National Infrastructure

Baroness Maddock Excerpts

Thursday 22nd January 2015 Lords Chamber

[Baroness Maddock (LD)]

My Lords, I declare my interests as recorded formally. I particularly draw attention to my vice-presidency of the Local Government Association, because in my remarks this morning I will be drawing on the interim findings of a report commissioned by the LGA into economic growth and the future of public services in non-metropolitan areas, under the chairmanship of Sir John Peace.

There will be no disagreement around the House that good infrastructure forms the backbone of a modern economy and is vital to our economic growth. In coalition, the Liberal Democrats have agreed to prioritise infrastructure as part of our economic strategy. Indeed, by making tough choices, the Government have been able both to reduce the deficit and to increase capital spending on infrastructure—I disagree with the noble Lord’s opening remarks. It is now higher as a percentage of gross domestic product than in the final term of the previous Government.

However, this morning, I want to concentrate my remarks on the challenges that face us now and in future to make sure that the whole of England can benefit from important infrastructure development. One of the main challenges that we face is a highly centralised system of government and financial decision-making. The coalition has taken steps to decentralise, but central government still controls 60% of local government spending in England. What is more, it prescribes how much of that can be spent and sets limits on how local government can spend much of the money that it raises locally.

Local authorities are often best placed to understand the needs of their local economies and the challenges and opportunities that they face, which cut across traditional administrative boundaries. Having control over the whole budget would enable local authorities to prioritise according to local needs. Outside London, the non-metropolitan areas—the shires, smaller towns and cities and rural and suburban areas—produce the majority of England’s growth. Although it is vital that cities should be empowered to grow their skills and productivity, it is important not to hold back areas other than the major cities. We need to ensure that transport investment provides infrastructure that better joins those non-metropolitan areas to their urban neighbours and to global trade routes.

No one wants a wholesale reorganisation of local government—I have seen at first hand how difficult and destructive that can be—but that does not mean that we cannot use our existing structures to better effect. At the end of the day, unless we can make cities and non-metropolitan areas more fiscally self-financing, we will continue to be a centralised economy.

As a resident of Berwick-upon-Tweed, I am only too aware of the effects of our centralised system of government and financial control in areas such as rural north Northumberland. The main artery, the A1 from London and Newcastle to Edinburgh, peters out to a single carriageway most of the way north of Morpeth. Morpeth is 50 miles south of Berwick and at present is the home of county hall. I am pleased to say that, after years of lobbying, my right honourable friend Danny Alexander has announced hundreds of millions of pounds to dual the road at least halfway to Berwick. Promises have been made in the past but then forgotten by both Labour and Conservative Ministers. I sincerely hope that, whatever the result of the next election, that will not happen again. We need that strategic road to be upgraded all the way to Berwick if we are to attract businesses and jobs there; it is dualled most of the way the other side to Edinburgh.

We also need good local transport that is affordable to our young people and students. We have one of the lowest take-ups of further and higher education in the country. We have one high school in Berwick; the next nearest is 30 miles away. I am very pleased that we pledge in our manifesto to give two-thirds off public transport fares to young people.

Broadband is very important in our area. The county council has worked with the Government to ensure its rollout. It is vital to every farm and small business in a rural or remote area. Again, the council had to bid for that money.

We want good infrastructure. We need more devolution, to balance the budget and to have a long-term plan for capital expenditure on infrastructure, including housing, so that we can continue to raise the amount of money available in both absolute terms and as a share of our gross domestic product.

Economy: House Prices

Baroness Maddock Excerpts

Thursday 3rd July 2014 Lords Chamber

[Lord Newby]

My Lords, clearly London is in a special position. The population of London rose, I believe, by 108,000 in the past year and this is going to require a significantly higher level of housebuilding. The mayor has plans to build 40,000 new homes a year in London—bearing in mind that in 2009 there were 14,000 new homes built in London. With the population increasing very rapidly there is clearly going to be a long period of stress in terms of housing in London.

[Baroness Maddock (LD)]

My Lords, the economy of the north-east is not growing at anything like the rate that it is in London. Is there not an argument for putting some of the stamp duty, much of it generated by the 26% increase in house prices in London, towards growth and infrastructure projects in the north-east?

[Lord Newby]

The Government have a comprehensive infrastructure plan, which includes a number of major new initiatives in the north-east of England. As the noble Baroness will know, over the years the Treasury has been very much opposed to hypothecating particular taxes for specific purposes, largely on the basis that they may be buoyant one year but may not be in another. Leaving aside stamp duty, the key point is that we have a comprehensive infrastructure programme in the north-east, and I believe that we have one for the next decade.

