affordable and social housing in rural areas is such that in parts of my constituency, they would have to commute from the nearest town to work. The solution lies not just with Government, whose planning reforms should make building such homes somewhat easier, but with local communities. I would be the first to oppose large and inappropriate developments in rural areas, but to oppose any development, especially of affordable and social housing, is wrong. People cannot complain on one hand about the loss of rural services such as post offices, village schools and public transport and, on the other, prevent the arrival of the very people whose presence would make those services more viable.

In each of our constituencies are hundreds of homes that have been empty for a long time. Whether they are in private hands or public—perhaps they were requisitioned as a result of road projects that are no longer live—they represent a waste of scarce resources. There are also commercial properties that have lain idle for several years as a result of a change in habits. Local authorities need to be able to take action to bring such properties back into use or change planning designations more easily to meet the need for more homes, particularly social housing. I welcome the Government’s proposals and initiatives on those matters and the Minister’s comments.

I have concentrated so far on social housing provided by councils and housing associations, but private rented property is a vital part of the mix and will be increasingly important as attitudes to home ownership change in the medium and long term after the experience of the past few years. I will not say more about that, as I am sure that other hon. Members want to contribute, but the key is to encourage responsible letting and tenancy.

It is clear that this country must provide more social and affordable rented housing. First, we must build at—and, I suggest, beyond—the increased rate forecast by the Government. Secondly, we must free up properties by enabling people to move to others that are more suitable or by bringing disused properties back into use. However, it is just as important to achieve the economic growth that will reduce the number of people who depend on social housing.

I conclude by considering some of the concerns brought to my attention by constituents. Problems arise when families break up and new partners, each with their own children, come together. Teenage boys and girls from different parents are sometimes expected to share rooms; indeed, a letter about such a case recently arrived in my constituency postbag. Although we cannot expect housing associations’ letting criteria to cover every eventuality, we must ensure that the heavy burden of waiting lists does not cause them to lose sight of the needs of individual families. That is particularly important for people with disabilities. Social housing providers make great efforts to meet the needs of those with disabilities, but the requirement to be fair and consistent due to concerns about being challenged must be balanced with the determination to tackle people’s real needs.

I also have concerns about how disputes between landlords and tenants are resolved. The Housing Ombudsman Service has an important role to play, but although its mission, according to its website, is to work

“with landlords and tenants to resolve disputes impartially, using processes that are fair, evidence-based, and free of bias and prejudice”,

it seems to see its role in resolving disputes in terms that I would regard as relatively narrow or legalistic. One person said to me:

“Housing associations have huge amounts of power. So if there are problems, you can only go to the ombudsman. However, the ombudsman only deals with things in a legal manner.”

I have sympathy with that comment.

What is needed is for the housing ombudsman or some other body to be involved in local arbitration between landlord and tenant at an earlier stage, when perhaps matters can be resolved before positions become entrenched. The relationship between landlord and tenant is sensitive, particularly when the tenant faces difficult circumstances. It is not simply a matter of being parties to a contract; it concerns the tenant’s home, family and community.

The structure and administration of housing associations are also an issue. They are not-for-profit organisations, often charities or industrial provident societies registered as charities. That gives them a certain status and some privileges, so one would expect restraint in remuneration, especially at the most senior levels, yet some executives have packages exceeding £150,000 or even £200,000 a year. I have always been mystified by how a small business that makes £20,000 or £25,000 in profit a year—effectively its owner’s income—can be described as for-profit, whereas a charity that pays an executive £200,000 a year has the elevated social and tax status of a not-for-profit organisation. Will the Minister and other colleagues consider whether it is appropriate for charitable bodies to retain that status if they pay excessive remuneration? Perhaps, as was the case with the bonus tax on banks, such organisations could be required to pay an additional levy on all remuneration above a certain level.

I have noticed that since stock transfers began, newly formed housing associations have tended to enter into takeovers or mergers. Although the need to come together for efficiency of scale is understandable, there is also a danger that contact with the local communities that they serve will be diluted. However good local staff are, tenants will be further removed from their landlord’s decision making. I do not wish to be prescriptive, but I welcome the Minister’s comments on how he believes social housing providers of all kinds can be more responsive to the needs of their tenants and communities.

I started by saying that social housing is affected by many other areas of Government policy. I will refer to one: the reform of housing benefit. I appreciate the need to control expenditure, but some of the proposed changes might have the opposite consequence. Deductions from housing benefit for non-dependants might cause tenants to ask their non-dependent children to leave. As a result, those children might end up on some perhaps more expensive form of housing benefit, or present themselves as homeless. I am also concerned about the extension of the shared accommodation rate to those aged 26 to 35. I have imagined myself in the shoes of someone of that age and in that situation. It is not a good place to be. What plans does the Minister have to encourage the building of decent accommodation for people in such circumstances?

I am most grateful for this opportunity to raise some of the questions that my constituents and others have put to me during my first year in the House. I come at the subject without previous experience, and I know that other colleagues with far more experience will wish to put their views, but I approach it with the desire for social housing that is both sufficient for needs and of a high standard throughout the country. I know that most providers do an excellent job, but not all do. I look forward to working with the Minister and all who wish to make such homes better for those who live in them and for the communities of which they are a part.

09:49

[Mr John Leech (Manchester, Withington) (LD)]

It is a pleasure to serve under your chairmanship, Mr Caton. I congratulate the hon. Member for Stafford (Jeremy Lefroy) on securing this important debate. I am surprised that more hon. Members are not here in Westminster Hall to discuss social housing.

I believe that we face a social housing crisis that is not of this coalition Government’s making. In Manchester we have thousands of people on waiting lists, many of whom have had to wait several years, with no realistic prospect of getting a social tenancy in the near future. Residents raise a large number of concerns with me, as they do with the hon. Gentleman, in relation to housing. I would say that the No. 1 issue that people come to see me about is either their concerns about the lack of social housing, or the fact that they are over-occupying their existing property.

The lack of social housing causes a number of problems, the most important of which is massive overcrowding in some of our social houses. I have constituents who have lived in a three-bedroom house with 10 or more people. Others end up having to move away from the area in which they have lived their whole lives to other parts of Manchester where the housing situation is not as serious as it is in south Manchester. The result is a big increase in the cost of private sector housing, and people are simply not able to afford the cost of going into private rented accommodation. All this has been exacerbated recently by a real difficulty in people being able to get mortgages and get on the property ladder, so more people have had to stay in rented accommodation.

I do not think that the Minister is to blame for any of this. It is the fault of previous Governments. We have to look at the right-to-buy legislation in the 1980s, which, while it had many merits, certainly had many drawbacks. It has resulted in a massive shortage of social housing in many parts of the country, and the money that was made from the sale of those council houses has not been invested back into the housing stock. In some cases in some parts of the country, those houses were almost given away, due to the low prices that people paid for them.

Unfortunately, following the introduction of the right-to-buy policy, the previous Labour Government, who followed a Conservative Government, did little or nothing to alleviate the problem. Social housing was not a priority of the previous Labour Administration, even in good economic times, when money could have been made available to build a significant number of social homes. We have, therefore, been left in a situation in which the coalition Government, with very little money to spend, face a rising need for social housing.

I would like to make three brief points on the future of social housing. The first is on changes to housing benefit, which the hon. Member for Stafford has already alluded to. There is a real problem with the proposed changes in relation to the single room rates for under-35s. The social housing simply is not available for people to share, which means that people will have to stay in properties where they will not be able to receive full housing benefit, or that they will lose their secure tenancies in social housing. It will also, almost certainly, result in an increase in housing benefit costs in many areas. In parts of my area, a one-bedroom flat occupied by someone under 35 who is in receipt of housing benefit is cheaper than the shared room rate in private sector accommodation would be in the same area. Therefore, rather than reducing the housing benefit bill, which is the intention of the legislation, we could end up increasing it.

Under-occupancy is another issue. I recognise that the Government’s plans on this issue relate to trying to make best use of the stock that we have, but that will not solve the problem, and for several reasons. The plans do not—rightly, in my opinion—include pensioners. In my area, the people who are most likely to under-occupy a property are pensioners. I want to make it clear that I do not want to see pensioners included in the change to the legislation. However, it is certainly the case that, in my area and other parts of Manchester, the people most likely to be under-occupying properties are the elderly. Rather than having disincentives for people to stay in properties, the solution, in my view, is to increase the incentives for people to move. At the moment, there are no incentives for people to move. As it stands, if someone who is under-occupying a property wants to exchange with someone who needs a bigger property, they have to take their new property as seen. There are no improvements when they move to a smaller property. An elderly person living in an immaculate house is never going to want to move to a smaller property that needs some work done to it. The Government’s plans to try to reduce under-occupancy by reducing housing benefit simply will not work.

My second point relates to the number of social homes. It is not rocket science—we simply need to build more. I am encouraged by the Government’s plans to build 150,000 social homes, but that is not enough. The tweaking of housing benefit rules will not disincentivise people from staying in bigger properties, so it is not going to solve the problem. We need to invest in more social housing. Local authorities in all parts of the country, with the possible exception of London, are sitting on large swathes of land that could be used for social housing. In Manchester, the council is waiting for land prices to go up, so that it can sell some pieces of land in my constituency to the highest bidder. We need to incentivise local authorities to make that land available to housing associations to build. Allowing local authorities to get more council tax as a result of building new houses will not be enough to persuade them to give up land that is worth millions of pounds. In the comprehensive spending review, we concentrated on spending our money in relation to transport on capital investment. We need to concentrate some of our resources in relation to housing on capital investment, to boost the construction industry and to build lots more social homes.

My final point relates to the size of the 150,000 homes that will be built. In my area, unlike that of the hon. Gentleman, there are plenty of one and two-bedroom flats. The real shortage of housing in my area is of larger, family properties. My plea to the Minister is that, when they come to be built, we get the right mix of social homes. In areas in which the shortage is in small, one-bedroom flats, let us build small, one-bedroom flats. In areas in which there is a massive shortage of bigger family properties, we must build three and four-bedroom houses, rather than two-bedroom houses. The social homes that have been built in Manchester in recent years have tended to be smaller family homes. We need bigger family homes so that all the people who are currently over-occupying properties in Manchester and other parts of the country are able to get bigger homes that are more suitable for their needs.

09:59

[Robert Halfon (Harlow) (Con)]

It is a pleasure to serve again under your chairmanship, Mr Caton—it seems to be a regular occurrence. I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) on securing the debate. He has a reputation for being a thoughtful and wise MP, and he has shown that today. I also welcome the remarks of my hon. Friend the Member for Manchester, Withington (Mr Leech), which were very informative and useful. I look forward to reading his speech in Hansard tomorrow.

I would like to declare an interest as set out in the register and to state that I am an unpaid member of the advisory board for the Centre for Social Justice. Our social housing is an enormously valuable national asset, which matters to the 8 million people who live in it. In my constituency, more than 12,000 households are in social housing, which is about one third of the town. A further 4,000 households are on the waiting list, which is down from 7,000 under the previous Government.

Social housing is the No. 1 issue in my constituency mailbox, but it is not just about putting a roof over people’s head—although that is, of course, the central mission. Social housing is a mechanism by which we measure social justice and help people to escape the poverty trap. I want to make three substantive points this morning. I shall acknowledge the major housing problems that we face, set out why some of the coalition’s policies will help to create a more socially mobile society and urge the Minister to go further and faster, particularly on shared equity schemes.

First, let me set out the key problem, which is waiting lists. Nearly 1.8 million households are on social housing waiting lists, which is a substantial increase that has taken place over the past 15 years or so. As I said, although the number of households on the waiting list is decreasing in Harlow, there is still an overhang of around 4,000 households that urgently need homes. The problem is not the queue in itself, which is inevitable, but that many families have no realistic chance of ever getting a home. The waiting lists are particularly clogged up because not enough priority is being given to local people and there are rigid and inflexible tenancies.

I look forward to the day when I can say, “Harlow housing for Harlow people.” I say that because an anguished bus driver—Mr Darren Presland—came to see me at a surgery last Friday evening. He sat in my surgery and was very angry for 10 minutes. He was furious that people from outside Harlow, including many foreign nationals, are allowed on to the Harlow waiting list. It is true that, for many years, local authorities have had to include literally anyone on their waiting list with few exceptions and that they have different bands of priority within the list. Mr Presland was making a serious point: that many people on low incomes are angry and disillusioned with politics because people who are not local are allowed on to the waiting list.

[Sarah Newton (Truro and Falmouth) (Con)]

I am grateful to my hon. Friend the Member for Stafford (Jeremy Lefroy) for securing such an important debate. On the point about local needs, Cornwall council has been effective at introducing criteria so that local people have priority on exception sites for social housing in villages. Not only has that been very beneficial to the people in those communities, but it has enabled the council to increase support for building more homes in rural areas because people have the confidence that those properties will be local homes for local people.

[Robert Halfon]

My hon. Friend sets out a very interesting idea, which I will come on to later. That is something other councils should follow.

Mr Presland made a very important point. He asked why families on low incomes should pay very high taxes for houses that they are unlikely to be able to live in. Along with many other Harlow residents, he takes the view that immigrants are not only taking away jobs and opportunities from British people, but being given an unfair priority on the housing waiting lists. It is very hard to dispel that view and it is very dangerous— toxic—for the body politic. Mr Presland is not a racist and he did not come to my surgery with an axe to grind or on behalf of the British National party. I am talking about his feelings and those of a number of other residents.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

The hon. Gentleman is going into very interesting and, in many respects, controversial territory. Many local authorities are considering how they offer local people council housing. Newham, Manchester and others are introducing schemes to enable that to happen. None the less, does he accept that there are dangers involved in “local homes for local people”? We saw that in Tower Hamlets in the 1980s, where the BNP got itself elected on the basis of “local homes for local people,” because what it actually meant was “local homes for local white people.” There is a genuine tension there and we must be responsible about how we manage and talk about such issues.

[Robert Halfon]

Yes, the hon. Lady makes an important point. However, the BNP was elected because, in many cases, the myth was purported that homes were being given to foreigners, and that was believed by residents who were not getting houses themselves. That is why the BNP was sadly successful in that area.

The second thing that clogs up the waiting list and stops the 4,000 waiting households in Harlow finding a home is the old system of rigid, lifetime tenancies. I welcome the Minister’s pledge that the rights of existing tenants will be upheld but, for too long, social landlords have been forced to give most residents an inflexible lifetime tenancy, which takes no account of how people’s circumstances might improve. I accept that the Localism Bill will help and that it offers many, if not all, of the solutions because it will give councils the freedom to prioritise their waiting list, as voters want them to do. As I said, I look forward to the day when I can say to the hard-working people in my surgeries, “Harlow housing for Harlow people.” When the Government consulted on the matter, two thirds of councils, including many Labour councils, said that they would welcome those powers.

[Jeremy Corbyn (Islington North) (Lab)]

How does the hon. Gentleman define a Harlow person? How long does someone have to live there to be a Harlow person, or is there some other definition?

[Robert Halfon]

If somebody is brought up and born in Harlow, has spent a significant number of years in Harlow and has paid local taxes, that would define them as a Harlow resident.

The changes to the housing revenue account and the Tenant Services Authority are also welcome. For a long time, I campaigned against the HRA and argued for “Harlow housing money for Harlow people,” because the HRA was taking £13 million a year out of our town. Local residents groups, councils and neighbourhood associations do a much better and cheaper job of talking to social landlords than the Tenant Services Authority ever did. We have some very good residents groups in my constituency.

A number of other changes will also make a huge difference. First, £4.5 billion has been secured from the Treasury to spend on affordable homes over the spending review period. Secondly, there is the raft of schemes for promoting home ownership—Firstbuy, HomeBuy, Community Right to Build and mortgage rescue—and the house building incentives in the new homes bonus, which has brought £250,000 into my constituency this year. Thirdly, I welcome the decision to end the default setting of rigid, lifetime tenancies. That is an important issue, although it is very difficult and I have some questions.

I think we would all agree that the Bob Crows of this world and other wealthy people do not need subsidised housing from the state, but there is the danger of creating a poverty trap if people are disincentivised from earning higher wages because they are afraid of losing their home. My concern is that we must not create ghettos of social housing, where people have no incentive to be ambitious and aspirational. There is a balance to be struck. I understand why the Government want to give social landlords the freedom to set new and more flexible tenancies with a minimum period of two years, but at the same time require that they must publish how their new tenancies protect the most vulnerable, including families with children.

[Mr Leech]

Does the hon. Gentleman agree that a better way to deal with people who no longer require social housing, due to the salary that they earn, would be to expect them to pay a market rent, rather than saying that they had to move? I do not want to use the example of Bob Crow, but instead of making him pay social rent, why not make him pay market rent for the property that he lives in, rather than expect him to move?

[Robert Halfon]

My hon. Friend makes an important point. That is worth looking at, but the problem is that the council house does not then become free for the people who need it most. That is an interesting idea, however, and I am sure that the Government will look at that.

I hope and believe that the Minister’s actions will help to tackle the waiting lists. I want to look at some potential solutions to asset inequality and to the housing crisis that we face. During the previous Parliament, the report “Breakthrough Britain”, by the Centre for Social Justice, suggested that social tenants who work, or who make a genuine effort to find work, should be rewarded with increasingly larger equity stakes in their home. The Conservative party adopted that policy in its manifesto, saying that social tenants with a good record should be rewarded with a 10% free equity share in their property, and that that could be cashed in when those tenants left the social rented sector. That could help in many ways; for example, as a small nest-egg for retirement, or as a deposit for their first house. I passionately believe in that policy: it is social justice in action, and rewards people who do the right thing. That is important because an Englishman’s home is not just his castle; it is his pension and an emergency source of funding for care in old age. People who never own equity in a house are shut out from that security, and have to live hand-to-mouth right into retirement.

When the economy improves, I hope that we will have the finance to implement that policy. There are other policies, however, that can have a similar effect. For example, the previous Government cut the right-to-buy scheme, which was so successful in the 1980s and 1990s. For many years, the Labour Government capped the maximum discount at £16,000, raised the minimum sale price and cut back the eligibility criteria. On top of that, Labour allowed the scheme to be eroded by inflation. In 1997, the typical discount was worth half a home’s normal value, but that fell to just a third in recent years. Why not dramatically restore the right-to-buy scheme, with proper discounts? I should also mention Harlow council again at this point. Why is it that, despite our councils paying to maintain homes and owning them outright, 75% of the sale price gets funnelled back to the Treasury—a point alluded to by my hon. Friend the Member for Stafford—rather than kept in the local area? I accept that that is the system we have inherited, but it is against the spirit of localism, and is an issue that could be earmarked for future reform.

Finally, I urge the Minister to look at the possibility—I emphasise the word possibility—of housing vouchers, funded by the sale of social housing as they become empty when existing tenants leave. Housing vouchers would create competition. That would drive more homes up to the decent homes standard and give people real choice. That would be a radical transformation of our society, and benefit new tenants as they enter the social market. Instead of the state owning or running social homes, it would simply pay the cheque to help families access accommodation. Linking the voucher to national insurance numbers would make it easier to administer. To adopt a famous phrase from Chairman Mao that is very apt at present, we could let a thousand flowers bloom and, instead of huge social landlords and corporations running the show, give smaller, nimbler businesses and charities a chance to run social housing.

In conclusion, the Government are delivering Harlow housing, and Harlow housing money, for Harlow people. The Localism Bill represents a huge shift of power to communities—something we have not had for a long time. We must also help families to take that step and take their rightful place in a property-owning democracy by getting a foot on the housing ladder. That is why I support giving free equity to social tenants when the economy allows it, restoring the right to buy, and looking at major innovations such as housing vouchers.

10:15

[Alison Seabeck (Plymouth, Moor View) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton. I start by making a declaration of an indirect interest in another Member’s entry in the Register of Members’ Financial Interests—that of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford).

I congratulate the hon. Member for Stafford (Jeremy Lefroy) on securing the debate. He gave a thoughtful and compassionate speech, and I support his remarks about the need for good-quality, caring case workers. Mine do a brilliant job too, and I am sure that the Minister will say exactly the same about his own.

