Debate on the Address

I have already set out my case. I have always been a Unionist—I still think that the Union has a lot to offer the peoples of the United Kingdom—but I am warning the Government that they are losing control of the debate because they have set up a lopsided system of devolution which does not suit the people of England. As an English MP, I will have to give voice to the very reasonable concerns of my constituents. I can still do so within the framework of a rebalanced Union, but if the Government ignore all those pleas, that will get more difficult. If they go in exactly the wrong direction and try to force bogus European regions on England, they will accelerate the process of splitting up the Union and make the problem that much worse. I hope that they are listening and understand the force of the argument. After all, they have some English MPs themselves. They do not get quite as many English votes as the Conservative party does, but they get quite a lot, and they will need a lot if they are to have any chance of staying as a large party in the House of Commons. I therefore trust that they will consider it very carefully. The Government have tried to use this Queen's Speech in the usual crude way that we have come to expect of this new Administration—not so new when one looks at their members, but perhaps new in style. They see their list of proposed legislative measures as a cross between a press release whereby they legislate merely to get an effect or create a story—which means that sometimes they do not bother to put all the legislation through or repeal it before it has even come into effect—and a means of trying to expose differences between themselves and the Opposition which they think will place them in a favourable light. I have a piece of advice for the Prime Minister. He has spent all his life trying to get this job, and I would quite like him to do it well, because it is my country too, and he is my Prime Minister as well as the Labour party's Prime Minister. However, a good Prime Minister does not spend all their time in office thinking about how they can trip up or expose their opponents—they should spend most of it thinking about how they can solve the nation's problems, identifying them correctly and taking the action that only they and their Government colleagues can take. Obviously, Opposition Members can speak but cannot act; we share the frustrations that Labour Members will remember from their time in opposition. We can have good ideas, but unless the Government adopt them, they do not happen. Of course, the Government live in a political world, and from time to time they have to give the Opposition a kicking, or try to—that is part of the life of this place, and I am not saying that we should be immune from criticism. However, they would be a better Government, and thought to be so, if they spent a bit more of their time worrying about the problems of the country and how their policies might work in effect and rather less time worrying about what the Opposition's position is on things. The Prime Minister spent quite a lot of his speech trying to find out what my right hon. Friend the Leader of the Opposition thought or said about a number of interesting issues instead of spending time developing the detail behind the Queen's Speech, which he and his colleagues had written, in order to satisfy the House that it would be different from the 10 Queen's Speeches written by his predecessor and would really make a difference to the problems of the country. Let us look at some of those problems. The Prime Minister says that affordable housing is a very big problem. It is obviously true that a lot of people would like to buy a property but are fairly young or do not have the incomes or savings that enable them to do so as easily as they would like. We notice that under this Government more and more young people live with their parents for rather longer. While I am sure that family life is a wonderful thing, I suspect that it is mainly because of economics—they cannot afford to get a property of their own at the stage in life when their parents or grandparents took it for granted that they would leave the family home and find their own property. The Government refuse to answer one very simple question. They say that they want more affordable housing, but when I ask Ministers by how much they want house prices to fall for them to then regard housing as being affordable, they will not answer, because they realise that telling all the existing home owners that they are trying to engineer a house price fall would not be very popular. However, if they are not trying to engineer a house price fall, it is difficult to see what they mean when they say that they want housing to be more affordable. It just does not make any sense. We know that there are lots of properties for sale, and it is possible to buy a property if, of course, one has the money. The difficulty is that the Government's analysis is economically illiterate. They believe that the determinant of house prices is how many new houses are built. Unlike the market for most goods and services, the housing market is mainly driven by second-hand homes. Most of the homes that are bought and sold each year are houses that were built quite a long time ago, and only a marginal amount is made up of new homes that are constructed. It has been a very marginal amount under this Government because not that many homes have been constructed. The Government say that if only they could make a quantum increase in the number of new homes built, they could create a hugely disproportionate effect on the market, leading house prices to fall enough to be affordable. I just do not think they have done the maths. They do not understand the balance between second-hand homes and new ones. More important, the Government clearly have not understood the first fundamental of how a housing market works in a free enterprise society with a big banking sector, such as the United Kingdom. Thanks to the work of the Prime Minister when he was Chancellor, we have lived through a credit boom and bust. We had several years of massive boom because interest rates were kept extremely low, inviting banks to lend huge sums of money against property, bidding the prices up. In the last three months, we have had a credit bust, which was very visible with a run on a leading mortgage bank, and people now have great difficulty in getting access to the mortgages they might need. If the Government are serious about wanting people to be able to buy homes, they must first of all look at their lurch from boom to bust in the credit market, and they have to get the credit and mortgage markets going again. Through the Chancellor, they need to have conversations with the Bank of England about why there was such a catastrophe in Britain—worse than anywhere else in the world—over the summer, and about how they can secure sufficient liquidity for the banking system again, with an interest rate structure that makes sense. During that period, the famous, so-called independent Bank of England has turned out not to be independent at all, as some of us always suspected. It turns out to be part of a tripartite arrangement with the Treasury and the Financial Services Authority. We now know that most of the crucial decisions taken during the summer were either actively taken by the Chancellor and the Treasury, or were heavily influenced or cleared through the Chancellor and the Treasury, illustrating that the Bank was not truly independent. What do the Government need to do from here? There should be a Bill in the Queen's Speech to introduce proper independence for the Bank of England so that we can pursue a more sensible monetary policy. I am not sure that the Chancellor's interventions during the past few weeks have been at all helpful. It would be good if the Bank of England were to re-establish control over interest rates in the money markets. All the attention is focused on the monthly deliberations of the Monetary Policy Committee. During the past couple of months, its deliberations have been academic seminars. It has fixed a rate, but it is not the rate at which transactions are taking place. The rate at which transactions are taking place has shot up considerably above the rate recommended by the committee because the Bank has not been doing the other part of its job. It has not been using open market operations, supplying liquidity or getting the banknote issue and the supply and trading of bills right in order to ensure that market rates are in line with Monetary Policy Committee rates. If the Government want to continue to believe in the Monetary Policy Committee, they must learn how monetary policy works so that the committee can once again be the main driving force for interest rates in the economy, not an academic spectator making interesting observations about it. The Government have to learn that if they want to price people back into the property market, they have to do something about money supply, credit and their mismanagement of the banking system. Promising, or threatening, some increase in the rate of new house building in 2, 3, 5 or 10 years' time will not have an impact on the current situation. The numbers are too small in relation to the total number of homes in the economy, and the delay will be such that it will have no immediate impact on the state of the property market today. I welcome the Government's belief in aspiration. I have always believed that home ownership is the best form of tenure. It is the preferred form—around half the people who do not own their home would like to do so. It is not the other way round: half the people who own their home would not rather rent. People who were in that position could, of course, easily sell their home and rent instead; that would not be a difficulty. I wish the Government well, but I hope they will study carefully what I and others are saying because they are not embarking on a policy in the Queen's Speech that will remedy the lack of affordable housing and the current crisis in the mortgage and housing market.