Taxation: Rental Income

Baroness Maddock Excerpts

Tuesday 3rd December 2013 Lords Chamber

[Lord Newby]

My Lords, I do not know whether that is the case. I think that I might take advice from the noble Lord, Lord Lawson of Blaby.

[Baroness Maddock (LD)]

My Lords, I agree very much with what the noble Lord, Lord Campbell-Savours, said in his opening comments. There is a lack of transparency around who owns rental properties in this country. I do not know what the Government will do about that. If we want to improve the quality and standard of our rented properties, particularly the energy efficiency, it is vital that we know who owns the properties.

[Lord Newby]

My Lords, as the noble Lord mentioned and the noble Baroness raised again, this is an extremely important and live issue, which I will raise again with my colleagues in the DCLG.

Infrastructure (Financial Assistance) Bill

Baroness Maddock Excerpts

Tuesday 23rd October 2012 Lords Chamber

[Baroness Maddock]

My Lords, I always enjoy the contributions of the noble Lord, Lord Desai. I declare an interest as a vice-president of the Local Government Association. This is an important Bill, particularly for housebuilding, which is what I shall concentrate on. It was interesting that Radio 4 yesterday morning highlighted rapidly rising rents in the private sector and highlighted one of the reasons for this—the shortage of homes that we face in the United Kingdom. Housing is a vital part of our United Kingdom infrastructure. Not only does housebuilding help to boost the economy, particularly the construction industry—a point made by my noble friend Lady Gardner—it also solves a number of other significant social problems, including social housing waiting lists, high rents, the affordability of homes for first-time buyers and overcrowding, which is becoming acute in housing in this country. However, despite this, the coalition Government inherited a housing crisis in May 2010.

Under successive Governments, the number of homes being built has been declining. In particular, social housing stocks have been extremely badly hit. The coalition Government are committed to building more homes. We have already said that we expect to build 170,000 new social homes by the end of this Parliament. However, while the Government are investing state money in many of these projects, there is also a real need for support for private developers to get housebuilding projects under way, a point made by my noble friend Lady Gardner of Parkes. The Bill will allow the Government to provide loans, guarantees and other financial support for infrastructure of up to £50 billion. As I understand it, £10 billion of this could be used to support housebuilding.

One of the problems of our housing infrastructure is its age. Very many of our houses were built in the last century, the century before and even before that. This means that our housing stock is incredibly energy inefficient and this does not help other matters that we are trying to deal with in reducing our carbon emissions. We just do not have enough houses. As I understand it, in 2011 390,000 families were created, but we managed to provide just in excess of 100,000 new homes.

The previous Government, despite the wide-ranging but scathing opening remarks of the noble Lord, Lord Adonis, did not do a lot for housebuilding. Housing construction—perhaps it was not all due to the previous Government—actually fell off a cliff during the financial crisis. In 2008-09, fewer than 100,000 new properties were started. Although the number has increased since then, we are still a long way off building enough new homes. I understand that the revised figure for 2011-12, as I mentioned earlier, is something in excess of 100,000 properties. Despite this positive news, a far higher percentage of these new starts were public sector-led, either by housing associations or local government, than were privately funded. In 2010-11, 24% of constructions were publicly financed compared to between 9% and 13% in the decade before.

The noble Lord, Lord Adonis, did not talk too much in his opening comments about his own Government’s record on housebuilding. During 13 years of the Labour Government, the social housing stock fell by well over 400,000. Although they had ambitious targets, they did not meet them in the 13 years. In fact, they consistently failed to meet their social housing target and, in their last year of office, they missed it by 78,000.

The lack of social housing and delivery of new private sector housing has led to a number of very serious consequences. Average house prices in January 2012 were estimated to be under £200,000, and for those of us who spend our time in London, we know that here—and particularly in Westminster—the position is even worse. This is an increase in the past decade of almost 70%. An average of 21,658 properties has been deemed to be overcrowded at any one point in the past three years. The lack of supply has also meant that homes cost more to rent. The mean rent of the private rented sector in 2010-11 was £160 a week, and that has risen considerably, leading to very large bills for housing benefit. That bill has increased from £11 billion in 2000-01 to £21 billion in 2010-11. If we look at other figures to do with the private rented sector, which is where a lot of people have to find their homes now, because we have not built so many social properties, there has been an 86% increase in working families claiming housing benefit. We now have more than 400,000 people receiving housing benefit. What is more worrying is that we have another 10,000 applying for housing benefit in the private rented sector every month. The total number has risen by 37% in three years. We can see why it is important that we find some way in which to support the construction of more homes in our country.