I have to admit that when I saw the original title of the debate—the future of social housing in England—my immediate thought was simply to say, “What future?” I will therefore be listening very carefully to the Minister, not least because one of the first headlines I saw relating to his policies after he took on his shadow ministerial responsibility was, “The death of social housing”.

We have had a well-informed and passionate debate, with good contributions from hon. Members. There are a number of points that I would like to draw out of the debate in my summing up; first and foremost is the simple truth that the Government have decided not to support the building of any new homes for social rent during the course of this Parliament—I specify social rent. Of course, homes will be built. Some 67,000 homes, largely for social rent, will be delivered in the first two years of this Government. Let us not forget, however, that those homes are the tail end of Labour’s national affordable housing programme. The funding and contracts were arranged by the previous Labour Government, and the homes will be completed under this Government. It is worth remembering that in the previous Parliament under the Labour Government, 142,000 additional homes for social rent were delivered between 2005 and 2010, out of a total 256,000 additional affordable homes. That is 100,000 more than the 150,000 target put forward by the current Government, which is apparently so ambitious.

The hon. Member for Stafford understands the needs for social homes. In his submission to his local development framework consultation, he said that it was important to build sufficient homes of the right type. He went on to mention that social and affordable housing was in short supply. His submission is very interesting, and the Minister might want to have a look at it. It is extremely well thought through.

Will the Government deliver? I doubt it. We now have a framework for the delivery of homes with Government grants that clearly states that the building of new social homes will be supported in exceptional circumstances only. Some 142,000 social homes were delivered in the previous Parliament, in addition to the 67,000 from Labour’s programme that will be completed under this Government—more than 200,000 homes for social rent. That number will fall under a Government who are sending a clear message that they want to see the end of social rent: the Localism Bill encourages councils to place people directly into the private rented sector; rents are being put up towards 80% of market rent; flexible tenure is being introduced, which will destabilise communities; and they have no history of support for the sector. Is the private sector becoming the new council housing under this Government? Has the Minister thought through what that will do to confidence among those seeking to invest in the sector? By the way, I welcome the Minister’s U-turn and announcement that he has accepted Labour’s argument, made in the Committee stage of the Localism Bill, on the need for standards to be fixed in the private rented sector.

The Government have chosen to introduce homes at 80% of market rent level, which they have had the temerity to call affordable rent. To whom is that affordable? It is not affordable to tenants, many of whom will be shifted on to housing benefit as a consequence, or, if they are not eligible for housing benefit, will simply leave the area if they cannot afford the rent, and it is not affordable to Government. The Department for Work and Pensions has been busy claiming that it will bring down the housing benefit bill, and yet the Department for Communities and Local Government impact assessment of the introduction of the 80% of market rent policy is that the cost of housing benefit will rise by £1.2 billion. The Minister will probably say that it is “up to” 80%, but the evidence coming out of the Homes and Communities Agency bidding process is for councils being told that it is 80% or virtually nothing. We have that from the local authority in Cambridge, which has been told that it must develop at 80% and not at 60%. If the Minister disagrees, can he give us his estimate of the proportion for social rent? If he says some will favour social rent, will that affect the number of homes built—the number he keeps quoting?

For all the Minister’s protests about his understanding of the policy, the reality on the ground bears little resemblance to his assurances. What can he tell us about where the funding will come from to support the building of new homes after the current comprehensive spending review period? That is a crucial issue for all those involved, from house builders to lenders and especially for those in need. If the answer is simply a further shuffling of the tenants, some tenants and landlords will be pretty desperate by 2014. Can the Minister share his thinking on what happens next?

I raise two other issues: the completion of the decent homes programme; and, perhaps most importantly, the Government’s decision to legislate away a tenant’s right of security of tenure. On decent homes, Labour’s commitment to tackle the £19 billion backlog of repairs and maintenance in the social sector was important and right. The allegation that the previous Labour Government did not care about social housing—made by the hon. Member for Manchester, Withington (Mr Leech)—is wrong, although his concern about better use of public land is justified and needs further development.

[Mr Leech]

I did not say that the previous Government were not concerned, I said that housing was not a priority for the previous Government.

[Alison Seabeck]

I thank the hon. Gentleman for his intervention, but I beg to disagree.

The decent homes programme not only provided dignity and warmth in the home for families, it saved thousands of social homes from being condemned and demolished—homes that were run-down and unfit to live in because the previous Tory Government had looked the other way. If people want to know why Labour did not invest in expanding house building early on, it is because we were spending the money on clearing up the mess in the social housing sector left behind by the previous Tory Government, who sold homes without making use of the capital receipts. Now, for local authorities with homes below the decent homes standard, the Government have cut again—far too deeply. Will the Minister leave the same legacy as that of the Thatcher and Major Governments?

On security of tenure, without any manifesto commitment from either coalition party, the Government have decided in the Localism Bill to introduce a new form of tenure: flexible tenancies, which can last for as little as two years. After as little as 18 months under the new tenancy, the eligibility of tenants will be reassessed. If they have worked hard and done well for themselves, or if they have met someone whom they have decided to settle down with and, consequently, their income has increased too much, potentially they will have earned themselves an eviction notice.

Interestingly, Centrepoint has taken the views of young people it works with, expressing support for a tenure with security. I quote a young person called Kiran:

“Having a mixture of people on estates is really important. It’s important that people living on low wages can get social housing as it can be really difficult for them to afford private sector rents, and some young people need the security of council housing to help them get a good start in life. It’s also really important for unemployed people to see other people working so they don’t give up and they keep working towards getting a job themselves.”

That says it all.

I and, clearly, other hon. Members who have contributed today think it is wrong that hard work and responsibility should not be rewarded in the offer of council housing. Hard work and responsibility should certainly not be greeted with an eviction notice. The policy tramples on aspiration and is a block on tackling worklessness. The Minister tweeted recently—he tweets a lot—on the subject of Labour policy in this area. He suggested that, if Labour wanted to encourage working, we should support the 80% rent. The Minister simply does not get it. Where is the incentive for people to earn and get on if they have to leave their home after two years because their income has gone up, or earning has become marginal? They risk falling back into the benefit trap.

[Mr Leech]

Does the hon. Lady agree that someone who is a highest-rate taxpayer should pay a higher rent? That higher rent could then be reinvested in building more council houses.

[Alison Seabeck]

The hon. Gentleman makes a good point, which is certainly exercising Labour Members.

I asked my constituents at the King’s Tamerton community centre, Dawn and her friends, what made their area work; they all felt that it was the stability they had. Many had lived in their homes for decades, looking after them and supporting their neighbours. They reinforced the comments made in debate today: the big society is more likely to work where people stay put. In my view, they are already the good society, making their community work.

Tenants already in social housing might find that they are overcrowded or want to downsize—they might want or choose to move. The only home that they would be offered, however, might well be a flexible tenancy, with no security of tenure. I am, therefore, sorry to have to disabuse the hon. Member for Harlow (Robert Halfon) of his views, but the Government’s claim not to be changing the rights of existing tenants is simply not correct. It is fundamentally wrong, and that has been acknowledged by some Conservative and Liberal Democrat Back Benchers who bravely and wisely supported our amendment on the issue in the Localism Bill.

Before I finish, I touch on a point made by the hon. Member for Stafford when discussing issues related to the ombudsman and dispute resolution. We need further detail, and I hope that the Minister will come back to us on the issue.

Much more can be said on housing, which I am always grateful to have an opportunity to debate in this place—too often, the subject is overlooked. The policies of the Government are deeply damaging. They deserve far more frequent airing and, in the coming months and years, I suspect that is exactly what they will get.

10:27

[The Minister for Housing and Local Government (Grant Shapps)]

I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) on securing the debate on an important subject which, as he rightly said, has often not had as much attention in this House as it should. I am delighted to see the support of coalition Members but dismayed—as I am sure the shadow Minister, the hon. Member for Plymouth, Moor View (Alison Seabeck), is—by the lack of support from Labour Members. Social housing used to be an issue that they made great play of and insisted on being passionate about, so it is surprising to see their Benches quite so empty today. Until the arrival of the right hon. Member for Greenwich and Woolwich (Mr Raynsford), I thought that the shadow Minister was in danger of being entirely alone.

[Alison Seabeck]

There is a strong argument against quantity: quality rather than quantity is the case today.

[Grant Shapps]

The hon. Lady is almost certainly right. The arrival of the right hon. Member for Greenwich and Woolwich at least demonstrates a partnership approach to Labour’s housing policy.

On the record, I want to say how much social affordable housing is an important part of the housing mix in this country. It is vital to people’s welfare, for all the reasons that other hon. Members have pointed out. Social housing is the bedrock of support for some of the most vulnerable people in society. I am proud—privileged, in fact—to be the Conservative Member who, in the previous Parliament at least, represented more council tenants than anyone else. I look to those people and see how proud they are of the homes they live in. I believe passionately in ensuring that they have the best possible homes, with the highest possible standards of decency and, although the hon. Member for Plymouth, Moor View might be surprised to hear this, the security to feel that it is their place to live in, so that expectations are properly set.

None of that means that I believe that the system is fit for purpose, that it should never be changed and that it is a perfect situation. Much has been made, particularly by the hon. Lady a few moments ago, of changes to flexible tenure; in other words, the concept that one does not necessarily get a house and stay there for ever and a day. I have been surprised, almost shocked, by the degree to which Opposition Members have argued for the last remaining hereditary principle—that a home is given for life and passed on to the next generation, regardless of whether a social home is still required. The hon. Lady may not know that that reform was brought in by one Margaret Thatcher. The socialists in the House of Commons are arguing—dying in the ditches, in fact—to defend a Thatcher reform. I will give way to the hon. Lady, who will perhaps tell us whether her party would reintroduce lifetime tenure.

[Alison Seabeck]

When approaching the Localism Bill and the issue of tenure, did the Minister look carefully at the Law Commission report of 2006, which covered the subject? It introduced a degree of flexibility, which the previous Government supported and were looking at. It also introduced a single form of tenure, much simpler than the current position of multiple tenures and rents at different levels on different properties, where there will be huge disparity. Did the Minister read that report?

[Grant Shapps]

We considered all the material and evidence. I know that report was attractive to Ministers in the hon. Lady’s party at the time it was brought out in 2006. The right hon. Member for Don Valley (Caroline Flint), the current shadow Secretary of State and then Minister for Housing, was attracted by some of the ideas in that report when it came out, and hinted towards them, only to be slapped back down, and the ideas were then put away. It is important to have flexibility. If we are to talk of having one unitary cost for living in social housing, perhaps the hon. Member for Plymouth, Moor View can explain why her immediate predecessors—the last two I shadowed—cancelled convergence between social rent and affordable rent for housing associations and council houses. That did more to diversify the rents than bring them together, so there is a dichotomy at the heart of her argument.

I want to address my comments to the points raised by hon. Members, rather than read a prepared speech, and so tackle some of the issues. I am grateful for having the time to do so, on the first occasion I have had to address issues raised in debate in Westminster Hall, which is a real pleasure. My hon. Friend the Member for Stafford talked of the social housing waiting lists and rises over the past 13 years. To be specific, the graphs show those rises taking place from 2003, as a direct response to a change in the way local authorities had to deal with anybody who approached them to go on to the housing waiting list. My hon. Friend the Member for Harlow (Robert Halfon) repeated that point.

The Localism Bill seeks to undo that to some extent, and ensure the ability, at a local, flexible level, to decide who should or should not be eligible for the list. Within a national framework, and under homelessness legislation, which I am not proposing to change—the reasonable preferences, for example—homeless people would still get the required cover, but there would be greater flexibility, not simply to have people apply to five, 10, 15 different council waiting lists, but to be able to manage people’s expectations. It is not right for people to sit on lists for ever. It is a national scandal that there are between 4.5 million and 5 million people languishing on those record housing waiting lists. The first thing to do is better manage those lists, and that is what the Localism Bill will do.

[Alison Seabeck]

I have listened with great interest to the Minister’s comments on waiting lists. One of my concerns is that we simply do not know who is on waiting lists nationally. We do not know their aspirations or why they are there. Therefore, any pressure that Government can bring to bear—and I know it is all about localism—on local authorities to do that piece of work would better inform the Minister’s Department about where the need exists and what it is.

[Grant Shapps]

The hon. Lady is absolutely right on that point. I became increasingly convinced of that in my three years shadowing this post. At one stage I went to see Owen Buckwell, an officer looking after housing in Portsmouth. I discovered that he had been doing precisely what the hon. Lady describes, which was to look properly through the list and try to manage it better, to understand who was on the list and for what purpose, and whether they had any likelihood of achieving a social house, or would be better looking elsewhere. The problem is that the current legislation—I think a 2002 Act—makes that nigh on illegal to do. He had to skate quite close to the limits of the legislation to manage that list properly. Bearing in mind the hon. Lady’s comments, I hope she will support—if not the entire Localism Bill—at least the aspects of waiting list reform which I believe will do what she has called on us to achieve.

My hon. Friend the Member for Stafford talked about flexible tenures and stable communities. That is at the heart of so much of the current housing debate, for reasons I have already mentioned to do with changing the automatic presumption or insistence on a lifetime tenure. He is right that I believe in stable communities: I want them to exist and flourish. The intention of the legislation is not in any way to undermine the ability for that to happen.

Much has been made of two-year tenancies, referred to by the hon. Member for Plymouth, Moor View. I am being clear, in all our language and in the tenancy standards that we will put in place, that two years is to be considered as an exceptional circumstance, and that at least five years would be the norm. I am sure many areas will want to provide tenancies of five, 10, 15, 20 years, perhaps even lifetime tenures still. However, the provision at a local level to provide for a short tenancy to account for exceptional circumstances could be very useful and welcome.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

If the Minister believes that the two-year tenancy should be the exception, why did his party not accept amendments to that effect when the Localism Bill was debated in Committee?

[Grant Shapps]

Quite simply because we have said we will include it in the tenancy regulations. It is a question of where it is mentioned. The fact is that there are some good and striking reasons why a short tenancy might be useful. I have used the following example in the House before and will use it again, as the family have been in touch this weekend. My constituent, Matthew Hignett, fell off his motorbike on his way to work and is now paralysed from the neck down and will be for life. He told me that he needed some support for just a very short period of time to get himself together and back into work, which, remarkably, he has now done.

When I approached our local authority—otherwise an excellent housing authority—it said it was sorry but that it had no option to help that constituent. He did not qualify for social housing because he previously had his own home, though mortgaged. If it were to give him a home, its only option would be to give it to him for life. That creates problems on both sides. He needed some help for a limited period of time. I want to make that available, and maximum flexibility will do precisely that for people who are sometimes in unusual circumstances, which are difficult to predict. There is no argument against flexibility.

To believe that people are going to be thrown out of their homes after two years is fundamentally to misunderstand the role of social landlords in this country. Social landlords, councils, housing associations, do not spend their time plotting how to kick people out of their homes. They are there to house people: that is their core activity, that is what they do. There is every reason to believe that they would want to keep people in those homes for as long as possible, and not to throw them out. Flexibility is the key; using the housing that we have to best advantage is essential. That is what the flexible tenure will provide within the circumstances of stable and secure communities. People’s expectations will be established, so that they know that they can live in their home for the next 20 years and bring up their family, but that when their family move away, they will probably downsize, as often happens in the private sector.

There has been a lot of discussion about the cost of housing benefit and the affordable rent scheme, and some interesting figures have been thrown about. I would like to cover that issue in a little more detail and note that the impact assessment that was published showed that the scheme would cost in the region of £25 million to £50 million. We do not recognise the figures running into billions of pounds that have been thrown around, for the simple reason that when somebody moves into affordable rented accommodation, they often come from the private rented sector where 100% of their rent is paid for and supported by housing benefit. They might then move into a property where the average rent is 67% of the market rent—that was the figure mentioned by my hon. Friend the Member for Stafford—and in such cases, the cost of housing benefit would not rise but fall. Such a move will have been supported by capital to build the house through the affordable rent programme.

There seems to be a fundamental misunderstanding about the affordable rent programme that I hear mentioned time and again. In fact, the programme will assist with the housing benefit bill. That does not mean that there will be no pressures on the housing benefit bill; those pressure have been acknowledged, but they will cost tens of millions of pounds, not thousands of millions.

[Alison Seabeck]

The Minister talks about people moving from the private rented sector into new affordable rented properties, and the saving that will be made. Does he acknowledge that, because of the pressure on councils and the number of people on the waiting list, any vacancies that appear in the private rented sector will be further backfilled by people who are in need of housing? Private rented accommodation will continue to be filled at those higher rents—we know that rents are rising sharply, particularly in London, and we have just seen the latest figures. I query the way the Minister has reached his conclusion that the affordable rent programme will cost tens of millions of pounds and not a higher figure.

[Grant Shapps]

Our impact assessment lays the scheme out in considerable detail and I do not recognise the methodology used in the impact assessment mentioned by the hon. Lady. There are many different ways to slice the data, but everybody in social housing is essentially already there and not about to move. There is no reason for them to leave social housing and go into the affordable rented sector, and for that reason alone, we do not expect to see dramatic changes.

Will there be a change? Yes, there will. Let me be clear: we believe that it may be advantageous to put power in the hands of the tenant—the consumer—in order to ensure that they get the property they want. If the way to do that is through the housing benefit system, it would make sense to use it.

[Mr Leech]

To the best of my knowledge, there are no social rented properties to share in Manchester. People under 35 in one-bedroom flats in social housing would not be able to move to other social housing. They would have to move to private sector rented property but, in Manchester, under the single room rate, that would cost more than staying in the one-bedroom flat. I urge the Minister to look at that issue. Ultimately, we will not save any money and it makes no sense to force somebody to move from a cheaper property to a more expensive, smaller property.

[Grant Shapps]

I will be happy to look at my hon. Friend’s comments and suggestions. The truth is that housing varies dramatically around the country. One problem with a debate such as this is that we all refer to our own constituencies and experiences. That is excellent and what Members of Parliament are supposed to do, but our experiences are rarely representative of what is going on across the country. Those of us who have spent years looking at housing and social housing realise that there is an incredibly fragmented picture across the country, and that the types of home available and rents vary, even before the introduction of the affordable rent programme. The traditions of local social housing also vary dramatically.

[Mr Leech]

Although I accept that every area is different, I am not aware of any local authorities that provide shared accommodation for people on a social rented basis. I suspect that all local authorities are in exactly the same boat on the issue of the single room rate, and I urge the Minister to take a proper look at the issue.

[Grant Shapps]

As I have said, I am happy to consider my hon. Friend’s points further. We are perhaps in danger of entering into a debate more suited to the Department for Work and Pensions than to housing, but I will follow up on those points and come back to him.

I want to ensure that we have covered the important points raised by my hon. Friend the Member for Stafford, so I will look at the issue of housing revenue account reform, which is an incredibly important subject that I picked up from where the previous Government left off. There is cross-party support for the reform, and I hope that it will be introduced by next April with the passage of the Localism Bill. It means that tens of billions of pounds will no longer return to central Government, only to be sent back out to different local authorities. I think it is an important and critical moment in self-determination for local authorities that manage their own stock and want to plan properly for their housing future over the next 25 years. On average, authorities involved in the HRA reform will have 14% headroom, meaning that they can properly invest in the future and ensure that they meet further decent home aspirations.

At the moment, 75% of receipts from the right-to-buy initiative are returned to the Treasury. As hon. Members will know, sadly we have had to leave that measure in place because of the need to reduce the country’s enormous deficit. We have, however, said that it will be up for review at the end of the spending review period, and I remind the House that—from memory—£863 million has gone into the self-financing pot. In other words, the overall debt has been reduced by £863 million, to take into account the fact that rent will no longer be collected from homes sold under the right to buy.

