Building Industry Prospects (Hansard, 18 October 1995)

The Minister of State, Department of the Environment (Earl Ferrers)
My Lords, the policies which Her Majesty's Government are promoting are designed to encourage the stability of the economy. That 741 will lead to the provision of new housing both for ownership and for rent, which will benefit the construction industry.

§ Lord Dean of Beswick
My Lords, is the Minister aware that his own department's latest figures for the three months ending in August of this year show an 8 per cent. cut compared with the corresponding three months of last year, including a substantial reduction in new house starts? Is the noble Earl also aware that Mr. Michael Quirke, the managing director of Costain Construction, is on record as observing only this week that those figures further fuel the view that unless the Government stimulate the building market, the industry will inevitably bleed to "death"? Are the Government going to let that happen or will they do something about it?

Earl Ferrers
My Lords, I am aware of the figures which the noble Lord quotes and I would not dissent from them. There is no doubt that our figures and those of the industry show that the signs of recovery have not yet been fulfilled. The noble Lord says that the Government ought to do something, but the Government cannot wave a wand and suddenly improve the state of a whole industry. The fact is that when a recession hits—and we have been hit by a very bad recession—the construction industry suffers. I remind the noble Lord that the Government subsidise housing by £18,000 million in England, which in real terms is broadly the same as the figure for 1979. I expect that the noble Lord will think that that is not a bad effort.

§ Lord Rippon of Hexham
My Lords, can the Minister say when the Government hope to allow local authorities to spend the capital receipts which they receive from the sale of council houses on the provision of new low-rented accommodation?

Earl Ferrers
My Lords, it would be imprudent of me to anticipate the Budget in any way whatsoever. I prefer to ask my noble friend to wait until then.

Lord Bruce of Donington
My Lords, is the Minister aware that there is an overriding shortage of housing in the United Kingdom and that much of the property that is occupied at the moment is unfit for human habitation? Therefore, there is a drastic need for an improvement in the housing programme for which the labour and materials are available and the money is in the hands of the local authorities. All that stands in its way is the Government's obstinate following of an ideology that has now become completely obsolete.

Earl Ferrers
My Lords, that is pretty strong stuff, but that is not surprising from the noble Lord, Lord Bruce. The noble Lord is being slightly unfair. The fact is that the public sector is investing in 70,000 extra social lettings in 1995–96—some are new, and some through grants to buy. That is in line with our view of what is needed, and that is what is being done. The most important thing that the Government can do is to keep the economy and prices stable. The fact is that the headline rate of inflation has been below 4 per cent. now for 39 consecutive months, which is longer than at any 742 time in the past 50 years. I am sure that even the noble Lord will give the Government at least three cheers for that.

§ Lord Richard
My Lords, I was surprised to hear the Minister characterise that gentle question from my noble friend Lord Bruce, expressed in his usual moderate way, as "strong stuff'. However, following the point that was made by my noble friend and by the Minister's noble friend the noble Lord, Lord Rippon—we are delighted to see him back in his place—what is the Government's estimate of the amount of money which local authorities now hold as capital receipts?

Earl Ferrers
My Lords, I do not have the figure with me, but I shall find it out and let the noble Lord know.

§ Lord Ezra
My Lords, does the noble Earl agree that in addition to the need for new housing there is an urgent need for the refurbishment of a large number of houses which are now in disrepair, which would, after all, have the effect of making more suitable housing available? Can the noble Earl indicate whether the Government contemplate stimulating such refurbishment?

Earl Ferrers
My Lords, I said that 70,000 extra social lettings were being made; of those, 52,000 lettings will be created either by new construction or by refurbishment funded by the Housing Corporation and local authorities. A further 17,000 will be made available through cash incentives or do-it-yourself shared ownership. Therefore, although one can always say that there should be more, refurbishment is taking place.

§ Lord Molloy
My Lords, would the noble Earl be gracious enough to consider another important aspect of this subject? I refer to the fact that, although it may be urgently needed, we cannot have new housing or any other form of building without our building trade operatives and skilled artisans, who, as my noble friend Lord Dean suggested, need security. Without them, we could not have a proper building industry. I feel sure that the noble Earl will take that point into account.

Earl Ferrers
My Lords, I shall certainly take that into account. I quite accept that without an adequate number of skilled people we shall not get done the job which we should get done.

§ Lord Barnett
My Lords, do the noble Earl's moderate replies to the Question indicate that the Government have ruled out any means of stimulating the housing market?

Earl Ferrers
My Lords, I have tried to explain that we have actually done quite a lot. One comes back to the basic thing that if you want to encourage building then you have to have the economy straight. The noble Lord asks what we are doing about that. I tell him that the average monthly cost of the mortgage has dropped by no less than £130 since October 1990 because of the fiscal policies adopted by Her Majesty' s Government.

§ Lord Peston
My Lords, perhaps I may declare a financial interest. I currently live in a flat the value of which is less than when I paid for it. It is important to bring such matters to your Lordships' attention. Do I understand that the Government do not accept the view that a fall in interest rates in the very near future would he about the best possible way of stimulating the housing market as it always has in the past?

Earl Ferrers
My Lords, I feel so sorry for the noble Lord, Lord Peston. I am sure everyone else shares my sympathy.

Noble Lords
Oh!

Earl Ferrers
My Lords, would the noble Lord, Lord Richard, not point? It is very unseemly. I was only trying to sympathise with his colleague. If he would rather I did not, of course, I will let him stew in his own juice. The noble Lord asked a pertinent question but I am bound to reply to him in the way I replied to my noble friend Lord Rippon, whom, I agree with the noble Lord, Lord Richard, we are delighted to see back. The noble Lord must wait for the Budget to hear about these desperately important matters.

§ Lord Avebury
My Lords, will the Minister consider suggesting to the Government a change in the planning laws to make it easier for people to convert office blocks, of which there are tens, of thousands empty all around the country, into dwellings?

Earl Ferrers
My Lords, I am certainly prepared to consider that, but I am bound to say that I am not sure what the position over that is at the moment. I shall certainly look into it.

§ Baroness Farrington of Ribbleton
My Lords, does the Minister agree that there is a terrible waste of public expenditure with thousands of people qualified to work in the building industry being a drain on public expenditure because of the high cost of keeping them unemployed, and that, if the Government were to look logically and with financial prudence at the way they are spending public money, putting the building materials and those people unemployed together with the housing needs and the capital receipts would make sound economic and social sense?

Earl Ferrers
My Lords, we need to do everything we can to ensure that the housing and construction industries succeed. We would have a worse position if we had a minimum wage.

§ Lord Stoddart of Swindon
My Lords, may I ask the noble Earl two questions? First, are the Government seriously considering abolishing or lowering stamp duty on housing transactions? Secondly, have the Government any influence with the building societies to persuade them not to spread doom and gloom every month by announcing, sometimes with conflicting figures, that negative equity is increasing, people are in danger of being thrown out of their houses, and that house prices are falling?

Earl Ferrers
My Lords, I was just jotting down a fascinating answer to the noble Lord's second question. He will have to wait until the Budget for an answer to 744 his question about stamp duty. I could not pre-empt that. He asked also whether the Government had any influence over the building societies to stop them spreading doom and gloom. All I can say is that we have a great deal of influence over a great many people but we do not seem to have too much over the party opposite. If it stopped spreading doom and gloom, we should get on very much better.