I shall spend a very short time on the area I come from, the north-east of England, where housebuilding numbers have suffered greatly since the financial crisis. They have slightly improved on the latest figures, but again in the north-east it is housing associations and local authorities that have taken up the greater number of starts. That shows a real need for more support for private sector housebuilding.

I have spoken on housing matters in this House for more than 20 years and in that time housing has never been really high up the political agenda. For many years we have not had a Housing Minister sitting around the Cabinet table, which is one reason why housing has been a little bit down the agenda. Instead of having its own department, it has been part of another, now called the Department for Communities and Local Government. In my time in Parliament, that is the fourth name for that department. It is not one of the highest performing departments, yet housing and housing infrastructure is such an important part of what happens in our country and in our economy.

I am very glad that the Government have brought forward this Bill. If there are technical details about why we could not do it before, that is a good reason to have it. We need to do all we can—and personally I want to see greater progress in the number of homes keeping up with the number of people and in building homes that produce less carbon. I give my support to the Bill.

EUC Report: Economic Governance

Baroness Maddock Excerpts

Thursday 16th June 2011 Lords Chamber

[Baroness Maddock]

My Lords, as has already been said by the two previous speakers, in or out of the eurozone, effective economic governance in the European Union is important to all member states and particularly to us here in the UK. The noble Lord, Lord Harrison, has clearly set out the remit and context of the report from Sub-Committee A of the EU Select Committee, of which I am a member. In the short time that I have, I will concentrate on the role of sanctions in future economic governance of the EU.

As has been said, the Commission’s proposals on sanctions will not apply to the UK by virtue of its opt-out from membership of the euro. As the noble Lord, Lord Harrison, set out and as I indicated in my opening remarks, the UK has a vital interest in ensuring that these proposals succeed. Our sub-committee report recognised that the markets will play a key role in promoting sensible fiscal behaviour by member states by charging higher interest rates to those countries deemed to have lax fiscal policies. However, the markets have not always proven effective at this in the past. There is a need for a further mechanism to ensure compliance. This is where sanctions fit in. The Government have recognised this—and recognised it in our report.

The sub-committee concluded that the Commission’s proposals for a more graduated sanctions regime would help dissuade irresponsible fiscal behaviour. Sanctions will be easier to apply and more of a credible threat if they start off small and are available earlier in the process. Again, the Government have agreed with the committee’s assessment of this. As has already been said, one of the greatest failings of the current system of sanctions has been that member states have found it too easy to avoid sanctions when they have broken the rules. France and Germany breached the stability and growth pact in 2002-03 and this led to a conflict between the Commission, which wanted to impose sanctions, and the Council, which refused. In the end, France and Germany managed to persuade the European Council to relax the rules governing the stability and growth pact.

Several sub-committee witnesses argued that sanctions should be made fully automatic. This was the line taken by the European Parliament, which feels that automatic sanctions would prevent member states from negotiating their way out of sanctions. However, the sub-committee concluded that fully automatic sanctions were a step too far and would remove any room for judgment. We supported the Commission’s proposals for reverse-majority voting, which would require a majority to vote against sanctions to block them, as opposed to the current system where the majority have to vote in favour. While the sub-committee believes that this discretion is necessary given that the EU is a political union of sovereign member states, it is vital that the Council shows that it is willing to take tough decisions and levy sanctions when the stability and growth pact is breached. The Government agree in their response that the efficacy of the sanctions regime will depend on the degree of political will in the Council. Will the Council be willing to take tough decisions on sanctions when the crisis is over?

We considered various other suggestions on sanctions. At the insistence of Germany, the Van Rompuy task force report did not rule out the possibility of removing voting rights in Council from those countries breaking the stability and growth pact. The sub-committee did not believe that this would be an appropriate sanction and would raise significant questions about legitimacy and sovereignty. Can the Minister confirm that the UK will block this proposal from being taken forward if Germany proposes it once again? The Government also stated in their response that there are a,

“large range of other potential sanctions that could be more easily and swiftly implemented by the Council”,

rather than removing voting rights. Could the Minister indicate what those might be?