It is appropriate to mention the right to buy in a little more detail. I was pressed on that issue by my hon. Friend the Member for Harlow, who is clearly keen to extend the right-to-buy discount. Much as I hate to disappoint him, sadly we do not have the money to re-extend that discount. In many ways, right-to-buy arguments come from the ‘80s and ‘90s. The House will be interested to learn that there were only about 3,000 right-to-buy sales over the past year, and projections are for such sales to remain at a fairly low level. A disproportionate amount of time is spent in this House—and elsewhere—discussing the right to buy. I like the right to buy; I am keen for it to stay in place and I think that it recognises people’s aspirations. As my hon. Friend the Member for Stafford said, many people in this country still want to own their own home, and the Government should back that aspiration. However, the right to buy affects 2,000 or 3,000 homes a year, and a lot of time goes into discussing what is, in effect, a debate from 30 years ago.

[Alison Seabeck]

I am probably asking a question that, in the light of his comments, the hon. Member for Harlow (Robert Halfon) would like to ask. The Minister said that at this moment in time, he sadly cannot do what the hon. Gentleman asks for in relation to the right-to-buy discount. Will the Minister tell the House whether he would do what the hon. Member for Harlow asked if the money were available?

[Grant Shapps]

I can reveal to the hon. Lady that if the money were available, I would want to abolish all manner of taxes and provide all manner of discounts to support people’s aspirations. However, I can go no further than to say that the money is not available at this time and that the discount will remain as it is throughout the period of this spending review as a result of the enormous deficit and debt, which we should never forget we were left with after 13 years of the Government whom she supported.

[Robert Halfon]

I thank my right hon. Friend for his comments and the hon. Member for Plymouth, Moor View (Alison Seabeck) for reading my mind. Will my right hon. Friend consider again and comment on the shared-equity scheme? That is slightly different from the right to buy, but gives people a share in their home and a chance to take a step up the housing ladder.

[Grant Shapps]

I am grateful to my hon. Friend for his intervention. I am very keen on shared-equity schemes and like to do all that I can to assist with them. I agree with his comments about that issue and will be happy to take a further look at it. I ask him to provide me with more details of his very interesting local bonds discussion, which is certainly worthy of further consideration. In terms of the housing revenue account reforms, local authorities can borrow the money elsewhere, particularly when the debt is large. That may apply only to those with the larger debts because it is difficult to beat the public works loan body percentage, which is still very good. Again, I would be interested to hear more about my hon. Friend’s ideas.

My hon. Friend the Member for Stafford touched on tenancy abuse and whether people whose earnings are in six figures should continue to live in the same home. Again, that is not a huge issue because it does not involve very many people, but there is a basic principle that social housing is built for a reason. It is there to help people who would not otherwise be able to afford to get a roof over their head, and it is important that the homes are used for the purpose for which they were meant. I think that if people are staying in council homes, perhaps in London, with a £900-a-week subsidy—a subsidy that is paid for by taxpayers and to which some of the poorest people in society are contributing—long after their need has clearly gone, that is wrong. I agree with the comments that have been made on that.

The hon. Member for Manchester, Withington (Mr Leech) should know that it is our policy that if people want to stay, they simply have to pay. That is a very simple principle, which means that a community is not broken up but that if someone’s salary reaches six figures, which possibly places them among the top 1% of earners in the country—it has to be at a very high level to deal with the concerns raised by the hon. Member for Plymouth, Moor View and to ensure that the provision is in no sense against aspiration or preventing people from bettering themselves—it is not unreasonable to ask them to pay if they want to stay in their social house, rather than having it paid for by everyone else.

The issue of under-occupancy and empty homes was raised. I passionately believe in trying to solve the equation of 430,000 people under-occupying while nearly 250,000 are overcrowded. I have provided some money, time and resources in order for the Chartered Institute of Housing to assist with that issue. Some of the reforms of housing benefit, which I know are controversial but which our colleagues in the DWP are pushing through, are designed to help to deal with some of the issues of under-occupancy by simply saying that it cannot be right for the taxpayer more widely to be paying for empty rooms. That does not make sense. We need to pay for people to live in homes, not to live with too much empty space.[Official Report, 13 July 2011, Vol. 531, c. 4MC.]

[Mr Raynsford]

The hon. Member for Stafford (Jeremy Lefroy) gave an illustration of the possible adverse consequences of the higher non-dependant deductions leading families to pressurise family members to leave their home because the amount of benefit would be reduced as a result of that increased deduction—this is very complicated. The Minister will recognise that that is clearly a perverse incentive to under-occupation. Will he deal with that concern, as highlighted by his hon. Friend?

[Grant Shapps]

It is an interesting point, because others would say that the change may well be an encouragement to people to work and help to pay the rent and stay living in the home. If they are of working age, they can of course work, contribute towards the rent and stay living in the home. There is obviously a balance involved. Tempting as it is, I do not want to be drawn into a detailed debate on that. As the right hon. Gentleman said, it is a complex area, and many other points were raised in the debate that I want to cover.

There was discussion of the ombudsman, and my hon. Friend the Member for Stafford suggested that there needed to be something in-between to try to tackle problems. I agree: it is essential that the problems are dealt with at local level with real teeth. There has been some confusion in debate in the House about what has been described, in a rather ugly way, as the democratic filter, but the idea is, under the Localism Bill, that before people go to the ombudsman or to the Tenant Services Authority, as it used to be, they should first try to have the matters resolved locally. The reason why I am so keen for that to be channelled through local MPs, local councillors and tenants panels is that the tenants will be empowered to resolve problems, with the implicit threat that if the problem is not resolved through work with tenants and their representatives, a referral can be made to the ombudsman.

I believe that if that happens, far more cases will be resolved at local level and it will have the added benefit of drawing in councillors, who in many cases have become distant and disconnected from local housing problems, particularly where stocks have been transferred. It will draw them back into the discussion and an understanding of what is happening with the stock. It is very much about resolution.

[Alison Seabeck]

Will the Minister give way?

[Grant Shapps]

I hope that the hon. Lady will forgive me for not giving way. I want to cover some of the other points that were raised.

My hon. Friend the Member for Stafford raised the issue of registered social landlords and the sometimes extraordinary chief executives’ salaries of £200,000 and more. I can tell him that I have announced that I intend to include housing associations in the consultation on the Freedom of Information Act with regard to whether they should be drawn into that. I say this today: housing associations, if they want to avoid being drawn into this, need to become incredibly transparent, and very quickly. When local authorities are publishing details of every £500 of expenditure, I see no reason why housing associations should not be doing precisely the same thing. There are good housing associations that are large and good ones that are small. I have no particular pattern or picture in mind.

In reference to a point made by the hon. Member for Plymouth, Moor View, housing associations are getting investment in now through private means. Just yesterday, there was an announcement on the London stock exchange that a large housing association has raised £100 million for the first time through that type of London stock exchange fundraising scheme.

There was quite a lot of discussion of mobility. The hon. Member for Manchester, Withington made very reasonable points about people being able to move from place to place. It is probably worth reminding the House—or, possibly, telling the House for the first time—that by September of this year, for the first time in this country, 90% of social tenants will be covered by a mobility or swap scheme and able to move from one place to another. I intend that figure to be nearly 100% of tenants next year, so that for the first time tenants will have proper mobility and be able to move around.

The hon. Gentleman also mentioned the new homes bonus and queried whether that would be sufficient to persuade local authorities to build homes. The House will be interested to know that the new homes bonus is not a small deal worth a few millions of pounds, but a multi-billion pound deal across the period of this Parliament. In fact, the right hon. Member for Greenwich and Woolwich made a big play of how much it would cost when we were still in opposition. He was right. It is expensive, and it is right to do—it will help more homes to be built. I cite as evidence the 22% increase in house starts in the first year of the present Government. I suspect that, at least in part, people have been persuaded by the new homes bonus and the power that that brings to local authorities because they know that they can use the money for useful things.

The hon. Member for Plymouth, Moor View and the hon. Member for Manchester, Withington mentioned the importance of public land. We have just announced that 100,000 homes will be built on public land, with the build now, pay later and Firstbuy schemes being important elements.

I have nearly run out of time. I again thank my hon. Friend the Member for Stafford for raising so many important issues. I know that the hon. Member for Plymouth, Moor View wanted me to talk about the future of our housing programme. I thought that it might be helpful to know first not what will happen in the next Parliament to our housing programme, which is what she was probing me on, but the Opposition’s housing policy for this Parliament.

Construction Industry

Tuesday 28th June 2011 Westminster Hall

11:00

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton. I am delighted to have secured a debate about an issue on which, for once, I believe I can actually speak with some authority.

I started my working life as an apprentice bricklayer under a scheme administered by the Construction Industry Training Board in the late 1970s. In those days, under the CITB training programme, people were given six months off the site to get relevant tools experience, site understanding and health and safety training, before being placed with the company under an indentured apprenticeship agreement. My placement was with Fairclough Civil Engineering, and after completing my three years, I worked for Fairclough International—it is now part of the AMEC group—in the Falkland Islands. That was in 1983, just a few months after the cessation of hostilities with Argentina.

On my return, I started my own construction business. After surviving two Tory-led recessions in the 1980s, I was persuaded to go into training to pass on my skills to a new generation of construction trainees. Eventually, I took up a post as a business manager at the now defunct Learning and Skills Council, where I oversaw funding for—yes, you guessed it—construction training programmes across Merseyside.

During that period, I graduated in construction studies from Liverpool John Moores university and began a master’s degree in contemporary urban renaissance. Although I did not manage to complete it, it gave me an insight into many different, and sometimes tangential, construction perspectives. Although there are far more eminent construction commentators than me, I can speak with a degree of understanding on this issue, given my broad personal experience.

I want to record my interest as a member of the Union of Construction, Allied Trades and Technicians and as one of its sponsored MPs, although I receive no remuneration for that. I would also like it noted that my son, Steven, is an apprentice electrician with M. J. Quinn. For the purpose of clarification, I should also say that I have previously proudly professed that I am the only brickie in Parliament, although my hon. Friend the Member for Derby North (Chris Williamson) also lays claim to that most sought-after designation because of his trade background.

In recent weeks and months, much of the business, innovation and skills debate has been about ways to improve the opportunities for a high-skilled work force in a low-skill economy. One of the previous Labour Government’s greatest achievements was to give those who wanted to do so the chance to go on to further education through the introduction of the education maintenance allowance and the university loans system. As a result, Britain now has the most talented generation in recent history. Job opportunities in science and technology, graphic design and public relations, which were the preserve of the well connected, are now at the fingertips of this more industrious generation of Britons. Real progress has been made in diversifying the skills sets offered to young people across the country, but in areas such as my constituency, traditional industries such as construction also have a real part to play.

I am pleased that the Minister, who is responsible for construction, recently said:

“An efficient, effective and profitable construction industry is at the heart of any growing economy.”

That is why urgent action is needed from the Government to save the industry from the brink. The Government’s approach must change, because it is clearly not working, as we saw from the previous quarter’s growth figures. We already knew that construction had been hit extremely hard in the global financial crisis, but the 3.3% fall in output—the steepest the industry has suffered since the financial crisis of 2008—is all the evidence we need that things need to change.

I have given Members an insight into my background in the industry, and although I do not profess to be an expert, my interest in the sector spans three decades. That is why I know there is a fundamental problem with the Government’s thinking when the Construction Products Association’s economics director, Noble Francis, says:

“It is likely that construction output will fall 2% in 2011 and this will inevitably hold back economic recovery given that construction accounts for around 10% of the UK economy.”

[Susan Elan Jones (Clwyd South) (Lab)]

Does my hon. Friend agree that the VAT rise is having a significant effect on the construction industry and making life extremely hard for the many small and medium-sized construction firms in many of our constituencies?

[Steve Rotheram]

My hon. Friend is absolutely correct. That is certainly true of the refurb and maintenance sector. At the end of my speech, I hope to come up with some suggestions, which the Minister might like to take away to contemplate, given this issue with VAT.

I can almost predict what the Minister will say in reply to my comment about economic stagnation. I will try to pre-empt him by simply pointing out that although last winter’s adverse weather conditions will have had an adverse effect on construction, the weather was bad the year before, and we saw nothing like the fall in output that we did this year. The fall has more to do with a lack of confidence than with too much snow or the wrong kind of snow.

[Jim Shannon (Strangford) (DUP)]

I represent an area where construction is very important and job opportunities for apprentices are critical. The construction industry has suffered a significant downturn over the past few years, and the background information certainly indicates that; indeed, another company in Northern Ireland folded just this week. We are always hard on the banks, but they were keen to lend money, albeit often without suitable guarantees. Does the hon. Gentleman feel that the Government should have more contact with the banks to encourage them to show more flexibility now so that companies that are having difficulties can get through them?

[Steve Rotheram]

The hon. Gentleman makes an important point about the banks. Again, I would like to tease the issue out further in my contribution. We cannot underplay the fact that one reason for the failure of construction is the lack of lending by banks.

Urgent Government action is needed to save the industry from the brink. The Minister must surely understand the relationship between public sector spending and private sector growth. Despite the at times relentless desire of the coalition Government to drive a wedge between the public and private sectors, the two are heavily interlinked and co-reliant in the construction industry. If we cut one, the other will bleed, and the construction sector is now haemorrhaging and in need of a transfusion.

To take the example of Building Schools for the Future, the cancellation of 719 school improvement projects was devastating for not only head teachers, staff in classrooms and parents and children left with substandard facilities, but the construction companies that had won the contracts, and that has serious ramifications for the sector. As Steve Bratt, the group chief executive officer at the Electrical Contractors Association, said:

“Although any party in power would have had to take major steps to reduce the deficit, the cuts to public sector construction projects such as BSF are a case of short-term gain but long-term pain.”

The cancellation of the schools building programme is creating uncertainty in the construction industry. Furthermore, ambiguity over potential construction jobs in hospitals and prisons, in building and civil engineering alike, continues to cause great concern and leads to low confidence in the Government’s ability to secure the UK construction industry.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Like my hon. Friend I spent 40 years of my life in the construction industry, and I am glad that people from that industry are in the House. Does my hon. Friend agree that the Government’s target on skills is significantly at risk, because their approach significantly challenges the construction sector’s ability to give training and to deliver skills to the marketplace? The Government treat the industry as the private sector, whereas as my hon. Friend said, it is fed from both private and public sectors. Will my hon. Friend also comment on the ownership of not only construction companies but supply companies in the UK, and whether he is worried that we are losing UK ownership of those companies?

[Steve Rotheram]

My hon. Friend is right. There are big supply chain issues that need to be addressed. On the earlier point, about apprenticeships, uncertainty in the sector prevents companies from thinking long term, so they stop taking on apprentices. I remember when, in the 1980s, under the Thatcher Government, pretty much all the construction industry stopped taking on apprentices. That created long-term problems for the industry, and skills shortages many years later, which meant heavy intervention was needed to plug the gap.

I am sure that the Minister is fully aware that every £1 spent on construction leads to an increase in gross domestic product of nearly £3 and stimulates growth elsewhere in the economy worth nearly £2; I think he recognises that, so surely he agrees with me that monumental cuts in construction make no economic sense. The Minister and the Department for Business, Innovation and Skills need urgently to tackle the problem, but that urgency, like leadership, has been sadly lacking in the past few months. It has been widely reported that currently one in five firms going into administration are from the construction industry. That is a frightening figure, when we recall that construction is responsible for about 10% of the UK economy. The alarming statistics keep on coming for the Minister. Research undertaken by the Financial Times has found that construction orders have fallen by 40% in the past 12 months. That is before the Government’s programme of the deepest and most unfair cuts in recent history has even taken full effect.

Jonathan Hook, global head of construction at PwC, said:

“It is the end of the money—coming through from Government stimulus—and no one knows if, when and to what extent, the private sector will come back.

It is a substantial reduction, but if you look at the numbers companies are reporting—you are not really seeing it reflected yet. They are trading off work that was won three years ago, but it is creating a bow wave of falling activity in two years.”

There is more: Anthony Cork, director of Wilkins Kennedy, said;

“The Government has slashed capital spending on infrastructure across the board in order to plug the deficit and that has pushed the construction sector into a double dip.

The question now is how quickly private sector construction work will be able to pick up the slack left by the public sector. So far this has not happened.”

The most devastating impact, in areas such as Liverpool, Walton and many other pathfinder areas, has been the withdrawal of housing market renewal funding, which has not only decimated the house building industry but left swathes of derelict land and boarded-up terraced streets without much prospect of development. Because of the economic downturn it is widely acknowledged that the construction industry’s saving grace was major public sector infrastructure projects such as Building Schools for the Future, and new hospitals and prisons. The Labour Government were right to bring forward additional capital project spending to help the industry to stay afloat. They were also committed to the building of additional social housing, including new council homes, in the latter half of 2009 and early 2010, with additional commitments to employ local workers and train apprentices.

I made my maiden speech as a councillor in Liverpool on the ability of local authorities to use social clauses to ensure that, for publicly funded construction projects, they would achieve the best possible outcomes for local labour and apprenticeships. Unfortunately, Liverpool was at that time controlled by the Liberal Democrats, and they missed the opportunity. Our current Labour administration is not making the same mistake. The previous Government put their money where their mouth was, and provided Kickstart funding in October 2009 to help 54 stalled private sector housing projects to restart work. Those commitments were primed to give the depressed housing sector a much-needed stimulus. The confidence that the Labour Government were instilling in the industry was the key factor. By the first quarter of 2010, all the construction surveys and indicators showed that confidence was returning to the sector. Firms were reassured that work would come their way, with many projects scheduled to start in mid-2010, and those companies were gearing up to take advantage of the opportunities.

Cancelling those programmes devastated the sector and demonstrated that the Government have little regard for the work that it does. It ripped the confidence out of the industry. The state is obviously the largest client of the construction industry. The Government’s role in procurement policy is therefore vital—and more so in times of economic downturn, when the private sector is less able to provide the work that is needed. I can personally testify to the way lack of investment in the 1980s stored up trouble for the industry many years later, and created huge skills shortages. That is because the industry operates on a two to three-year lag. It did not need to have the confidence torn out of it once again, within weeks of the formation of the coalition.

Given the time constraints that we are under, I shall catalogue just a few of the licentious achievements of the coalition in the past year, as they have single-handedly knocked the stuffing out of the fragile construction industry. On 17 June 2010 the Government cancelled millions of pounds worth of infrastructure projects including the North Tees and Hartlepool hospital, the A14 road widening, the Kent Thameside strategic transport programme, the Leeds Holt Park well-being centre, and the Birmingham magistrates court. On 4 July 2010, the Government announced major cuts of £220 million to the budget of the Department for Communities and Local Government. It was claimed that that was because of a black hole in the funding for the Homes and Communities Agency, and that it would result in many of the newly announced social and council housing building projects being cancelled. We later proved that there was not a black hole in the funding, so why have the cancelled projects not been reinstated?

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my hon. Friend on securing a timely debate. Does he share my concern about the Homes and Communities Agency, and the fact that it has scrapped its national targets for the number of apprenticeship scheme places provided through agency funding? Is he concerned about the impact of that on the number of apprenticeships that will be created?

[Steve Rotheram]

That decision is regrettable. It seems that the Government say things such as “We are going to create 250,000 apprenticeships,” but do not realise the knock-on effect of other policies. The training tap cannot be turned on and off. For construction trades colleges need to gear up, and they need space. Sometimes, once construction programmes have ceased, other uses are found for the space and it is not possible just to go back and scrap whatever it has been used for temporarily, to re-instigate construction training. It is more complex than that, however, because the staff that have been let go cannot always be re-employed, yet relevant construction experience is necessary; we also need people with teaching qualifications to train students to the NVQ standards. It is another short-term gain, but there will be long-term pain for the construction sector.

On 5 July 2010, the Education Secretary announced that the Building Schools for the Future programme was effectively being scrapped. BSF was the biggest construction project in Europe; it was intended to rebuild all 3,500 secondary schools in England. The work was to have been done over 15 years. When the Secretary of State made his announcement, 180 schools had been rebuilt and 231 projects had been given the green light, as they had already reached financial closure. BSF would have cost £45 billion over the lifetime of the project.

