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Housing and the Credit Crunch

The hon. Lady's intervention was helpful. I hope that the Government will bring forward proposals that are agreeable to all councils. The devil will be in the detail. My council, like many London councils, is in receipt of subsidy; the question is what will happen to it. We have argued that that subsidy should be paid out of general taxation. It is untenable for poor council tenants in areas such as Cambridge or Kingston, who pay a lot into the system, to have to subsidise repairs for tenants in my area. It should be paid out of general taxation—by those who can afford to do so. I do not know what model the Government will use. Authorities such as mine will be in a difficult position if they lose money and later find themselves unable to borrow in order to build. The Government's approach matters. We have been arguing the point for 10 or 15 years, but if they require local authorities to buy themselves out of negative subsidy, something that they have considered previously, it will be a disaster for authorities such as Cambridge. If they do not top up subsidy for authorities such as Brent, that, too, will be a disaster. We shall have to wait to discover what model they propose, but I would not want to push all authorities to agree to something that might be highly detrimental to their tenants. I hope that the Government bring forward something that is useful. I feel a little frustrated that the Government are publishing the consultation document on 23 July, as the House rises the day before. I presume that the consultation will run throughout the recess, so there will be no opportunity to debate it in Parliament. If the consultation proposes something that is not helpful to local authority local residents, we will not be able to raise the matter with the Minister in Parliament until October. By then, I dare say that the Department for Communities and Local Government will have closed the consultation. That would be deeply regrettable. Had the Government dealt with the issue 10 years ago—or even three or four years ago—or brought forward the consultation, local authorities may have been in a position to push forward with building and to be at the forefront of the fiscal stimulus that the Government were hoping to introduce. Although I said that the Government have brought forward money, there are other things that they should have done. Instead of making a VAT cut, they should have invested the money in building housing. However, not all the money that has been allocated for the VAT cut has been spent, so the Government could still reverse the decision and build 10,000 to 20,000 more homes, which would make a considerable difference, and help to keep the building industry alive. If the Government are going to cut VAT, they should cut VAT on renovation and rebuild. That would significantly help to keep skills in the construction industry and ensure that building work continues. Moreover, it would help us to deal with the issue of empty properties, which was touched on in the report when it dealt with areas of unsold properties. That problem is one of the consequences of the recession. We will see a heavy rise in the number of empty properties. Dealing with such properties will be made much easier if we were to reduce the VAT level on renovation and rebuild. I hope that the Minister will focus on the issue of empty properties when he makes his reply. I am hoping that his civil servants are taking note of some of the things that I am saying, or that someone will read my comments in Hansard. Half of the hon. Members who have contributed to the debate seem to have left the Chamber during my speech. That is the normal situation that Liberal Democrats face when they speak in debates. None the less, it is not particularly courteous. As I said, I think that we will see a considerable rise in the number of empty properties. I should like to hear what the Government will do with major regeneration projects, which was an issue touched on in the report. We have a major new deal project in my own constituency. I met with teams from pathfinders projects this week. If there are problems with private finance and cross-subsidy, such projects tend to stall for a period of time. That will cause difficulties, especially if there has been stock transfer or people moving out of an area. We will see whole streets or estates being emptied for an extensive period of time—much longer than was anticipated during the regeneration project. I should like the Government to encourage local authorities, pathfinders and new deal projects to make better use of short-life housing. Perhaps they need to provide incentives in the form of grants and loans. They could work with local co-operative organisations and even private companies. Whatever they do, they must ensure that housing is not lying empty because that will reduce confidence in an area. We must boost the sense that something is happening in such areas. The psychological impact of regeneration is often as important as the building projects. Moreover, such properties will provide short-term housing for many people who are in dire need. I am glad to see that the Minister has reappeared. I am sure that he is now listening attentively to my contribution. A number of hon. Members focused on the issue of repossessions. Earlier, I said that it was frustrating that so many straw men had been built and knocked down during the debate. When I challenged the right hon. Member for Greenwich and Woolwich on the issue of long-term projections for repossessions, he responded by saying that there was an issue around mortgages and mortgage finance. However, I did not criticise that particular building society for offering more than 100 per cent. mortgages to people in specific circumstances who want to move. My hon. Friend the Member for Twickenham (Dr. Cable) raised the issue in a debate here at the end of June. We often focus on the short term, with the consequent danger that we forestall repossessions. At some point, interest rates will almost certainly rise. People in negative equity have found themselves unable to move their mortgage. It is not necessarily about moving house; they may be unable to get another fixed deal. Lots of people who are over-mortgaged have been accustomed to moving their mortgage every three or four years to another fixed deal. That may not be a healthy situation, but it is how an awful lot of young people on a mid-range salary cope with buying a property. They will find that they are unable to move. When interest rates rise, some of them will inevitably fall into arrears. There may be a time lag with unemployment, which is what we almost always see in recessions. Unemployment figures tend to lag behind what is happening with the economy, so even when the economy starts to pick up, redundancies will continue for six, nine or even 12 months down the line. Many of those people will fall into arrears and some will lose their homes. I do not mention the figure of 100,000 to try to create scare stories. I just want the Government to think in the long term about how we are going to plan for the future of those people. Not all of the mechanisms that have been introduced will help them in the long term.