As I stated at the beginning, only member states within the euro area can have sanctions imposed upon them. However, the Van Rompuy task force report suggested that enforcement mechanisms should be extended to all member states, excluding the UK, in the multi-annual financial framework. The committee thought that this was quite inappropriate. The Government’s stated intention is that they would oppose these suggestions. Can the Minister confirm that they will stop any attempt to extend sanctions beyond the euro area by any such means?

Investment Bank Special Administration Regulations 2011

Baroness Maddock Excerpts

Thursday 3rd February 2011 Lords Chamber

[Lord Myners]

I can only say that there are failures of agency functions here. The shareholders are not holding the boards to account, and the boards are not asking the right questions or building depth of talent. It may be that the Minister, with his great experience in this area, can share with us his thoughts about why banking has this problem of high bonuses. My father was a fisherman, and there was not a big bonus culture in fishing. There is no bonus culture in making ball bearings, in engineering or in the hospitality industry. I think the answer possibly lies with the work that the Independent Commission on Banking is doing. The Minister always treats anything I say positively with considerable scepticism and caution, but I repeat my strong endorsement of the creation of the Independent Commission on Banking. It may well raise some interesting perspectives on the points that have been made. I close by simply saying that I fully support the administrative orders being tabled today.

[Baroness Maddock]

My Lords, I strongly support many of the things that the noble Lord, Lord Myners, said in support of these orders, particularly the measures that allow for clients’ assets to be recovered more readily. I have three questions.

Not only will administrators be able to prioritise the three objectives outlined in the instrument as they see fit, but they will also be able to continue to administer their organisations with a guarantee that suppliers must provide their services for up to a period of 28 days without pay. Have the Government fully identified the potential costs to suppliers who have to continue to provide their services for this period?

Secondly, I understand that the regulations allow suppliers to gain a court order to exempt them from this duty if they can prove hardship. Again, can the Government expand a little on the definition of hardship?

Lastly, on the bar date by which time claims for assets must be made, will the Government consider setting out what they think might be a reasonable amount of time to allow for claimants to properly state their case?

Having posed those questions, in summary I support these regulations and hope that the Government will give proper attention to the suppliers who must provide their services without pay and, of course, those clients who seek to recover their assets.

[Lord Davies of Oldham]

My Lords, I bring some comfort to the Minister, as he has already had a plethora of questions, which I know he will dutifully answer in his wind-up. I have a few questions of my own but I begin by saying that we welcome these regulations, which bring investment banks within the terms of the special administration or wind-up rules for banks contained in the Banking Act, which otherwise apply only to deposit-taking banks. As my noble friend Lord Myners reminded the House, this goes back to the Banking Act 2009 on which he led for the Government—I was pleased to give him some minimal support at the time and enjoyed that experience—but there was always going to be considerable secondary legislation attendant upon that Act. The regulations are part of that process, and we welcome them and commend them to the House, as the Minister will do in his final speech.

I also want to reassure the Minister that I do not think I will go far down the line on which my noble friend Lord Myners managed to stir up the attendant House—the issue of bankers’ bonuses. There will be a time for debates on that and he will know that we are all watching the work of the independent commission on banking and awaiting its outcome. He will also know that the country expects the industry to be responsive to the obvious fact that mistakes were made and calamities visited both on this country and on the wider world economy because of the significance of the banks. In particular, he will know that their return to the bonuses concept affects our nation adversely in circumstances in which so many people are hard pressed for resources. That applies especially to the banks in which the taxpayer has a substantial stake. The Government must respond to this fundamental question: how is it that, when the rest of the country is suffering such privation, people can pay themselves such enormous sums in bonuses and do so on the basis of a taxpayer bailout? However, that is a debate for another day.

As I indicated to the Minister, I shall concentrate on one or two detailed questions. I want to ask about Regulation 6(1)(b), under which there can be an application for special administration if that is deemed “fair”. Fair by whom? Presumably, the decision is made by the Financial Services Authority or the Secretary of State, but who defines what is fair? This seems a very loose term, in what are otherwise tightly drawn regulations, so I ask the Minister to comment on that point.

Secondly, an important element in reducing the vulnerability of investment banks is to require them to hold more capital and, especially, to limit their leverage. Can the Minister outline what steps are being taken to implement either of those measures?

In what ways is this legislation future-proof? Which agency will be responsible once the FSA is wound up? There is an important element of client protection in these regulations, which my noble friend Lord Myners referred to. Who is actually going to ensure that there is consumer protection? Investment banks deal predominantly in wholesale markets, so it might be thought that the Bank of England was relevant. It is clear, however, that once the FSA goes we need to know who is going to take responsibility regarding consumers in both areas.