Early in September 2010, it was revealed that the Government’s decision to scrap the regional housing strategy had resulted in plans to build 100,000 new homes being shelved by local authorities. That has severely depressed private sector housing. On 20 October 2010, the Government announced their comprehensive spending review. That further confirmed the reduction in Government spending on construction; by 2015, annual construction spending by the Government will have been reduced from £59 billion to £47 billion, a reduction of more than 20%.

Again, the most savagely affected sector was public housing. The housing and regeneration budget is to be cut by 70%, from £6.8 billion to £2 billion—but that £2 billion will be used only on projects to which the Government are legally committed. Surely the Minister cannot blame all those policies on snow. The general consensus is that, at best, the industry is treading water; although some sectors of the industry are improving, such as office building in London, others remain in the doldrums. Despite its flexibility, construction is a complex industry, with hundreds of job roles and professional and technical relationships. Despite being only a few months old, the Government’s construction strategy needs impetus in order to achieve its objectives.

What else can the Government do? To answer an earlier point, we know that bank lending is a major problem for small and medium-sized enterprises; indeed, the banks failed to meet their Project Merlin proposals earlier this year. That is a particular difficulty for construction companies.

Firms in Liverpool tell me that part of the problem is that banking has become too impersonal. Years ago, when a construction firm secured a contract it would phone the manager of the local branch—he was probably known to the firm—to explain the job, say what would be needed and how the job was to be staffed. The bank manager would sometimes pop down to the site to make a physical assessment, and a loan would be negotiated. However, the relationship manager—the bridge between the construction firm and the banker bureaucrats—has now gone. Many banks have their central office space elsewhere, not in places such as Liverpool or wherever the construction firm is based, and companies are refused loans before a thorough assessment can be made.

[Gordon Banks]

I thank my hon. Friend for giving way again. Although some banks do not lend to the sector, in some ways the Government’s broader economic policies are having an impact on the banks by restricting them and preventing them from making the right decisions on lending to the construction sector. The underlying current of concern is the Government’s economic policy.

[Steve Rotheram]

There are real issues with regard to the Government’s economic policy. However, on that aspect of Project Merlin I agree with the Government; setting targets that forced banks to lend to SMEs was the right approach. Unfortunately, they missed their own targets once again.

[Gordon Banks]

The fact that the Government have pulled the rug from under the construction industry through the reduction in state spending is making the industry a less attractive proposition for the banks. That is the point that I was trying to make; the Government’s policy on the construction industry also affects the banks.

[Steve Rotheram]

That point is well made, and spot on. More than a third of members of the Federation of Master Builders have seen their access to credit restricted, and nearly half have had their costs increased since 2008. That is restricting. It is for the Chancellor to use his powers to force the banks that caused the financial crisis to assist SMEs, the very people who will help get the economy going again. It is not acceptable for the Minister and his colleagues to hide behind Project Merlin until the end of the year, hoping that they will meet their targets and reacting only if they do not. The construction firms with which I speak are looking for proactive solutions now, not reactive compromise in six months’ time, after the Government have blundered their way through yet another failed policy.

Markets hate uncertainty, and at present the construction industry does not have enough confidence to kick-start its recovery. It pains me to say that, because I have a vested interest in the industry and plenty of friends who still work in it. It is therefore for the Government to consider matters that affect the industry to determine whether there are mechanisms to assist it.

One such matter is insurance. Ian Fletcher, a friend who runs a small scaffolding company despite the economic uncertainty, is just about keeping his head above water. However, spiralling insurance costs are jeopardising the jobs that he has created. Pressure must be brought to bear to ensure that businesses are not priced out of the market by excessive insurance premiums. We need to restore confidence in the domestic construction sector. Housing has huge potential for growth. The demand is there, but the Government lack a coherent and well considered fiscal plan. Such indecision means fewer homes, fewer construction jobs and fewer supply chain opportunities.

I am reminded of yet another policy cancellation that has devastated construction—Labour’s HomeBuy Direct scheme. In places such as Liverpool, the construction industry can take people off benefits and put them into a lifetime of work. I know from my own experience—and more latterly from my advice surgeries—that Liverpudlians are desperate to get back to work. They understand the dignity that comes with having a job and being able to provide for their families, and they are worried about their future.

For me, one of the most alarming things is that construction is failing to recruit a sufficient number of apprentices. Every year, despite the recession, the industry still needs more than 30,000 recruits. The lack of confidence in the relationship between the Government and the industry means that, for many people, a job in construction is only a short-term measure and far from stable. For businesses, that lack of confidence manifests itself in a climate in which few SMEs have enough confidence in the future of their business to recruit an apprentice. Quite simply, they are too busy trying to stay afloat.

[Catherine McKinnell]

My hon. Friend is generous in giving way. As he knows, increasing the number of apprenticeships is something that I have been promoting in Parliament through a private Member’s Bill. In discussions on the subject, I have met representatives of the majority of trades in the construction industry, and they all raise significant concerns about the skills shortage for the new green economy. Some of the new business opportunities are available now and will become more so, but we will lose some of those investment opportunities because we do not have the skilled work force, either now or in readiness for the future, to meet those challenges.

[Steve Rotheram]

My hon. Friend makes another important intervention, but it is not even as simple as that. Some of these new technologies need to find space in colleges to train those who will train the providers; we also need to train people with relevant construction qualifications in their specific fields, which means that there will be a lead-in period for such changes. If we had a medium-term strategic plan, we should be considering future job opportunities and starting to plan for when they come to fruition, so that we can ensure that we have people trained and qualified to take up those jobs.

Another fundamental problem is that companies are thinking only in the short term because that is all the Government are doing. Firms are not directly employing workers and they are not prepared to make the effort or take on the cost of training anyone, despite the evidence of significant returns on such investment.

The previous Government recognised that construction companies were not training sufficient numbers of apprentices and began to introduce procurement policies that required contractors to train apprentices on Government construction projects. If companies did not train, they did not get the work. I hope that the Minister will cover that issue in his contribution. Will he tell us whether the present Government support such a policy? If they do, will he explain that to the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin) who apparently does not?

The construction industry and I want the Government to provide additional resource and investment through a major programme of social housing. The housing industry is desperately in need of assistance for both economic and social reasons. There are currently more than 1.8 million people on housing waiting lists. Hundreds of construction firms are ready and willing to get back to work to begin building those houses. Perhaps such an investment would help to rebuild the shattered confidence in the sector. We need to promote a policy to develop green building technologies; to help get people back to work and to create new apprenticeship opportunities. Such a policy would tackle the growing homelessness crisis and the ever-expanding housing waiting lists.

Perhaps the Minister could consider lowering the VAT on home repair, maintenance and improvement works. Such a move could be used as a catalyst to stimulate activity. It could increase the overall tax-take that growth in the sector would generate.

[Gordon Banks]

My hon. Friend talks about finance in the sector. Does he not agree that there is also a need to address mortgage lending? In 2006, the Halifax conducted some research and found that first-time buyers in the private housing sector injected some £2.1 billion of spend into the UK high street. Does he not think that the challenged retail sector would benefit from more first-time buyers re-entering the market? The Government must work with the banks to ensure that we have a decent level of mortgages from about 90% without punitive interest charges and punitive arrangement fees.

[Steve Rotheram]

Most commentators would support that economic argument. Growth creates further growth and confidence. If mortgages were secured for first-time buyers, it would help both the house-building sector and the industry to get back on their feet. To me, such a proposal seems like a no-brainer, but we still have to persuade the Government of our arguments.

I have gone over my time because of all the interventions, so let me say in conclusion that to do nothing but to cross our fingers and hope for the best is not good enough and that our industry deserves better than that.

11:33

[Chris Williamson (Derby North) (Lab)]

I congratulate my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) on securing this important and timely debate. Like him, I have a building industry background. I trained as a bricklayer and come from a long line of building workers: my father was a plasterer, one brother was a carpenter and my other brother trained as an electrician and can turn his hand to plumbing and many other things. Following in my footsteps is my own son who has gone into the construction industry and is training as a surveyor with Bowmer and Kirkland, so we are keeping the family tradition going.

I want to make a brief contribution about the central importance of the construction industry in rebalancing the economy. The Government say that they want to rebalance the economy and to see the private sector taking a leading role. I cannot see how that ambition can be realised without the construction industry playing a central role. The Government have made it much harder for the construction industry to contribute to the rebalancing of our economy by scrapping the Building Schools for the Future programme. Let me talk for a moment about the impact that such a decision has had on my own constituency of Derby North. Although Derby is made up of two and a bit constituencies, schools in the city are all affected in a similar way.

The five secondary schools in my constituency—Bemrose, Lees Brook, Murray Park, Littleover and St Benedict’s—were all looking forward to the impact that a new school would have on the children, the staff and the parents. Some of them have real problems. Lees Brook in particular is a health and safety hazard, suffering as it does with problems related to asbestos. The scrapping of the BSF programme was a great disappointment to everybody in the city and it had a huge impact on the construction industry in the local area.

The aim of rebalancing the economy and of enabling construction to play a key role was made even harder to achieve when the Government decided to halve the social housing grant. As a consequence, the number of affordable homes coming on stream has been severely diminished.

A further obstacle to the Government’s ambition was the decision to abolish the regional spatial strategy and the consequential abolition of the housing targets. Although the Government were critical of those targets, the number of planning permissions that have now been jettisoned as a direct consequence of that decision is running in excess of 100,000 homes.

[Ian Lucas (Wrexham) (Lab)]

On the issue of planning, does my hon. Friend agree that the confused regulatory framework that now exists because of the advent of the Localism Bill has created a massive amount of uncertainty for the construction sector and has been an additional bar to making progress?

[Chris Williamson]

My hon. Friend makes a central and pertinent point. The confusion that has been brought about as a consequence of the Localism Bill has created a real problem. I do not particularly want to make a partisan point here, but I was disappointed in the debate on the Bill that Government Members were queuing up to say how the measures would enable them to stop housing developments from taking place in their local areas.

[Mr Stewart Jackson (Peterborough) (Con)]

I apologise for my late arrival to this debate, Mr Caton. Circumstances beyond my control meant that I could not get here on time, so I sincerely apologise.

Let me take the hon. Gentleman back to regional spatial strategies. He will no doubt be aware that in August 2009 the then shadow spokesman for Communities and Local Government, my right hon. Friend Member for Meriden (Mrs Spelman), wrote to council leaders and developers indicating that an incoming Government would probably scrap the regional spatial strategy and that they should continue with plans to build, but based within a context of working with local authorities in developing local development frameworks. There was never a moratorium on building. That was just a different way in which to pursue the same ends—to build more homes for people who need them.

[Chris Williamson]

The real problem is that the housing targets offered some cover for local authority planning departments and planning committees. With those targets gone, they are much more exposed. As we have seen up and down the country, they have come under pressure from people who do not want to have their view spoiled or who do not want to see new housing developments. None the less, we all know that new housing is desperately required. But now local authorities will be much more exposed, because they cannot refer back to the regional targets set by Government. I know that the RSS was not perfect, but I genuinely believe that local authorities and in particular locally elected representatives need some additional support to help them to drive through the new housing that is needed throughout our country.

I want to say a little about the contribution that the construction sector makes to the wider economy. A thriving and vibrant construction sector has a significant and beneficial knock-on impact on the wider economy, not least because 80% of the materials that are procured by the construction industry are procured from within the UK, which creates an additional stimulus outside of the construction sector itself.

[Gordon Banks]

On that point, I just want to reiterate a point that I made earlier. I come from the materials side of the construction industry and I understand it very well. However, does my hon. Friend have some concerns that although 80% of construction materials are produced in the UK the ownership of the companies producing that material is rapidly falling into the hands of multinational conglomerates, and that as a result decisions are being taken in Australia and Mexico that can affect British jobs and the production of that 80% of construction materials within the UK?

[Chris Williamson]

That is another valid point and the Government need to consider it; it is a source of some concern. As I say, we are in a fortunate position at the moment, in that 80% of construction materials used in the UK are procured within the borders of the UK, but that might not always be the case. As my hon. Friend suggests, the Government need to be alive to the potential for change as the ownership of firms passes to multinational conglomerates. If that trend continues, the percentage of construction materials procured within the UK could diminish quite rapidly and quite significantly, and we need to be vigilant about that.

[Susan Elan Jones]

Does my hon. Friend agree that another important factor in this debate is the employment of young men in the construction industry? If we are to accept—as I think, at times, the Government seem to be accepting—a high level of young male unemployment, there are serious social consequences to that as well.

[Chris Williamson]

Yes, there most certainly are. My hon. Friend puts her finger on another important element of the construction industry. Clearly, it is a very labour-intensive industry. A vibrant, thriving and growing construction sector provides plenty of training opportunities, as she points out. That has significant social implications, because we all know the detrimental consequences—both for individuals personally and for the wider community—of large-scale unemployment. When we consider some of the Government’s other targets, supporting the construction industry and creating training opportunities in the industry would have huge beneficial impacts well beyond the obvious impacts, which I think are clear for all to see.

I wanted to make a point about housing and the importance of having a vibrant housing sector. In particular, I wanted to say why I am so disappointed with the decision to get rid of the housing targets. I have already mentioned the procurement of construction materials from within the UK, but a vibrant housing market also has much wider beneficial impacts, in that people are moving house and buying new carpets, curtains, furnishings and so on, which also benefits all the people employed in those sectors. At the moment, all those sectors are in significant decline.

I would like to talk again parochially for a moment, this time about the commercial sector. In Derby, we have 1.25 million square feet of office space that has planning permission. Those development sites are now standing empty; some have been cleared and some are just a dilapidated eyesore. We were looking forward to those sites being developed, possibly with a view to civil servants moving into them as part of the Lyons review. At the time of that review, developers were talking about building speculatively, but that will not happen at the moment. Derby is not the only example of a town or city where there is a plentiful supply of commercial space available. In the current climate, no developer will build speculatively; they need end-users and certainty. In fact, they need certainty to get a development funded for a start.

I will be interested in hearing the Minister’s response to that point, because I plead with him to say what assistance the Government are prepared to provide to give that stimulus to the construction sector. There is one very simple thing the Government could do that would achieve another one of their targets, which is reducing public spending. That simple thing is to move civil servants from extremely expensive central London locations and out into the regions. When the Government are looking at the relocation of civil servants, I hope that they will consider Derby, because developing a prestigious site in Derby could be achieved at around £20 to £25 per square foot and I know for a fact that in central London some of the prices that some of the Government agencies are paying are in excess of £100 per square foot; indeed, they might be up towards £150 per square foot. Clearly, relocating those agencies and staff to Derby would be hugely beneficial, not only to Derby and the construction sector but to the Government’s own target of reducing public spending. In fact, it will reduce public spending in a way that will not hit front-line services. However, it seems that that relocation process has stalled. I do not know why that is and I would be interested to hear the Government’s thoughts on that.

I am pleased that the Minister is here today for this debate and I know that he is considering locations for the green bank. I have written to him to say that Derby would make a perfect location for the green bank and I hope that he will consider Derby, particularly as Barclaycard has moved out of significant premises in the city. Derby would be an ideal location for the green bank and I hope that he will bear that in mind when he makes his final decision on that issue.

The Government are going in the wrong direction at the moment—the opposite direction to the one they need to go in. What they need to do is to create an economic virtuous circle and construction can play a really important role in delivering that virtuous circle. That means investing in the economy to create the growth that my hon. Friend the Member for Liverpool, Walton referred to, which will have a knock-on impact. I think that he said that growth begets growth, or growth generates more growth, and clearly it does.

My hon. Friend and I are not the only ones saying that. I myself am a humble bricklayer—what do I know about economics? But I just look at my history books. I look at what President Roosevelt did in the 1930s, when there was 25% unemployment in the US during the great depression. A lot of the recovery from the depression was built on the back of construction, including huge construction projects such as dams, roads and housing. We saw that happen again in 1945 in this country, with the efforts of the post-war Labour Government.

[Gordon Banks]

On that point, does my hon. Friend agree that not only does such investment help the economic situation at the present time but it prepares us better for generations to come?

[Chris Williamson]

My hon. Friend is absolutely right, because such investment creates employment opportunities and the better infrastructure that future generations, as well as the current generation, will benefit from. I was talking about the Roosevelt legacy; Americans are still benefiting to this day from some of the investment that Roosevelt was responsible for. Surely, therefore, it makes sense to invest in the economy now.

I want to conclude by saying that we also have a perfect example of such investment in this country. In 1945, following the ravages of the second world war, the post-war Labour Government did not shirk their responsibilities. At that time, they faced massive debts and a massive deficit, but they demonstrated that by using the power of the state we can turn the economy around and build a better life for people, including better houses, good-quality services and a better, more cohesive community and society.

We all know that Britain is facing very difficult times, but they are not as dark or as bleak as the times that we faced in 1945. We demonstrated then that we could achieve so much, so I plead with the Government to think again. We have talked about a plan B, which will probably be an issue that is beyond the Minister’s pay scale; it is a matter for the Chancellor. But there are certain things that I have mentioned today that the Government can consider—the green bank, slightly tongue in cheek, being one of them for Derby. We must also consider how we can get civil servants out of the centre of London and into the regions, which will help to stimulate the local economy, including the construction sector, in those regions, creating jobs and a better society for all of us.

11:49

[Mr Stewart Jackson (Peterborough) (Con)]

It is a pleasure to serve under your chairmanship for the first time, Mr Caton, and to be able to contribute to this very important debate.

I pay tribute to the hon. Member for Liverpool, Walton (Steve Rotheram). We perhaps do not have much in common politically, but we both represent cities that have a district called Walton at their heart, so there is some agreement across the Chamber. I spoke on regeneration for Her Majesty’s Opposition in the previous Parliament, and during a visit to Liverpool—to north Liverpool, Rock Ferry and Bootle—in 2009 I was struck by the positive and good work undertaken by the Liverpool NewHeartlands pathfinder scheme. From what I heard of his speech, the hon. Gentleman put his case this morning confidently and reasonably, and I will try to pick up on some of the issues that he has talked about.

I particularly want to look at the wider context of construction, because it strikes me that Opposition Members are not giving due credit to some of the things that the Government have done in the 15 months of this coalition Administration. They do not concede that in 12 or 13 benign economic years, with incremental growth, there was still failure to deliver the appropriate results in the construction sector. An average of 145,000 new homes were built between 2000 and 2010, but in 2009— the last year for which figures are available—only 103,000 housing completions were delivered, which is the lowest number since 1923, and that was, coming back to the point that the hon. Member for Derby North (Chris Williamson) raised, with the regional spatial strategy.

The regional spatial strategy was not a panacea or an answer to the conundrum. It did not deliver what it was meant to. There might have been elements of localism, and some stasis in planning departments, in the competence of councillors and in the willingness of people to use the existing legal system to block such development, but the bigger question is: “Were we building the right homes in the right places?” Between 1997 and 2005 we built 117,000 homes in the east and south-east, on the flood plain, and we need to look at that. Were we building the appropriate quantity of homes, and on what demographic basis?

[Chris Williamson]

Will the hon. Gentleman at least concede that before the unprecedented worldwide economic downturn the regional spatial strategy was making a positive contribution? The number of new housing starts in the past year has fallen again to a new record low, so the policies being pursued by the Government are not working. Will he concede that the economic downturn is the biggest reason for the reduction in the housing stock, and not the regional spatial strategy?

[Mr Jackson]

The hon. Gentleman is persistent, not least in his aspirations for Derby to host the green investment bank. I have to tell him, regretfully from his point of view, that Peterborough got in first, and we have a good chance because we are an environment city with excellent transport links—we are a sustainable bus city. However, I must not stray too far from the locus of the debate.

What the hon. Gentleman says is not necessarily true. If we look at the first quarterly figures on private sector housing starts, yes, they are patchy but we are looking at an upward trajectory, certainly in the eastern region and also possibly in the east midlands and other parts of the country. I accept that there will be a difficult time, because historically this is the worst period that the construction industry has suffered in the past 60 years.

[Gordon Banks]

I have worked in the private housing industry for a significant time, and I think that it would be an experience for the hon. Gentleman to make a journey up to Scotland to see the absolute decimation of the private housing sector there. Major developers are releasing four or five plots for development at a time, where 10 or 15 years ago there were four or five completions per week. The housing industry in the UK, and in Scotland in particular, is as far down on its knees as it can get.

[Mr Jackson]

The hon. Gentleman will therefore support the views of the Government, and particularly those expressed in the ministerial statement issued by the Secretary of State for Communities and Local Government on 23 March, which focused on a presumption in favour of sustainable development, encouraging developers to question local planning authorities vis-à-vis section 106 and the financial viability of each development.

[Gordon Banks]

I do not think that the hon. Gentleman has been listening to the debate. The driver behind the private housing sector is bank finance and mortgages.

[Mr Jackson]

If the hon. Gentleman will allow me to proceed, he will hear my comments on that in due course.

I agree with the premise of the financial importance of the construction sector. It is certainly the case that there is a multiplier of £2.84 to every £1 invested in the construction industry. I also agree that we have a social and economic responsibility, and the Government see it as such, to tackle the historically high levels of people on social housing waiting lists—currently 1.75 million. That concentrates our minds, whichever constituency of the country we represent. We must not be too churlish, however, about what the Government have done. The new homes bonus, which we developed while in opposition, is a fiscal incentive, to encourage local authorities to build appropriate housing, and because it is based on council tax bands rather than on capital values, it builds in a predisposition for quality homes at the same time as paying due regard to the need for social housing.

[Chris Williamson]

Is the hon. Gentleman aware that when this matter was considered by the Communities and Local Government Committee, all the expert opinion was that the new homes bonus simply would not work and that it needed an overlaid target? The hon. Gentleman throws his eyes into the back of his head but that was what they said. They were unanimous. All the expert opinion was that the bonus would not work without an overlaying of a national target system.

[Mr Jackson]

We all know that there were limits to the concept of localism. It would be foolish for any Secretary of State or any Minister in the Department for Communities and Local Government or the Department for Business, Innovation and Skills to say that they could second-guess the development control—to use the old term—or the planning policy of each of the 400-odd local authorities. In densely populated areas of the south-east of England local authorities might feel that they have reached an equilibrium in quality of life and do not want more house building. There are large parts of the north of England, however, for example County Durham, Northumberland and the north-west, where better quality housing perhaps is needed.

[Susan Elan Jones]

Will the hon. Gentleman give way?

[Mr Jackson]

If the hon. Lady will forgive me, I will not give way for the time being because I have quite a few points to make and others might wish to speak. I will let her in later.

It is not possible to design a system that delivers the same result in every part of the country, and the experts the hon. Gentleman mentioned will be disproved, I believe, by the impact. Six years’ matched funding for infrastructure, giving genuine fiscal power to local authorities, will deliver, using the market mechanism, the right kind of quality housing in the right place. None of us can prejudge that until we have seen it in action. The new homes bonus will work, based on a council tax band D of £1,414, and the Home Builders Federation projects that that will bring £1.2 billion into local authorities each year. That is income to the local economy of each authority that builds new homes, which can only be good, and it is 215,000 jobs.

The wider context of the Government’s construction policies is about rebalancing an over-reliance, in some parts of the country in particular, on the public sector, and trying to encourage, with tax policies and a regulatory regime, more private sector growth in jobs. We have already begun to see that. We are not steaming ahead with the creation of private sector jobs, but the trend is in the right direction, and I expect more jobs to be created in the construction industry.

[Mr Charles Walker in the Chair]

The Government’s plan for growth, published in March at the same time as the Budget, introduced significant changes that will help the construction industry. Of course, it makes a presumption in favour of sustainable development, and the wording was criticised for being opaque, but it is now in place and subject to consultation and discussion. The national planning policy framework is coming forward. I have some concerns about it. I am particularly mindful of the possibility of a watering down of the primacy of town centres over out-of-town shopping centres, and the Treasury needs to be mindful of it too. It is all very well creating Asdas and Tescos on the fringes of towns, but that effectively destroys the viability of niche retailers in town centres.

Generally, however, the national planning policy framework will de-clutter the governance of planning, which can only be good. The hon. Member for Liverpool, Walton is right that certainty and the ability to plan properly are absolutely integral to a successful construction industry. That is why this Government’s remit includes simplifying generic planning policy.

To my mind, we are not going fast enough in piloting local land auction models, but we are going in the right direction. Public land will be the first to be auctioned. There is a myth about the availability of land, and a lack of available land clearly contributed to the overheating of the housing market between 2006 and 2009. However, even in the south-east of England, only 12% of land is used for housing, and 10% is used across England as a whole.

The conversion of commercial premises to residential premises and a duty to co-operate would meet some of the objections made by the hon. Member for Derby North about regional spatial strategies. The Local Government Association and others, including KPMG in its report on regional governance, found that regional development agencies did not alleviate differences between regions, or even within regions. He will know that there is a world of difference between Rutland and Melton and inner-city Nottingham or Derby. We as a Government believe—I cannot speak for the Minister—that there are sub-regional economies that were not reflected in regional development agency boundaries. We believe that it is much more practical and flexible to consider a duty to co-operate, particularly in the development of infrastructure.

We are proceeding with a major infrastructure planning system overhaul and consulting on the liberalisation of use classes as a way forward, but the hon. Member for Ochil and South Perthshire (Gordon Banks) is absolutely right that the principal issue is mortgage finance and the capital available for the development of housing. None of us can deny that—it is absolutely the case—but he must concede that the Minister for Housing and Local Government, my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), did an extremely good job in raising with the Treasury the importance of not throwing the baby out with the bathwater in terms of the Financial Services Authority’s mortgage market review. Both the Chancellor and the Secretary of State for Business, Innovation and Skills are mindful that the FSA review must get the balance right. Without reckless spending, they must make available the mortgage moneys that young people need to buy their first property.

To give my own local authority a plug and pay tribute to it, Peterborough city council voted just last week to put £10 million aside for a local authority mortgage scheme. Without wanting to be too partisan, I must say that I am slightly disappointed that the Labour group on Peterborough city council has seen fit to call in that decision, which will delay the process of getting young people the finance that they need to buy property. Not everything that the previous Government did was wrong. The HomeBuy Direct scheme was good, and we have built on it pragmatically and practically with the Firstbuy scheme, which will put about £1 billion into the system and help 10,000 first-time buyers.

The other issue is the planning system. We cannot get away from the fact that the planning system in this country can be construed as dysfunctional. One hears anecdotes all the time. Developers bring an expensive, costed plan for the development of a few hundred houses to a planning department and an officer says, “Yes, that’s a good plan. We can run with that.” He leaves, and another officer comes in and says, “Hmm, I don’t really like the aesthetics. Will you do it again?” Time is money, and that takes an enormous amount of time. It is extremely frustrating, and it is not fair on shareholders or on the people who want to buy the new houses.

We must develop a way to break through the shroud of mystery around town planners, as we used to call them in the old days. They are a bit like hospital consultants: “Don’t question my professionalism on this.” However, it matters to economic growth and people’s jobs and livelihoods that planners expedite decisions. We must develop a way to incentivise them to get inherently viable projects off the ground. They must work much more closely with developers on things such as section 106 and focus on the affordability of individual projects. The evidence that has been presented shows that it is complex. Some supplementary planning documents for large-scale developments can take 18 months to two years. With core strategies, site allocation plans and consultation on local development frameworks, the process can be frustrating for developers. We must find a way to simplify the system.

A report by Michael Ball of Reading university, “The labour needs of extra housing output”, suggests that the costs associated with development control could be up to £3 billion a year. That is not acceptable if we are committed to a pro-growth agenda. Since January 2005, 3,250 pages of national planning policy guidance have been issued. The complexity and cost of development are significant. The hon. Member for Derby North made the point that the gross cost of regulation, the cost of construction and the market price of floor space are significantly greater in London and other UK cities than elsewhere.

I am being admonished by you, Mr Walker, to conclude my remarks, but I will say that we need to see construction policy holistically. We need to consider residential real estate investment trusts and what the Treasury can do to simplify them. We need to consider how EU procurement rules affect large-scale regeneration. We need to consider brownfield remediation to make it simpler for construction companies to build. We need to encourage special purpose vehicles through the tax system so that local authorities can work with developers. We need to push forward tax increment financing so that there is a fiscal incentive to regenerate town centres and other areas. We also need to concentrate on empty properties.

We must find a way to deal with land banking by people who hold land but will not release it—

[Mr Charles Walker (in the Chair)]

Order. We must find a way of concluding this speech as well, Mr Jackson.

[Mr Jackson]

I am happy to conclude my speech, Mr Walker, with three brief points. Developers must engage properly with local authorities and local planning authorities, and with politicians here in Westminster, to lobby hard for changes in the Budget next year. Mortgage providers must provide more flexible mortgage products. We must also concentrate on developing the right houses in the right places at the right price. There is a wider issue, which is not just a local issue of building.

My final point concerns apprenticeships. This Government have a good record on apprenticeships and announced 50,000 new apprenticeships in the Budget. That will be an integral part of growing and enhancing the construction sector.

[Mr Charles Walker (in the Chair)]

The Front-Bench spokesmen have about 10.5 minutes each.

12:09

[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Walker. My time is about half of the 20 minutes that the hon. Member for Peterborough (Mr Jackson) has just taken, and 20 minutes is exactly how late he was for this debate, so he has done well out of the past hour and a half. I know that he apologised.

I congratulate my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) on securing the debate. I will not enter into the argument between him and my hon. Friend the Member for Derby North (Chris Williamson) about who is the best brickie in the House, but it was a delight to hear from both of them and to hear about the Labour party’s commitment to the construction industry. This debate is taking place because it was sought by Labour MPs, and I contrast the attendance of Labour representatives with that of Government representatives. We have had one contribution from the Conservative party and no contributions whatever from the Liberal Democrats. We will be on tenterhooks when we listen to the Minister, whom I am very fond of and have listened to on many occasions. Although we disagree on practically everything, I think that his comments are starting to resemble some of the things that I said when I was in government. That certainly did not happen when he was in opposition.

This is an important debate, because the construction industry in the UK is in crisis. The situation is extremely serious. My hon. Friend the Member for Liverpool, Walton has already provided some quotes from the industry. A survey by Wilkins Kennedy suggests that the number of businesses going bankrupt rose sharply in the first quarter of 2011, from 706 to 948. Analysts at the firm also warned that the private sector was not providing the necessary growth to substitute for the withdrawal of the investment that the public sector provided in response to the worldwide banking crisis. My hon. Friend has outlined what Mr Cork from Wilkins Kennedy has said.

The reduction in capital investment that was announced by the Chancellor of the Exchequer in his first Budget last summer is only now beginning to kick in. We have heard a lot about deficit reduction, but we are now beginning to see the impact of this Government’s deliberate decision to take matters forward. The construction industry does not like it. The Federation of Master Builders says:

“The workload net balance has now been negative for thirteen consecutive quarters, which means more construction businesses are reporting a decline in workloads than are reporting any increase.

The latest results from the FMB’s State of Trade survey showed that construction workloads continued to fall at the start of 2011, and around 35% of respondents anticipated lower workloads in the second quarter of the year.

Employment conditions also deteriorated in the first quarter of 2011. When members responded to our last survey in March 43% had reduced employment levels in the first three months of the year, compared with 32% in the last quarter of 2010. Figures recently released by the Office for National Statistics showed a total of 24,000 construction job losses in the first quarter of 2011.”

The situation is very serious indeed. The FMB also points out that the pressure on small construction businesses in particular is intense. Their output decreased by more than twice as much as that of bigger companies, which is very worrying, considering that 93.5% of Britain’s private contractors employ fewer than 14 people.

When the UK economy contracted by 0.5% in the last quarter of 2010, the fall in construction output was 3.3%. Responding to that drop, the Construction Products Association’s economics director, Noble Francis, said:

“Although the poor weather in December inevitably had an adverse effect on construction work, it also did one year earlier. It is clear that the recovery in construction during the middle of 2010 has now ended abruptly and that private sector work is not coming through strongly enough to sustain growth.”

He predicted a 2% decline in construction in 2011.

We have heard the key statistic that every £1 spent on construction generates a total of £2.84 in economic activity. We need, desperately and urgently, to generate economic activity, which is the exact opposite of what the Government are doing. For smaller construction firms in particular, a lack of available work is being caused by the deliberate decisions of this Government to withdraw investment from projects such as Building Schools for the Future. The interlink between the public and private sectors in construction is of huge importance. We lack work in the construction sector, but, at the same time, there are also increases in prices for construction companies. The Specialist Engineering Contractors’ Group tells me that the price of copper has risen by 275% in the past two years, and that the price of iron ore has more than doubled to $200 per metric tonne since last summer.

Some good work is going on in relation to project bank accounts. It was initiated by the previous Government and has been taken forward by this Government, but even that is under threat.

[Gordon Banks]

On the issue of price increases, my hon. Friend is right to highlight international commodity prices, but price increases are also being forced by the economic conditions delivered by this Government. Production capabilities are being closed down and jobs are being lost, so the price of the finished product is being driven up.

[Ian Lucas]

Absolutely. The other key point is that this Government increased VAT at the beginning of this year. They have increased the price of any business that offers goods for sale and services within the construction sector. The FMB says:

“The situation for small construction firms has been made more perilous by the VAT increase at the start of the year.”

A deliberate decision and act of Government policy is making the position of construction companies more perilous. That is a damning statement.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

The hon. Gentleman has rightly cited the concerns of the FMB. Does he support its call for a 5% cut in VAT, over and above the claims of the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls)? Is that what the Labour party would do?

[Ian Lucas]

If the Minister listens to the rest of my speech, he will hear me address that particular point. The increase was wrong-headed, the wrong policy and an example of the Government being wrong again. They are beginning to look increasingly like Herbert Hoover, rather than Franklin D. Roosevelt. That is why we are saying that we need to look at alternatives to the policy that is being pursued at present. If we continue with the policy that the Government are doggedly pursuing, it will be disastrous for the construction industry. That is why the Labour party will propose reductions in VAT when we next discuss the Finance (No. 3) Bill. My right hon. Friend the shadow Chancellor has already proposed an emergency reduction in VAT. The Government make complacent observations on the matter, but the situation is urgent. Not only is the construction sector under massive threat, but it is not able to provide the number of apprentices needed within the sector to maintain it. Businesses have no confidence in offering any jobs to people, let alone in taking on employment. The Government simply have to recognise that sort of reduction in confidence in the sector.

The FMB has made various proposals, as the Minister has mentioned. Our shadow Treasury team has made proposals in relation to the Finance (No. 3) Bill, and I hope that the Minister and the Government will start listening. If they do not, all of the rhetoric about growth and rebalancing the economy that we hear coming out of No. 1 Victoria street will be recognised for what it is, which is rhetoric alone. The Government are being hounded by the Treasury, and the Department for Business, Innovation and Skills is being sidelined. It is a Department with no influence in a Government who are pursuing a bankrupt economic policy that is leading to more bankrupt companies. Such companies are increasing in number, as shown by the figures that I quoted earlier. That is the reality of what is happening on the ground.

I pay tribute to the good work that the Minister is trying to do in areas such as the development of a low-carbon economy, the green investment bank and the green deal, but they are chugging along and are nowhere near arriving yet. The position is urgent. The Government need to contribute a positive answer to the crisis facing the construction industry. We need action, not words, and we need it now.

12:19

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate the hon. Member for Liverpool, Walton (Steve Rotheram) on securing the debate. It is great that we have among our specialist crafts and trades two bricklayers who have been in the business. I am a mere surveyor, but I hope that I am trusted to at least get the pricing right. I am pleased to say that we have had a very constructive discussion, albeit with a fair degree of partisanship. I was glad to hear the hon. Member for Wrexham (Ian Lucas), who speaks for the Opposition, say that he is fond of me. It would be slightly worrying if he were not—I am not sure what we would have had at the end in terms of just how fond he is.

Let us consider some of the facts and see whether I can respond to some of the key points raised. The debate has been very wide. We have covered skills, access to finance, the importance of the green economy and of apprenticeships, as well as the planning regime system and how that works. I suspect that hon. Members from all parties would share the view that the construction sector is crucial, as is shown by the numbers. It makes up 6.8% of the total economy and directly employs around 2 million people.

As we have heard in the debate, we recognise that construction and housing related to construction have been through a tumultuous time—a savage period—since 2007. Over the two or three years during and through the recession and, yes, into difficult times now, many businesses have faced a real rollercoaster. Good firms have gone and firms that, frankly, were struggling anyway have gone. There has been a headcount loss, which we note and regret, but we should not simply paint a wholly gloomy picture. Some months the figures go up and some months they go down, but if we consider the most recent output figures that have been published on the three months to the end of April, there has been a 6.2% increase in output, which is about £16.7 billion. So it is not a wholly gloomy picture.

[Gordon Banks]

On that point, I take it that the Minister is referring to ONS statistics. Does he have any concerns about how the ONS gathers statistics on the construction industry?

[Mr Prisk]

Concerns have been raised. The Construction Products Association, which has been mentioned, has asked whether the strength of the sector is in fact underplayed. That issue is being considered by the ONS.

The hon. Member for Liverpool, Walton will not agree on this analysis, but I did not hear from him any recognition of the enormous financial deficit that we inherited and therefore the tough decisions that we had to take. What I heard from him was the suggestion that we are not investing at all. I do not accept that. Let me highlight how, despite those difficulties, we have set out the first national infrastructure plan and shown how £200 billion of public and private funding will be put into the sector—into infrastructure and construction—over the next five years.

The spending review has started to spell out how that will work. There will be £10 billion additional funding for roads and maintenance, which is crucial, and £14 billion additional funding for rail. Of course, Crossrail is going ahead and we intend to proceed with High Speed 2. That is crucial for the overall sector. In the hon. Gentleman’s area, the Mersey Gateway is a £600 million project that will create 460 direct jobs. The project should open some important opportunities in the area and generate around 4,500 jobs. In difficult circumstances, we are making an investment that could help.

Several hon. Members mentioned the question of how we can help the economy and the construction sector more broadly. The Government can do a number of things. My hon. Friend the Member for Peterborough (Mr Jackson), the hon. Member for Derby North (Chris Williamson) and others talked about the planning system, which is a sclerotic system that needs to change. That is why we are progressing with a presumption in favour of sustainable development, so that the default answer is yes and the burden of proof is moved to those who seek to oppose development. We are streamlining the planning process and the consents that go with it and stripping back the 3,250 additional pages of planning guidance of the past five years to around 100.

We want to speed up the system and to get developments under way by setting a time limit. That important issue has not been raised in the debate. If we establish a clear 12-month deadline, including appeals, it will give business, construction and corporate clients the certainty of knowing that there is a timeline within which planning will progress. That is a vital part of the process.

[Susan Elan Jones]

Will the Minister give way?

[Mr Prisk]

I am not going to give way because, with respect, the hon. Lady did not make a speech and I am trying to respond to those who have.

The construction strategy is important because it provides certainty about the future pipeline of public projects. Several hon. Members said, “Let’s have some action, not talk.” I agree. That is why, from this autumn, we are rolling out a two-year programme of pipeline projects that are funded. Therefore, the industry—infrastructure and construction projects—will know what is coming, can plan for it, invest for it and put money into the skills. That is crucial. We have never had that before. It seems painfully obvious now that that is what the industry wants. We are doing that, and we are doing it for the first time. Such an approach will make an important shift.

That brings me to the question of public procurement. We recognise that many public procurement costs have been way over what they should be, which is why we have set a target of a 20% reduction. I pay tribute to the industry because it is great that it has stepped up to the plate and said, “Yes, we agree. We want to be part of this.” We have set out a clear process of how we are going to eliminate waste and duplication, and introduce a whole new way of procurement that will not only reduce the costs, waste and duplication, but open the market to newer entrants—small and medium-sized enterprises—who perhaps in the past have felt shut out.

[Gordon Banks]

Does the Minister not agree that for that to happen there must be a constructive programme—to use an appropriate word—of varying sized contracts throughout the UK? Crossrail is fine, but a small SME will not be involved in that and certainly will not make any money from it.

[Mr Prisk]

Absolutely. That is why our approach is not just about one part of central Government; it is about the whole of government. The hon. Gentleman is right. We need to ensure that the package sizes are varied sufficiently, so that SMEs can participate.

On skills and apprenticeships, first, we are ensuring that young people can at an earlier age—14 onwards—get their hands dirty and start to learn good trades and crafts. We are expanding the university technology colleges—there will be 24 of them—so that we can ensure that, yes, young people get their basic English, maths and so on, but that from 14 onwards they can start to learn a trade and a craft. That is important. Secondly, we have rightly heard a lot about apprenticeships. That is why, over the coming four years, we are putting £250 million of extra money in to deliver 250,000 additional apprenticeship places. Concerns have been raised about whether we are making enough progress and whether there are enough places. In this first year, the evidence is that the take-up has been 100,000 places. That is double the number originally expected and is an encouraging sign.

[Ian Lucas]

Is the Minister not concerned that, according to figures released yesterday, the proportion of apprentices in construction has fallen? Is that not a matter of real concern? Places are not available within the industry because there is not enough work.

[Mr Prisk]

I do not deny that there is a challenge in construction. We cannot force that number. The point is to ensure that we put the funding in place, so that businesses who wish to do so can participate. In that first year, we have seen a good picture overall.

The important issue of green skills was mentioned. For the record, we have agreed a clear strategy with the sector skills councils and established a programme to create an additional 1,000 apprenticeship slots for green skills. Last week the “Low Carbon Construction Action Plan” was published. That document sets out our response to the industry’s programme in terms of 65 specific tasks, including skills and investment. We do not simply want to set out what we might do in five, six or seven years’ time; there is a programme for what happens now, through the next four or five years. The programme is specific in that context.

I shall turn briefly to Building Schools for the Future. The reality is that it was a hideously complex programme with an overrunning budget, an incredible duplication of processes and wasteful outcomes. It has been suggested that Building Schools for the Future is the end of school building. It is not. The Department for Education has spelt out clearly that we intend to ensure that £15.8 billion is available for schools spending over the four-year comprehensive spending review period. Clearly, we need to get value for money and to strip away what the industry has told us are some of the processes that block the system and do not deliver the calibre of buildings that our children deserve. That is why the Department will be responding to the independent James review. I am mindful of the time, so I will respond in writing to the point that the hon. Member for Wrexham made on low carbon.

Let me draw my thoughts to a conclusion. I come from the sector, so I recognise that these have been tough times and that the industry is not out of the woods yet. There are glimmers of opportunity, but there are challenges as well. For the first time, we have an infrastructure plan in place and a rolling programme for the funding of infrastructure and construction schemes—

[Mr Charles Walker (in the Chair)]

Order. Time is up.

End-of-Life Care

Tuesday 28th June 2011 Westminster Hall

12:30

[Brandon Lewis (Great Yarmouth) (Con)]

It is a pleasure, Mr Walker, to serve under your chairmanship. The aim of this debate on end-of-life care in Great Yarmouth and Waveney has two key elements: to highlight the great deal of work being undertaken locally by a wide range of people for end-of-life care through the primary care trust, the James Paget hospital and the East Coast hospice; and to outline where we need further Government support, because more support is needed for end-of-life care in our area.

For many years, patient choice has been the buzz phrase used by all Governments in relation to the provision of health services. However, patients and their families in Great Yarmouth and Waveney, and in parts of the east coast more generally, live in one of the few places in the country where full patient choice of end-of-life care is simply not available. This debate will highlight the work that is already being done to provide end-of-life care, and outline the need for a full range of options.

The World Health Organisation defines end-of-life care as:

“The active, total care of patients whose disease is not responsive to curative treatment”.

Palliative and end-of-life care needs to provide dignity, respect and privacy for both patients and their families. There is an opportunity for a range of providers—hospitals, community hospitals, care homes, hospices and hospices at home—to be part of that provision. The aim is to provide a holistic approach to end-of-life care, in order to limit distress for both the patient and their families through the right type of support.

Let me first turn to current provision. It is disappointing that, at the moment, Norfolk has no in-patient hospice provision outside of Norwich. Other counties in the eastern region have much better provision. For example, neighbouring Suffolk has two hospices, in Bury St Edmunds and Ipswich. With a population of approximately 230,000, the Great Yarmouth and Waveney PCT area is significant in not having a hospice. I will return to some worrying figures relating to that shortly. There is a lack of choice. Great Yarmouth and Waveney is one of only two areas in the country with no in-patient hospice. If the Government wish to provide the widest choice, which I believe they do, then different solutions for different patients are required. There is no full range of options for end-of-life care. At the moment in Great Yarmouth and Waveney, end-of-life care is only available in a hospital, community hospital or at home. A hospice would extend that choice, and provide a midway option between dying in hospital and at home.

One project currently underway is Palliative Care East, which is part of the James Paget hospital. Funding has been secured to establish this superb project, which will be a day care centre at the hospital. There will be a resource centre and an outreach service with out-patient care for terminally ill patients, providing practical help and support, along with advice and information. Many people support the project—I have taken up the challenge of a triathlon to raise money for it. The date is 7 August, if anybody would still like to donate some money, through JustGiving, for Palliative Care East. In the past few weeks, some ladies raised £65,000 by climbing to the top of Ben Nevis—a great example of fundraising by a local community, which is not affluent, in order to deliver something that it needs very much. The hospital is to be congratulated on pulling that organisation together, and the project is just about ready to be delivered.

It is, however, important to provide additional services. Currently, that facility has no plans for in-patient beds. That is where another organisation, East Coast Hospice, comes on to the radar. It is a local charity, which I and my hon. Friend the Member for Waveney (Peter Aldous) have supported all the way through, which wishes to build and operate a 10-bed, in-patient hospice, alongside a day care unit, to provide a safe haven for patients and their families. So far, it is half way to raising enough money to acquire a five-acre site in Gorleston, which is close to the hospital, through various fundraising activities, including four fundraising shops that are now open. There is a lot of work being done. The charity requires several million pounds to commence building work on the hospice.

One issue that has arisen, with Palliative Care East and East Coast Hospice working at the same time to raise funds for two much-needed facilities, is the confusion in the local community about what they are. One challenge facing end-of-life care is how various providers can work together and access funding. It is important to avoid duplication, so that voluntary services can run alongside the NHS provision and for neither to be seen as a threat to the other, or duplicating costs, particularly administration costs. One aim of the debate is to highlight how different organisations need to work together, and how they can work together to provide real choice in an open, transparent dialogue that is required to achieve that. There has been some confusion, even among people in the public sector, and among councillors. We have had to have meetings to bring people together to explain the difference between what Palliative Care East will provide as an out-patient facility, and what a hospice provides as a non-hospital based facility for people at the end of life.

Historically, there seems to have been an institutional block to the provision of a hospice, particularly because of the stance of the local hospital. That has nothing to do with the current administration; it appears to go back to 1982, when there were arguments from the hospital that there was no local need for a hospice. That has been, and currently is, at odds with strong indications of support from patients, residents and GPs. The Marie Curie Cancer Care “Delivering Choice” programme notes the need for a hospice. Perceived local hostility towards the establishment of a hospice has, at times, directly prevented the project from moving forward. The PCT has not always been able to provide the necessary and helpful letters of support to allow the hospice to gain access to funding.

One worrying issue is that in our PCT area, Great Yarmouth and Waveney, £2.62 per head is spent on end-of-life care. Out of 151 PCTS, Great Yarmouth and Waveney is ranked 142nd for patient spending—the lowest in the east of England, and nearly half the national average expenditure. Even now, we are somewhat unclear as to what the current spending on end-of-life care is for the PCT, as there are no published figures for 2008, or indeed 2010. Research shows that the Great Yarmouth and Waveney PCT has the lowest spend per capita, despite having the highest relative need. With an ageing population, that will continue to put pressure on our local area.

During a debate recently secured by my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), the Minister of State, Department of Health, my hon. Friend the Member for Sutton and Cheam (Paul Burstow) said:

“We want to ensure that these institutions grow and flourish as part of a more personalised approach to end-of-life care.”—[Official Report, 2 February 2011; Vol. 522, c. 1007.]

During the debate, three principles for hospices were set out: to get the funding right for hospices; that there should be a clearer understanding of the role of hospices in end-of-life care, and that that should be recognised in the commissioning process; and that end-of-life care is a priority for improvement across the NHS. What will the Minister do to help us to persuade PCTs, such as Great Yarmouth and Waveney, to look at hospice provision as a core part of end-of-life care strategy?

The principles of the Health and Social Care Bill will allow GPs a central role in commissioning services and providing choice for patients. I very much welcome that, as do GPs in our area, with their pathfinder. At the moment, however, that choice will not be able to be fully exercised because no real choice exists in our area for end-of-life care. GP commissioning can help the establishment of a hospice in this area because of the broad support of GPs, as outlined in the Marie Curie “Delivering Choice” programme.

In last year’s end-of-life care strategy, the Government announced a £40 million capital scheme for hospices. That fund is allocated directly to PCTs, with the Department of Health not being prescriptive about how it is spent. In addition, Help the Hospices also receives funding directly from the Government to help support its network. That funding is only available, however, to hospices with established facilities. That excludes charities, such as East Coast Hospice, that want to build a hospice. I have two questions for the Minister. Will the Minister consider allowing opening access to funding, so that charitable organisations can access funding where there is a need for hospice provision, and where no current provision is available? Secondly, what can the Minister do to allow organisations that want to establish a new hospice to access capital funding from the Government, which is clearly needed in Great Yarmouth and Waveney?

The phase 1 report of the Marie Curie “Delivering Choice” programme made various recommendations about hospice provision and in-patient care in the area, which we have so far failed to deal with properly. The report highlighted widespread support among GP respondents, who identified hospice provision and palliative care services as key themes for health care in our area. They were particularly critical of the difficulty in accessing the 12 beds available at Northgate hospital in Great Yarmouth, underlining the need for additional in-patient beds, which a hospice could provide. GPs recognise the need for access to a hospice with specialist provision of enhanced symptom control, respite care to support families and emotional support for patients and their families. Of 45 respondents to the questionnaire, 38 considered the development of a hospice for vulnerable patients a necessity.

Most GPs recognise that the James Paget hospital is not suitable for end-of-life care. In fact, the whole point of a hospice is that it is not in a hospital but that it is an alternative. The James Paget is also a busy acute hospital, which adds extra pressures to make end-of-life care more difficult. The community hospital has limited access to its provision and has a shortage of side rooms allowing for privacy and respect. Although the PCT’s commitment to new palliative care facilities exists, the trust has not yet been able to do anything about the need for a hospice.

We now have the palliative care funding review, which is chaired by Tom Hughes-Hallett, the chief executive of Marie Curie Cancer Care. When launching the review, the Secretary of State said:

“This will better enable patients to choose how and from whom they receive their end-of-life care”—

something I fully applaud. After the debate, I hope that we can ensure that such a choice becomes available to the residents of Great Yarmouth and Waveney, as it currently is not. We do not even have access to the £40 million of hospice funding via the local primary care trust, as I noted a few minutes ago, because we do not currently have a hospice. We have, however, the need to build one.

The interim report published by the review committee in December 2010 states that

“we need...A reduction of inequities in the system; be they geographical…or access to services for patients with different diagnoses.”

The committee also comments that affluent areas tend to be able to offer a more diverse range of services owing to increased charitable funding. Poorer areas offer poorer levels of choice, a point highlighted in an area with deprivation, such as Great Yarmouth and Waveney. The interim report emphasises that the majority of patients have a preferred place of care when they die: at home. The second choice is a hospice, with almost 25% preferring that option, although at the moment only 5.2% can achieve that aim. Most deaths in England—about 55%—occur in NHS hospitals. That is exacerbated in areas such as Great Yarmouth where a full range of end-of-life care options is not available.

Can we find a way in Great Yarmouth and Waveney for the PCT, the hospital and East Coast Hospice to work together? Primarily, can the Government allow us to develop a hospice in Great Yarmouth by ensuring fair access to infrastructure capital funding? Organisations such as East Coast Hospice are working hard to raise the necessary funds to buy the land and to run the service, but they need help with the infrastructure, with the capital investment to make the potential building a reality.

12:43

[Peter Aldous (Waveney) (Con)]

It is a pleasure to speak under your chairmanship, Mr Walker. I am grateful to my hon. Friend the Member for Great Yarmouth (Brandon Lewis) for securing this debate on a topic of such importance to our two constituencies, and to the northern part of the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey).

My hon. Friend the Member for Great Yarmouth has set the scene admirably. I shall make a few observations based on my own finding and experiences in the past year representing Waveney and over the past 40 years as a resident of the area. I will outline five distinctive health features in the area that place a burden on the NHS generally and on end-of-life care more specifically.

First, Lowestoft and Great Yarmouth include pockets of extreme deprivation which are not immediately apparent to those with only a passing knowledge of Suffolk and Norfolk. Secondly, a high percentage of the population is elderly; the East Anglian coast has long been a popular retirement area. I do not begrudge people moving into the area—in fact, I welcome them—but the Government must recognise that they are an added financial cost for those providing health services, and that must be reflected in the funds made available. Thirdly, the influx of holidaymakers in the summer months is an added pressure. I well remember visiting my father in James Paget hospital some 10 years ago and observing that many of those in his ward were not local to the area.

My fourth point, with regard to where people die in the Great Yarmouth and Waveney area, is the limited hospice provision. In England as a whole, 5.2% of people die in a hospice, but in our area only 0.1% do. In the west of the Waveney constituency, those in the Bungay area are well served by the excellent All Hallows hospital at Ditchingham, but there is a glaring lack of a similar facility in the Great Yarmouth and Lowestoft area. East Coast Hospice, of which my hon. Friend the Member for Great Yarmouth and I are both patrons, is determined to redress the balance, as he said. It has a lot of work to do, however, and it is vital for the Government to ensure an environment and climate giving it every assistance and encouragement as it sets about its task.

Finally, despite the lack of facilities in the area, we have a tremendous community spirit, with many voluntary groups and charities doing all that they can to provide services and to raise funds. As well as All Hallows and East Coast Hospice, we have Waveney Hospice Care, which is merging with the St Elizabeth hospice, and does great work providing day care. Palliative Care East has reached its target for providing day care and support for those using the James Paget hospital, and East Coast Truckers continues its sterling efforts to raise funds for East Anglian Children’s Hospices.

Moving on, I will outline three areas of end-of-life care in which we must do better. First, as I mentioned, more hospice care is needed—my hon. Friend set that out clearly. Secondly, linked to that, is the urgent requirement for more respite beds, so that carers can get away for a much-needed break. Last Friday, I was with Crossroads Care, which reinforced that point.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I congratulate my hon. Friend the Member for Great Yarmouth on securing the debate and my hon. Friend the Member for Waveney (Peter Aldous) on his contribution. Does he agree that, although we do not have the range of choice, we ought to pay tribute to places such as Patrick Stead hospital in Halesworth, which manages to provide some respite care but could easily provide more if the funding were available?

[Peter Aldous]

I agree entirely. The Patrick Stead is my local hospital, so I also endorse its excellent work.

The third area is the need for the provision of 24/7, around-the-clock community care, which must be a priority. It could provide people with the option to spend their last days in their own homes, with their families and friends, which so many people wish to do. My father, who died last year, died in hospital and not at home. For my mother, who cared for him in the last few months of his life, the availability of such a service would have made her job as a carer that much easier.

In conclusion, what am I looking for from the Government? I want two things: first, a fairer funding settlement, to address the needs that I have outlined briefly; and, secondly, a system or framework that enables the voluntary and charitable sector to work with and flourish alongside the NHS. The Department of Health tends to distinguish only between the NHS and private providers, but the third sector must not be forgotten and it must be set free to flourish without the bureaucracy that currently bears down on hospices and carers.

12:48

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

As ever, it is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Great Yarmouth (Brandon Lewis) on securing this debate. He is closely involved with charities in his constituency, and the issue is close to his heart, as it is to mine, having worked in the NHS for 25 years before entering this place. I congratulate him and all the local people who have worked tirelessly to raise funds in his area.

Many people receive excellent care at the end of life, but not everyone does. Services in some parts of the country are not as good as services in other parts, and people with some diagnoses are more likely to get good, high-quality, end-of-life care than others. My hon. Friend is right that choice is absolutely central. Choice is about where one is cared for and where one dies. The end-of-life care strategy, published under the previous Government in 2008, aimed to improve care for people approaching the end of life, whatever their diagnosis, wherever they were, including enabling more people to be cared for and die at home, if they wish. It is worth noting that the figures indicate that 17% of people, when asked where they would like to die, reply that it depends. That depends largely on the sort of support that they feel that they might get. My hon. Friend the Member for Waveney (Peter Aldous) mentioned respite care, which is an important element. People feel they might like to die at home if their family could get some respite from their responsibilities.

The end-of-life care strategy covers all adults with advanced progressive illness, and care given in all settings. We know people want choice about where they die. Some want to die at home, but not everybody. Some people are happy to die in a care home, where that has become somebody’s home, which we must not forget. However, we know that most people die in hospital; the figure is about 57%.

We want to ensure that the services are there to help people die and live the end of their lives in a comfortable setting. For choice to become a reality, we need commissioners and providers to ensure that the right services—including community-based services, such as 24/7 care, as mentioned by my hon. Friend the Member for Waveney—are available to support people at home. Ensuring that those services are available cannot be done overnight. We have said that we will review the progress we have made in developing and improving services in 2013; that will be an audit of where we have reached.

We also want to review the payment system to support end-of-life care, including exploring options for per patient funding. The funding has to be right to provide the incentives to commissioners to purchase the care that we want to see. We have set up an independent palliative care funding review to look at the matter, as mentioned by my hon. Friend the Member for Great Yarmouth. The review, covering both adult and children’s services, has been looking at options to ensure that the funding for palliative care providers is fair and encourages the development of community-based services. As I said, it is important to get the levers and incentives in the right place. We hope to be able to respond formally to the report by the end of the year.

Of course, hospices and the important role that they play are in the mix of care facilities that need to be provided. When I worked in this area of nursing there were very few hospices in the country. One cannot talk about end-of-life care without mentioning people such as Colin Murray Parkes who spearheaded the hospice movement. We want to see hospices flourish, develop and continue the expansion of their remit for caring for those with illness other than cancer, and into community-based support for patients, their families and their carers.

Only a comparatively small number of people die in a hospice, but a great many more benefit from their services and expertise in other ways, such as day therapy or hospice at home. My hon. Friend the Member for Great Yarmouth mentioned the £40 million capital grant for hospices, but that an area must have a hospice to get the grant. His point is well made. The one-off grant allowed us to fund 123 projects in 116 hospices, which is quite a far reach. For the longer term, the palliative care funding review will help us move towards a fairer funding system that puts the levers in the right place.

However, it remains for local NHS commissioners to determine what services should be provided locally. I urge all hon. Members to ensure that they work closely with the local NHS. I understand that the estimated need for palliative care is higher in Great Yarmouth and Waveney than in any other PCT. NHS Great Yarmouth and Waveney, together with Norfolk and Suffolk county councils, have commissioned the Marie Curie “Delivering Choice” programme, one of the first to be established in the east of England. That programme brings together local organisations, patients and carers. I can assure my hon. Friend the Member for Great Yarmouth that the Department of Health never forgets the third sector. The third sector is a very important part of the mix of health care providers. We never forget it because there are people around the country who work tirelessly in the third sector, not just to support people who are ill or at the end of their lives, but their families and carers.

My hon. Friend the Member for Great Yarmouth is right that hospice provision is part of the mix of care. Ideally, no care setting should have priority over any other. The settings are like the pieces of a jigsaw: the picture is not complete until all the pieces are in place. The choice is not there until all the choices are available locally. Many care homes have developed a lot of expertise in the area and are now delivering excellent end-of-life care. The knowledge and expertise owned by the professionals in end-of-life and palliative care are what matters.

I will return to the subject of the local area. NHS Great Yarmouth and Waveney have put together this programme, and a new end-of-life pathway has been defined and specifications written for the services required to deliver it. The new services that have been commissioned are specialist palliative in-patient services; a care resource and outreach service; and a nursing end-of-life care facilitator.

I fully understand the concerns that prompted my hon. Friend to secure the debate, and it wonderful that he has the support of other hon. Members. I am sure that working together with the local NHS, they will move the programme forward. I applaud his commitment to the campaign for the best-quality end-of-life care for his constituents. I believe that the initiatives and steps that the Government are taking will help improve this important area of health care. We look forward to continuing to work with everybody, including those in the hospice movement, to achieve that aim.

I would like to finish by mentioning the incredible efforts, not just of those in the east of England but around the country, who are tireless in their efforts to raise money, to support those at the end of their lives, and to support the families who are looking after them.

[Dr Coffey]

I welcome the Minister’s warm words for actions already undertaken by my hon. Friends the Members for Great Yarmouth (Brandon Lewis) and for Waveney (Peter Aldous). At some point, would she come to our part of the world, to meet people who are actively involved, and to hear about other aspects such as the community nursing care fund, which, as long as she helps us get a hospice, may provide a good role model for elsewhere in the country?

[Anne Milton]

I would be delighted to visit the east of England. The hon. Lady has struck a good deal. I am always interested to see progress made. As she says, it is important to spread good practice. For anybody who is in need of NHS services or care, nothing but the best will do. We should never lower our standards in trying to achieve that aim. Nothing but the best will do on the day one is born; and nothing but the best will do on the day one dies.

Edale Unit (Manchester)

Tuesday 28th June 2011 Westminster Hall

12:58

[Tony Lloyd (Manchester Central) (Lab)]

It is a pleasure to have this debate under your chairmanship, Mr Walker. I am delighted to see the Minister here. However, I express regret on her behalf, as the debate would not have been necessary, had the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Paul Burstow), who is responsible for care services, had the courtesy to meet me some weeks ago. I asked to meet him to discuss an important issue, not simply a local one, regarding how decisions are made in the NHS.

The subject of the debate is a mental health facility in Manchester. The Edale unit was a custom-built facility for in-patient mental health services, for people with acute mental health problems who need that type of dedicated care. It was built as part of the private finance initiative that totally transformed central Manchester hospital facilities in my constituency. The Edale unit opened only four or five years ago, and offers five wards and single rooms, many of which are en-suite. It has gyms, therapy rooms, quiet rooms and other facilities that, even now, are pretty much state of the art. It is therefore astonishing that some time last year—I do not know when because the mental health trust did not have the courtesy to inform me as the local MP—plans were made to close the unit and relocate it to a refurbished unit some miles away.

The first I knew about those plans was when the Manchester Users Network for those who use mental health services wrote to me, and to others, stating that it regarded the proposed relocation as deleterious. The group pointed out that it would be difficult for people to travel from central Manchester to the relocated site, that patient recovery is clearly helped by contact and support from networks, families and friends, and that it would be more difficult for some people to receive that support if the unit were located away from the centre at a site in north Manchester. The Manchester Users Network raised a number of other issues, and I am grateful to its chairman, Alan Hartman, and to others, for making me aware of what had been proposed. At that point I was fairly neutral about the proposals and wanted simply to be persuaded. I began to ask questions about the changes but, quite frankly, it is difficult because I have not received answers to the important questions.

One might think that a brand new facility, built to precise designs by the mental health trust, would be worth keeping. The trust said, however, that on cost grounds it made sense to close the facility. It claims that it will make savings of £1.7 million a year in running costs, which may be true, although it is not clear how such savings will be achieved. Nevertheless, even if we accept that figure as part of the basic argument, that does not justify the closure of a unit that the trust was so recently involved in designing.

The situation becomes even more bizarre when we learn that some £2.3 million of non-recoverable fixed costs will fall on the central Manchester health trust as a result of the closure of the Edale facility. In other words, there will be a loss of £600,000. That does not make accounting or economic sense, and even if it narrowly makes sense for the mental health trust, it does not make sense for the taxpayer.

I have never received answers as to whether the figures that I have cited on different occasions are right or wrong. If that imbalance exists and it will cost the NHS and the taxpayer more to close the facility than to keep it open, it will be a scandal to allow the relocation to go ahead. In any case, nearly £5 million worth of new capital costs will be needed to refurbish the old facility to which the mental health trust wants to move the present unit. A huge argument needs to be made to justify the cost equation, and Ministers, the strategic health authority, the mental health trust and the primary care trust have not yet provided answers to that.

Perhaps the cost will be balanced out if we have a much better facility for users of mental health facilities and their families in Manchester. The difficulty with that argument is that those groups who have been in touch with me feel as one that the proposed move will be a bad thing—I say as one, although in fairness one or two senior consultants from the mental health trust have told me that they are in favour of the move.

I have also received a letter which, although sadly anonymous, no one would dispute comes from clinicians. The letter is about the proposed changes, and warns that the transfer of the Edale unit to Park house in north Manchester would be a move to an

“overcrowded, predominantly dormitory set up. This will predictably increase violence and morbidity on the ward.”

The letter goes on to say, among other things, that the move will

“hinder the contact of the patient with their family—”

—again, a point made by the Manchester Users Network. The letter rails against the fact that there are already numerous transfers to Edale house from the facility in north Manchester for reasons of privacy and space, and states:

“Most senior clinicians of the Trust are very cynical and disillusioned with this plan and appalled that the Strategic Health Authority has not put a stop to this.”

That is quite strong language from the clinicians, although I admit that it is an anonymous letter, which makes it difficult to validate.

When the mental health trust, and others, were scoping possible changes, they came up with a number of options. From all those available, the option that scored the lowest was that now adopted by the mental health trust. The weighted benefit score was a combination of inputs from clinical leaders, service users, carers and the wider community, and using those scores, the proposed relocation to Park house not only received the lowest mark but was deemed far worse than the “do nothing” option—in other words, to keep the Edale unit open. That assessment was not made by anonymous clinicians or users; it is the in-house weighted benefits score that was used to determine how to proceed. On that basis, I am at a loss to know the clinical justification behind the move. It is not necessarily that there is no case to be made, but the case has not been made to the wider public and it seems that for the mental health trust, cost is still the dominant issue.

More recently, a minute from the board meeting papers of the strategic health authority seemed to attempt to undermine the validity of the Edale unit. It stated:

“The Trust has indicated that any option to retain the Edale Unit is deemed to be unviable given their severe concerns regarding the design of the Edale Unit which include multiple ligature points, unsecured windows, dangerous balcony, lack of access to outside space. The Trust does not feel the faults are rectifiable.”

That seems to be a damning critique of the unit. Catalyst, the PFI partner that developed the whole of the central Manchester site, was so concerned that it attempted to engage with the mental health trust. A letter sent to Mark Ogden, the chief executive of the strategic health authority, stated:

“Following our contact with the staff at Edale we had a telephone call from a Mr Paul Fitzpatrick who introduced himself as the lead for health & safety for the Manchester Mental Health and Social Care Trust. His manner was extremely abrupt; despite repeatedly requesting details of the alleged breaches to health and safety in order for us to address them, Mr Fitzpatrick hung up the telephone on us without divulging any details of the alleged breaches.”

That would be farcical if it were not so serious. A paid operative of the mental health trust refused to discuss with the developer the problems that were minuted in the strategic health authority’s board meeting. It gets slightly easier because Catalyst sensibly went out of its way to see whether there was any validity in the allegations. It commissioned a health and safety report and looked at whether anything needed rectifying. It replied to the strategic health authority:

“We are sure that you will be pleased to see that the allegations were groundless and we would like to agree a mutually acceptable amendment to the minutes of your meeting”.

I think that Catalyst has every right to ask for that retraction if the allegations cannot be made to stand up, not because I want to defend Catalyst—it is up to Catalyst to defend itself—but because it has been used as part of the polemic about the unit’s closure.

We are now in very serious territory, because the point that I am making to the Minister is this. On cost grounds, the closure does not add up. On quality-of-service grounds, it is a very uncertain case. I have had a reply from the chief executive of the mental health trust, who goes through a number of things that she says are improvements in the move from Edale to Park house. However, none of those supposed improvements is location-specific. They could be achieved—if they need to be achieved—either at the Edale unit or at Park house.

The physical environment that the mental health trust proposes to move to is certainly inferior. The facility has been refurbished, but not, I am told, to an amazingly high standard, although that has to be proved. It is certainly the case that, instead of offering the single rooms that the Edale unit offers, that facility will have dormitory accommodation, and one of the concerns that people involved with the treatment of mental illness have put to me is that, with that type of dormitory accommodation, when more than one person in the dormitory is in a very distressed condition, that is a combination that is simply not acceptable in terms of the best possible type of treatment. There are real doubts even about the capacity of the proposed alternative if it is brought to fruition.

I cannot quote Greater Manchester police officially on this matter, but I have talked to individual police officers. It will perhaps be difficult for the Minister to know the physical geography of Manchester—why should she?—but the Edale unit is very close to the city centre. Crumpsall hospital in north Manchester is a considerable way from the city centre. One of the realities of policing in a city such as Manchester is that there are times when people who are severely distressed during bouts of mental illness and mental health breakdown are taken to the accident and emergency unit at the Manchester Royal infirmary, which is close to the city centre and part of the central Manchester site. When the clinicians recognise that the people brought in need mental health treatment—mental illness treatment—they can be transferred across the hospital site to the Edale unit.

I know from talking to police officers that exactly that happens regularly. Their concern has been expressed to me in this way—again, I point out that this is not GMP force policy. If they take people to the A and E unit at the central Manchester site and are told that the people need treatment in a mental health unit, they will have to transfer them physically, with all the use of police time at busy times of the week—on a Friday night or Saturday night—from the centre of Manchester up to the new unit in north Manchester. I say to the Minister that I fail to understand why the police were not a formal consultee in this process, because that seems a fairly obvious thing to have asked about.

The location matters in its own right. This is not a location-free decision. There are better locations in central Manchester than the north Manchester site. That is not to say that there should be nothing in north Manchester. I represent constituents across the north and the centre of the city. What I am asking the Minister for is some sense that the decisions really have been thought through and that there are proper answers to the very serious doubts that have been raised. As yet, I have not heard those answers.

I come finally to what may be the most important issue of all. I have been very concerned for a long time about the governance of the mental health trust in Manchester. I have met representatives of the strategic health authority. I have had many meetings over the years about the situation there. Most recently, there was an inquest into the death of Peter Thompson, a man who was certainly an alcoholic, who died outside the Edale unit. The coroner and the jury involved made quite hard-hitting reports on his death. The coroner issued a report under rule 43 of the Coroners Rules 1984. He says in his letter to the mental health trust:

“This rule provides that where the evidence at an inquest gives rise to a concern that circumstances creating a risk of other deaths will occur or will continue to exist in the future, and in the coroner’s opinion, action should be taken to prevent the occurrence or continuation of such circumstances, or to eliminate or reduce the risk of death created by such circumstances, the coroner may report the circumstances to a person who may have power to take such action.”

This is quite a strong thing for the coroner to have done: he has reported to the mental health trust that it needs to take action.

Section 8 of the conclusions of the report of the inquest said:

“The court received independent expert evidence from a Professor of mental health nursing, who identified and confirmed several failures in management and planning.”

In relation to the actions that the coroner urged should be taken, he said:

“It was noted that there seemed to be a general lack of appropriate management and control of the ward staff…The court was concerned about the general competence and professionalism of the staff and their actual ability to do the job…What is required is effective leadership and management. This appeared to be absent.”

This matter is not sub judice, Mr Walker—I must make that point in case it is of concern to you. It is already in the public domain. The coroner sent the rule 43 letter to the mental health trust and to other interested parties. I will not argue about the nature of cuts in modern Britain—that is a fallacious argument. I believe that the mental health trust in the city of Manchester has been underfunded for many years. I believe that, in the desperate need to find cost savings, the mental health trust has come up with a scheme that will save the mental health trust money. However, it does not deal with the real issues of a mental health trust that is not managing its affairs properly, which is putting—in this case, literally—the life of someone at risk.

We must do better. Frankly, it is not good enough for the Minister responsible for care services to refuse a meeting with me to talk about these issues. I would not have been raising them today in this public forum had I had a private meeting with him. I invite this Minister to say that there will now be a proper investigation of the way in which the decision was made, to satisfy not just me but the public that on cost grounds and on care grounds, the decision is optimal. Most importantly, we must now begin to get to grips with the management malaise that the coroner identified and that other people have raised as a concern. If we do not do that, we not only let down those who are mentally ill; we may put them at the most serious risk.

13:17

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

Still we are here, Mr Walker—how lovely!

I congratulate the hon. Member for Manchester Central (Tony Lloyd) on securing the debate. I would join him, I am sure, in paying tribute to the skills and dedication of mental health professionals not just in Manchester, but throughout the country. They do a fine job, often in very difficult circumstances. However, he was right to say at the end of his speech that we must do better. Mental health services have often been the Cinderella services. It has been extremely difficult to get them the priority that they deserve. From my perspective as a Minister responsible for public health, I see the prevention of poor mental health as being as much a priority as the prevention of poor physical health. I know that the hon. Gentleman has campaigned locally on health issues in his constituency and is a very strong supporter of all that goes on. Unfortunately, my hon. Friend the Minister of State, Department of Health, who has responsibility for care services, is tied up with the Health and Social Care Bill today. However, I am sure that he will read the record of this debate with interest.

I cannot unravel this story in the time available to me, so I hope that the hon. Gentleman will bear with me when I raise a number of issues that are pertinent. I shall come in my conclusion to what I feel is the best way forward. There is no doubt that any change brings uncertainty. I can well understand how plans to transfer local mental health in-patient beds naturally provoke concern. I understand the hon. Gentleman’s surprise at the relocation of beds from a newly built facility. He particularly mentioned the central location of Edale as important, and the views of the police not having been sought. I cannot comment on that, but his point is well made.

Let me give a little background on where we are with mental health services. We have launched “No health without mental health: a cross-Government mental health outcomes strategy for people of all ages”, which has two aims: improving the population’s mental health and improving services. The mental health strategy takes a life-course approach and sends a clear message that prevention, early diagnosis and early intervention are key priorities.

We would expect the bulk of the strategy to be delivered locally by experts on the ground working with services users, their families and carers, and, in some circumstances, the local police. Through the Cabinet Sub-Committee on Public Health and the ministerial advisory group, Ministers will continue to pay close attention to the delivery of the improvements set out in the strategy. There is no doubt that services in the community and closer to patients’ homes are better for recovery and encourage independence, although in-patient beds are needed at times.

The ministerial advisory group will bring together the new NHS commissioning board, Public Health England and a range of stakeholders, including clinical commissioning groups, the voluntary and community sectors and local authorities—one cannot underestimate the role that local authorities have to play in providing services for people with mental illness. Once the proposed NHS commissioning board and Public Health England are fully operational, we anticipate that they will become the focus for all stakeholders to lead the implementation of the mental health strategy and to review its progress.

The NHS in Manchester is working to strengthen its community-based services and to reduce reliance on acute care for those with a mental illness. That should be about improving quality, not introducing cost-saving measures. That follows the strategy set out in the national service framework for mental health services, which the Labour party introduced when it was in government. Indeed, there is cross-party consensus that investing more in community-based support benefits patients, and there is a growing body of evidence to support that. What people are fearful of is that such support is a cost-cutting measure.

I am told that Manchester Mental Health and Social Care Trust has worked closely with staff, service users, carers and other stakeholders, including the Manchester local involvement network and the Manchester carers forum, to develop proposals for rationalising its in-patient services for adults and older adults with mental health problems. The hon. Gentleman might not feel that that work has been sufficient, but it is important to put on the record what the local NHS feels it has done, which, as he rightly said, involves reducing the number of in-patient sites

The proposals will maintain the same number of beds, and I am told that only one in 17 mental health service users requiring in-patient services in Manchester will be affected. Service users who are in receipt of community support from adult and later life community teams at the nearby Rawnsley building and those who attend out-patient appointments will not notice any changes to services as a result of the relocation of beds. Alternative accommodation for the non-in-patient services based at Edale house is being sought in more appropriate community settings. I do not know Manchester well, but I am sure that there are other community settings in which such services can be provided.

The trust expects to achieve a number of clinical benefits, although the hon. Gentleman is perhaps somewhat cynical about that. It feels that those benefits will include a greater concentration of staffing expertise, an improved level of support on wards, a reduction in delays for treatment and the development of specialist services. We probably need to concentrate specialist services ever more to get the expertise we need.

[Tony Lloyd]

I am genuinely sympathetic to the Minister, who has been given her briefing. I mean no disrespect to her or her speech, but the problem is that such claims are easy to make; indeed, the 100-bed Edale unit could deliver concentration in exactly the same way. It is just not obvious that the mental health trust is doing anything more than providing words as a façade for its decision. It has given no explanation of why the change is better, or why the present situation is worse, other than this fallacious nonsense about the Edale unit not being up to standard.

[Anne Milton]

I thank the hon. Gentleman for his intervention. I should probably have started with the end of my speech, but I will come to the direction I feel he should move in.

The Government have pledged that all service changes must in future be led by clinicians and patients, and not driven from the top. The Department has outlined and strengthened the criteria that any decisions on NHS service changes are expected to meet. Decisions must focus on improving patient outcomes, and the hon. Gentleman mentioned quality, although the issue is obviously open to debate locally. Decisions must also consider patient choice, have support from GP commissioners and be based on sound evidence.

I must stress that the NHS is not run from Whitehall, and a lot of local issues need to be looked at locally. The overview and scrutiny committee has confirmed that it is satisfied that appropriate involvement has taken place. The mental health trust is exploring the feasibility of introducing a defined transport system at the committee’s request to ensure that service users and their families have suitable access.

The hon. Gentleman mentioned the tragic case of Peter Thompson, and my sympathies are always with the friends and families involved in such situations. The case has clearly raised significant issues, not least that of good leadership, which is critical to ensuring that good services are available. I would expect the local NHS to learn from this tragic incident and to ensure that it does not happen again.

The chief executive of the mental health trust has written to the hon. Gentleman and offered him a meeting on three occasions—28 February, 25 May and more recently. I urge the hon. Gentleman to have that meeting, because he is clearly unhappy about a lot of issues. He mentioned the anonymous letter he had received, and if its authors get sight of this debate, I hope they will come to see him in confidence—like all Members, I know that he would keep their identities confidential. The letter has raised some concern, but it is difficult to do anything about it while it is anonymous. I am sure that the hon. Gentleman’s assurance that it is from clinicians would hold up.

I urge the hon. Gentleman to meet the chief executive. He clearly remains open-minded, but he is anxious to be convinced. He describes a complex story, in the middle of which we have a tragic death and the coroner highlighting some important issues. I am sorry that I cannot give the hon. Gentleman more in the debate, but the best way forward would be for him to meet the chief executive.

[Tony Lloyd]

I would, of course, be happy to meet the chief executive, but what I have really been offered is a meeting to tell me why the trust is going ahead with the decision that it has already made. I want explanations, and that is what the public and the taxpayer are entitled to. If I do not get that explanation, can I come back to the Minister and her colleagues and at least get some sense that they are engaged in dealing with what could be a scandal?

[Anne Milton]

I thank the hon. Gentleman for that intervention. That is absolutely right: he should see the chief executive and ask for an explanation. As he rightly says, he is open-minded and wants to be convinced. If he still does not get an explanation that satisfies him that things are being done to improve patients’ quality of care, I am sure that my hon. Friend the Minister of State would meet him. He would be welcome to come back to us with any issues, but I urge him to have a meeting with the chief executive first.

Rural Bus Services (South Devon)

Tuesday 28th June 2011 Westminster Hall

13:29

[Dr Sarah Wollaston (Totnes) (Con)]

I thank you, Mr Walker, for chairing this debate on the important issue of rural bus services in south Devon, and I thank the Minister for his continuing interest in sustainable transport. I want to cover the three areas of the scale of rural transport poverty, the current reductions to services in Devon and, perhaps more importantly, the threats on the horizon: there is a perfect storm brewing for rural transport in my constituency. Finally, I have some proposals, put forward by my constituents as well as by people with transport expertise. I hope to persuade the Minister that doing nothing will be to abandon the transport poor at the roadside. I hope that he will accept an invitation to Townstal in my constituency to meet those who have been hardest hit by cuts to services.

Citizens Advice has found that many low-income families spend as much as 25% of their income on owning and maintaining a car; not through choice but through necessity. In addition, south Devon is one of the most expensive areas of the country, with high housing costs and low earnings, and employment that is often unreliable and seasonal. It has one of the highest insolvency rates in the country, and a high percentage of retired people, who are more likely to be dependent on public transport. It is not only the work that is seasonal; we also have a seasonal population. In summer our population expands dramatically, putting a further strain on services.

It is notable that the more rural an area is, the greater the number of cars and vans per household. Our services have become so infrequent and inconvenient that anyone who can use a car will do so, and those who have no access to a car cannot afford the full fare that is needed for the services to be run on a stand-alone commercial basis. South Hams, for example, has more than 12,000 more cars than households, which only underlines the relative transport poverty of the have-nots. Those have-nots are 14% of rural households in Devon—55,000 people who have no access to a car. Without transport, those people cannot gain access to hospitals, employment, education or even employment agencies or citizens advice bureaux.

The reason for that is clear. Under the comprehensive spending review, the Government grant to Devon county was cut by £54 million in 2011-12. Like all councils, Devon has statutory obligations, so it held a good public consultation exercise. However, unfortunately, people who never need to use public transport do not see it as a priority, so it emerged as a relatively low priority.

[Anne Marie Morris (Newton Abbot) (Con)]

Similar cuts have been suffered in my constituency, in Dawlish, on the 178 Newton Abbot to Okehampton service, and on the 361 Bridford to Newton Abbot service. Does my hon. Friend agree that one of the problems is that Devon’s settlement from central Government was in a sense not appropriate, because rurality was not taken into account? Therefore there was a particular challenge in funding the bus service.

[Dr Wollaston]

My hon. Friend makes an excellent point. Devon county council reduced its public transport support budget by £1.35 million out of a total spend of £7.75 million. My hon. Friend makes a good point in noting that that did not recognise the particular challenges of rurality.

As I have said, the real problem is the perfect storm that is brewing, with ever-increasing costs and further reductions in revenue. From April 2012 there will be a 20% reduction in the bus service operators grant which will increase operator costs by 1.5% to 2%. When we consider that our fares are already among the highest in the country, if that were passed on to passengers it could result in a further abandonment of bus transport.

The reduction in operator reimbursement for pensioners’ bus passes is also creating a particular problem in Devon, because in Devon 56% of all bus journeys after 9.30 in the morning are made by concessionary travel scheme passengers, which amounts to 30% of operator income. Local experts tell me that a reduction of the reimbursement to operators of 15% translates into a 4% to 5% loss of income; but for more rural operators such as those that are found in Devon it could be as much as 30%, which would be devastating. To those figures must be added the cost of administering the scheme. Devon must spend £12 million on that, which ironically is twice as much as it must spend on supporting bus services to ensure that people can travel in the first place. Devon county council estimates that it has been underfunded by approximately £5 million in the current year on that scheme alone. Many of my constituents wonder whether the ability of some people to travel free is more important than the ability to travel at all for many people of all ages.

On top of those reducing subsidies comes the blow of passenger transport inflation, which the Minister knows outstrips the retail prices index, as a result of increased insurance premiums, increasing staff costs as a result of legislation on part-time workers, increased training requirements and bus adaptations. That is before factoring in the runaway costs of fuel. Seventy bus routes have been affected in Devon. Hon. Members will be relieved to hear that I am not going to name them all, but I should like to mention service 111, which illustrates several points.

The 111 was a lifeline in my constituency, running from Dartmouth via Totnes station, stopping off at the Torbay shopping area and taking passengers directly to the door of the local hospital. It ran via several villages and was a reliable service. Crucially, it also allowed parents to exercise choice in the matter of their children’s school. The loss of the 111 has been devastating. Last week I met Freda Morgan, who, despite being in her eighties, made the trip from Dartmouth to visit her 91-year-old sister in hospital. Previously she would have been able to travel door to door. This time, on the way out she needed two changes of bus and a very long walk up a steep hill—trust me, people in Devon are used to hills, but this was a very long one from the main road. On the way home she needed to take a completely different operator’s buses and a different set of routes, including a ferry crossing. The round trip lasted a total of 10 hours. She managed to get only an hour with her sister, and she arrived home completely exhausted.

Mrs Morgan is not alone. I have had similar emails and letters from many other constituents: patients and visitors, parents who now cannot get their children to school—of course we cannot think it is an option to change a child’s school half way through their education—and a flood of people who feel trapped in their homes.

[Mr Adrian Sanders (Torbay) (LD)]

One of the answers is to get more people using the buses, so that they become more viable. Surely one of the best ways to make buses more viable is to get them to run on time. Reducing congestion between the hon. Lady’s constituency and mine—I am thinking of the Kingskerswell bypass—would have an enormous impact on bus use throughout Torbay and south Devon, because buses would be more likely to run to timetable.

[Dr Wollaston]

That is an excellent point. Reliability is a key issue—both reliability in timetabling, and the reliability that means a child who starts at a particular school will continue to be able to get there in the long term.

Another of my constituents, Richard Parnell, made the excellent point with reference to seasonal employment that he has been unable to get to many places because of the changes. Even when he was recently called to do jury service he found it very difficult to attend.

I mentioned bus 111 because it was, in a way, a victim of its own success, showing that the issue is not only cuts to rural subsidies; there is also the perverse impact of the way it has been possible to apply competition to the routes in question, since deregulation under the Transport Act 1985. Some 76 per cent. of bus journeys in Devon are on commercial services and, crucially, Devon county council is unable to consult on changes to commercial services. There have recently been 200 to 300 service changes each year, with only 56 days notice. That leaves little time for those affected to make alternative plans.

Service 111 was operated by Stagecoach under a tender paid for by Devon county council, which allowed Devon to specify the timetable, fares and bus specification. When the tender was due to expire, another operator declared the section between Dartmouth and Paignton to be commercial. To cut a long story short, the unviable parts of the route were cut out, and Devon was left to pick up the sections covering a number of villages, which are now cut off, with an inadequate service, the 149. Stagecoach registered its own commercial service 111, but because Devon withdrew the funding to students whose parents exercised choice to send them to an out-of-area school, it was left unviable, and the service folded. Now all the communities have been left with a woefully inadequate service, as a result of the combination of grant cuts and the inappropriate application of competition.

Many communities in my constituency have been badly affected. They include Kingsbridge, with the loss of the X64, and Dittisham, Blackawton and Marldon. The county maintains that no community has been cut off—I acknowledge that it has tried hard to prevent that—but if a service no longer allows people access to employment, medical appointments or school, they might as well be cut off.

We have some wonderful community bus services in Devon. I am sure that my hon. Friends will join me in paying tribute to them and their volunteers; I think of services such as the Coleridge community bus and “Bob the Bus” in Totnes. Devon has also led the way in demand-led bus services such as the fare car scheme, but it would be a mistake to think that they reduce costs, as some are even more expensive.

[Mr Gary Streeter (South West Devon) (Con)]

I congratulate my hon. Friend on securing this important debate and on making such a powerful speech. Given that we cannot anticipate much more Government subsidy over the next two or three years, and given that bus companies understandably do not want to operate unprofitably, does she believe that some improvement could be made if the bus companies, the county council and—as important—parish councils and communities were much more involved in consultation about which routes were necessary and which timetables would suit best? Does my hon. Friend believe that there is enough engagement with local people?

[Dr Wollaston]

My hon. Friend makes an excellent point. As I said earlier, there is no opportunity for such engagement because of changes in legislation after deregulation. I would like it to be restored and I would like to see an obligation to consult more widely. I would also like to see more sensible ticketing arrangements, so that constituents who have to take different routes there and back are able to use a smart card.

I am surprised by the number of pass holders in Devon who say that they would rather pay a small amount per journey, or even pay an annual administration fee, than suffer reduced services. They understand the financial realities to which my hon. Friend the Member for South West Devon (Mr Streeter) refers. Experts in local transport tell me that an annual fee of around £30 would cover the administration costs—the £12 million that I spoke of earlier—which is twice as much as Devon is spending on subsidising the extra costs. Such a fee would still represent outstanding value for money. I hope that my hon. Friend the Minister will consider it.

Another excellent question is why foreign vehicles can use our motorways for free when we pay so much to use theirs. Why cannot we have a system like that in Switzerland, where vehicles have to pay for and display a motorway pass even if they use the motorway for only one weekend? Could we not do likewise? The equivalent for British nationals would be the tax disc; we could ask all foreign trucks and cars to pay a smaller amount for the pleasure of using our lovely motorways. Others have suggested increasing vehicle excise duty for high-emission vehicles to subsidise public transport. However, we know that such measures would not directly benefit local rural services unless the increased income were directly allocated to councils and ring-fenced for sustainable transport.

My own suggestion would be to consider giving councils greater powers to require out-of-town supermarket users to pay to park. The money could be reimbursed in store if necessary, but the levy could be used to subsidise local rural services if it was appropriate for the area. It would be a form of localism to allow local people to decide on the matter. It would also help redress the imbalance that blights our rural high streets, which are often subject to high parking charges.

I hope that the Minister will think again about the cuts to bus service operator grants. However, I make a special plea on behalf of community buses: could they use red diesel? I hope, too, that the Minister will reconsider the unforeseen consequences of deregulation, referred to earlier, particularly the impact that it has had; on top of the cuts, it has devastated rural services. I also hope he will meet me to discuss some of the red tape and additional costs faced by community buses, which provide an invaluable service. I have already referred to smart cards. Again, that would make a huge difference. I stress that none of us feels that doing nothing should be an option.

Finally, as a small plea to another cyclist, may I ask the Minister to consider amending the legislation to allow buses to have bike racks? It happens in European countries but not here; that is another example of UK legislation exceeding that of the EU. I understand that regulations prevent buses from carrying front bike racks—that is what local operators tell me—but if we allowed rural buses to carry bike racks, the services could become more commercially viable in the summer. We all know that there is not an endless pot of money, and that would make a big difference to areas such as mine, which are trying to introduce green transport.

13:45

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I thank my hon. Friend the Member for Totnes (Dr Wollaston) for arranging this debate and for packing a great deal into 16 minutes. I thank our quartet of Devon MPs for saying roughly the same thing about their bus services.

I know well from my constituency that buses are a lifeline for many people in rural areas, providing access to jobs, schools, health care and social activities and the rest. Good bus services contribute to the Government’s key transport priorities of cutting carbon and creating growth, not least by allowing access to employment opportunities. Other benefits of removing car traffic from our towns would include reduced noise pollution and improved air quality.

Because of the value that the Government attach to bus services, we are committed under the comprehensive spending review to continuing our financial subsidy of bus operators. It is worth pointing out that the many newspaper stories suggesting that the bus service operators grant would be cut altogether proved to be erroneous. We value the support that we give to bus companies and bus operators.

The bus service operators grant—the BSOG—remains untouched for this financial year. However, as my hon. Friend the Member for Totnes said, it will be cut by 20% from next April, thereby giving bus companies about 18 months notice of the change. Department for Transport calculations suggest that will bring about a change in fares of about 1%. Bus operators are on record as saying that the scale of changes and the notice that they have been given make them hopeful of being able to incorporate the change to the BSOG without affecting fares.

[Dr Wollaston]

Given the rurality of services in Devon, local experts in the county council estimate that for us the change would be between 1.5% and 2%.

[Norman Baker]

I hear what my hon. Friend says. The Confederation of Passenger Transport UK said that it was hopeful of incorporating the change without affecting fares or services; I hope that reassures her on that point. I shall deal in a moment with local tendered services, which I suspect are more of a problem for my hon. Friend’s constituents.

The Government are committed to reducing the budget deficit that we inherited, and every sector has to play its part in that. However, the Transport Secretary and I are determined that buses should continue to receive their fair share of funding. We want to encourage more people to use buses, and to make bus travel more attractive in whatever way we can, given the financial envelope within which we have to work.

The Government spend more than £1.2 billion a year on concessionary travel and bus subsidy in England, outside London, of which £15 million or thereabouts is spent in Devon. We remain particularly committed to the concessionary travel entitlement in England for the 11.5 million eligible older and disabled people. I hear my hon. Friend’s suggestion of introducing a small charge to help finances. I can only say that the Prime Minister has made plain the importance that he attaches to the present arrangements—that the concessionary travel arrangements continue to be free for those entitled to them. That obviously remains the Government’s policy.

My Department recently issued new guidance to local transport authorities to help them ensure that bus operators are reimbursed for carrying eligible passengers on a “no better off, no worse off” basis. My hon. Friend referred to the concessionary travel reimbursement arrangements, but the essential legislative requirement that bus companies should be no better off or no worse off has not changed. All that has happened is that the Department has issued new guidance to enable local authorities better to deliver the requirement. They are not obliged to follow that guidance, although they may do so if they wish; but they are obliged to comply with the legislation, which has not changed.

[Mr Sanders]

I raised this matter under the previous Government and suggested, through parliamentary questions, that the cost of a national scheme would be less than lots of local schemes. Will the Minister consider that as a way in which we can reduce the costs overall? It seems crazy that different local authorities pay different rates for the same service.

[Norman Baker]

There is a national arrangement in place in Scotland, which was considered. Responsibility was moved from district councils to county councils, which helped to bring some consistency to services and reduce some of the overheads. However, we have to balance that with our need to pursue a localism agenda, which both coalition parties firmly support. To have a national scheme would counter that and go against our direction of travel.

When the Department was considering the new guidance for the concessionary travel scheme, we took representations from the bus operators and local councils. I then personally amended the guidance to ensure that it reflected the particular challenges of operating in a rural area.

I recognise that the recent local authority funding settlement has been challenging and that in some areas, local councils have responded by taking the axe to local bus services. That badly hits rural areas such as Devon where supported services make up a much higher share of the total than in metropolitan areas. The formula of the Department for Communities and Local Government, which allocates money to local councils, incorporates a sparsity factor, which should help areas such as Devon. The Department is also committed, through the local government resource review, to looking at the entire way in which funding takes place and local moneys are raised from the local taxpayer, and that process is ongoing.

I am naturally concerned when I hear that vulnerable people with few other transport choices have lost their only bus service, or that children have reduced public transport access to the school of their choice. Those are serious and unwelcome developments. As my hon. Friend says, fewer than a quarter of all journeys in Devon are made on supported services. That means that more than three quarters are made on commercial services, which are unaffected by changes to council income or changes in council policy.

When difficult decisions are to be made on local bus services, I am clear that they should be made at a local level and not in Whitehall. The Government set out in the local transport White Paper their commitment to ending top-down decision making and one size fits all solutions. That means that we will see different decisions made in different places across the country depending on the priorities given by elected local members in those areas.

Some councils have taken an almost slash and burn approach to bus services, while others such as East Riding have percentage cuts in single figures. They have been more careful about making decisions that affect bus users. I note that Devon county council has cut its budget for supported bus services by 17% this year. In a consultation that it held called “tough choices”, which I welcomed, savings on bus services were one of the top three areas that were identified by 60% of those who responded. I accept the point that my hon. Friend makes that those who do not use buses will be more likely to identify them for cuts than those who use them. Nevertheless, it was an attempt by the county council to validate the decisions that we are taking, and that is entirely helpful. Other areas have consulted and reached different conclusions. Cornwall, for example, has chosen to keep its morning peak-time concessionary travel entitlement on a countywide basis.

It is up to Devon to prioritise its spending as it sees fit, and it is not for central Government to intervene in that matter. How much it spends on buses, roads and libraries is ultimately a matter for Devon county council. Rather than telling councils what to do, my focus instead is on encouraging bus companies and local transport authorities to work together to deliver improvements that make the bus a more attractive option. They need to improve reliability and produce smarter and more integrated ticketing—to which my hon. Friend referred—reasonable fares and understandable timetables. She will be aware that an application has been made to the local sustainable transport fund in respect of smart ticketing. Decisions on the outcome of that particular application will be made shortly.

I am also keen that local authorities make the most efficient use of their resources. It is a good idea that there is a maximum efficient use of the vehicles that a council may have. We still have cases in which there are adult social care vehicles in one box, public transport vehicles in another box and school buses in a third box, and they are all run by different departments of the council. These days, councils, which need to make efficiency savings, should eliminate those sorts of duplications and that silo mentality. I am not clear what the position is in Devon. I hope that it has identified savings such as that to be made. None the less, those sorts of practices can still be found in local councils up and down the country. Therefore, local councils have a job to do to ensure that they get the best value for money.

My hon. Friend also mentioned community transport. I accept that that is not a panacea for any reduction in bus services, but it can be a useful facility for particular individuals with special needs or for small communities where a bus service would not be practical. We are keen to build up the capacity of community transport organisations, which is why I recently provided local authorities with £10 million of extra funding. Devon county council was given a grant of £425,000 for that purpose. I was pleased to learn that the council has maintained its community transport budget in recognition of the important work that such organisations do at a local level.

I pay tribute to Devon Wheels 2 Work scheme. It is an excellent example of a not-for-profit organisation that provides vital links to education, work and training by loaning motorbikes and scooters at subsidised rates. Other examples can be found across England, and it is exactly the sort of grassroots activity that I would like to see more of and to encourage.

Let me now pick up on some of the points that were made. My hon. Friend made reference to route 111. As she will understand, I am not familiar with that route. However, it is a matter for Devon county council to judge whether or not it is one of the routes that it should support. It is sometimes the case that routes to hospitals are difficult to justify commercially. As people move in and out of hospital, it is difficult to build up a regular clientele for that particular service. It certainly seems that some people have been significantly inconvenienced by the withdrawal of that route, and I hope that she and her colleagues will be able to persuade Devon county council to think again.

As for the integration between the transport authority, Devon county council and the bus operators, I have noted my hon. Friend’s point about 56 days’ notice for changes. That is something that I am currently looking at. No decisions have been made, but it is something that is on the radar. It is up to Devon to decide whether it takes advantage of the terms of the Local Transport Act 2008, which facilitates quality partnerships or even quality contracts. If Devon wants to get more of a handle on bus services, there are powers in legislation available to use should it wish to do so.

My hon. Friend raised other matters that do not fall under the Department for Transport. She will be interested to know that the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) is introducing proposals for HGV charging, which will, for the first time, capture foreign lorries in terms of what they have to pay to use our motorway network.

My hon. Friend seemed to want to go wider into road charging and almost edged into the Lib Dem manifesto from the last general election, but that is not currently Government policy. She also came up with some interesting ideas on red diesel and hypothecation, which are matters for the Treasury and not the DFT. However, her comments have been noted and I will ensure that they are passed on to the relevant officials at the Treasury.

My hon. Friend also raised an interesting idea, which has been around for some time, about out-of-town supermarkets. I can see why she has raised that matter, and I will make sure that her comments are passed on to colleagues at the Department for Communities and Local Government, who have the lead responsibility for that matter.

I do not have an answer on buses with bike racks, but I will drop her a line to let her know what the legal position is and how we view the matter. Finally, if my hon. Friend wants to bring up some of her constituents to discuss matters, I will ensure that a slot is made available in my diary for her to do that.

Question put and agreed to.

13:59

Sitting adjourned.