Edinburgh East April update: Budget, Bedroom Tax approaches, Castlebrae campaign success, and where is spring?

Westminster Report

Those of us inside the ‘Westminster Bubble’  are sometimes accused of losing perspective on what really matters, but I think most people would agree that the week of March 18th was a big one in Parliamentary terms. The response to the Leveson Report came to a head on the Monday, preceded by some last minute cross party talks, with the Budget scheduled for the Wednesday.

Budget 2013

The Shadow Chancellor called this the ‘Groundhog Day’ budget because in this, Chancellor Osborne’s fourth budget, we had another repeat performance. Previous forecasts about borrowing, deficit reduction, economic growth and unemployment falling, have been downgraded each budget.  Regular statements are made about being ‘on track’, only to discover at the next again budget that the economy is well off track.  Again the Chancellor assured us that with ‘one more heave’ all will be well. In the budget debate one Tory backbencher referred to a pre-budget cartoon of Osborne as a soldier in a World War 1 trench digging in. Then it was always ‘one more push’ – and we know where that led!    I was surprised that the Tory speaker drew all our attention to that image!

Forecasting is a notoriously difficult thing, and it is true that there have been external factors at play, for example the Eurozone problems. However the Government’s austerity measures have been a factor as well, as the independent Office of Budget Responsibility (OBR) made it clear in a rebuke to the Prime Minister, after he made a speech claiming that austerity measures were not a contributory cause of low growth.  A recent article in the Financial Times pointed out that those Euro countries with the deepest austerity had the lowest growth.  Plummeting demand in these countries of course affects our exports, and so the UK recovery also.

Ed Miliband Budget day 2013

The last Labour Government put in stimulus measures to tackle the recession. Combined with low tax receipts caused by the recession, these measures did increase the ‘deficit’.  In June 2010 the newly established OBR published a Report just before the emergency budget forecasting the situation under the previous Labour Government’s policies, and the effect of that emergency budget. It is illuminating comparing these with more recent OBR forecasts.

OBR Growth

Below are figures for the amount forecast to be borrowed by the Government each year (Public Sector Net Borrowing)

OBR Deficit

The Chancellor now seems to accept that growth needs stimulation.

But his measures in this budget are extremely limited.  A small increase in capital spending of £3bn a year will come forward, but not until 2015. The chancellor committed stimulus to housing but the bulk of it for shared equity and mortgage guarantee schemes. These will stimulate construction indirectly, although some commentators fear they may cause a renewed price bubble rather than any real economic growth. I have written a longer piece on the housing aspects of the budget for my website http://www.sheilagilmore.co.uk/the-chancellors-housing-stimulus-the-wrong-answer-to-the-wrong-question/.

Here is what the National Institute for Economic and Social Research concluded on the budget:

“Despite the many policy announcements in the Budget the OBR’s judgement is that these measures, in aggregate, are fiscal neutral and will have no overall effect on growth this year and next. We agree; while we welcome the reduction in employers National Insurance Contributions, the cut to corporation tax, and the switch of some spending from current to capital, none of these rather small changes will have much impact on the overall economy. To generate a significant boost to growth would have required a boost to public investment, financed initially by borrowing, of the order of 1-2 percent of GDP, as suggested by NIESR (and elsewhere: for example The Economist, and in the IFS Green Budget). In that sense, the Budget represents (another) missed opportunity.” The full report is here: http://bit.ly/15TD8SR.

The Financial Times editorial had this to say:

“George Osborne’s Budget offered little – too little – to boost growth now. The Chancellor’s counter to his supporters’ worsening pain was to promise that in a few years’ time, they will be rewarded. This was a political budget that left the economic heavy lifting to others – and to the future.” Read the full excerpt at http://on.ft.com/15TCFA9

The Budget in Parliament

The Budget is still a big House of Commons event, although not as in the past when, ‘old hands’ relate, MPs would queue up in the early hours to get a good seat. With the expansion of autumn Statements into mini budgets, plus numerous media briefings there is little surprise left for budget day itself.

Budget speech

It is tradition that the Leader of the Opposition replies and that both he and the Chancellor are given the field without intervention. Not unlike other statements does the Chancellor face a Q and A session. Straight after these two speeches the Budget debate starts, and continues over the next three sitting days. Votes come on Day 4.  (Monday 25th March).

I spoke on Thursday 21st March.  It has become a bit of a joke between three or four of us ‘frequent speakers’ as to who is going to get the last backbench speaking slot.  This time it was my turn and the time limit was five minutes after some four and a half hours ‘sitting on the benches’.   It was only possible to say a fraction of what I would have liked to cover. The full debate can be read at http://bit.ly/ZY0ki4, with my speech from p62.

Leveson & Press Regulation

The Leveson Report came out at the end of November.  It was clear from the outset that the Prime Minister was not keen to implement the proposals in full. Several weeks of cross party talks passed and frustration at the lack of progress led to various attempts in both Houses of Parliament to ‘amend in’ proposals on Leveson to other pieces of legislation. For example amendments to the Defamation Bill were passed in the House of Lords, and it appeared for a time that the Government was reluctant to make further progress with this Bill. I received a number of letters and emails from constituents concerned that that this could lead to these important reforms being lost. In March matters came to a head as further amendments were put down to the Crime & Courts Bill due to be debated on March 18th.  Cross Party talks were broken off by Cameron the previous Thursday and resumed over the weekend. It became clear that the Government was likely to be defeated if votes took place, and finally a ‘deal’ was done in the early hours of the morning on the 18th.  This lead to the Prime Minister having to seek an urgent short debate on the matter that afternoon.

The majority of constituents who have contacted me on this issue were in favour of the implementation of Leveson in full.

Youth Budget event

Youth Budget 2013 A few days before the Budget I took part in an event at Westminster where groups of school students participated in debates about what they would prioritise in the budget.  They spent the morning at No 11 Downing Street and came into Parliament that afternoon. These sessions built on consultation with young people up and down the country over previous weeks. Results included: Youth Budget Some people might think that it is ‘easy enough’ for young people to propose more taxes but it was interesting to note the support for an unhealthy food tax which they undoubtedly would have to pay! In his closing remarks Treasury Minister David Gauke did say somewhat ruefully that selling such a policy might be easier said than done – clearly still smarting from last year’s ‘pasty tax’!

As so often at these events the enthusiasm and confidence of the young people was inspiring. You can read more about this here: http://bit.ly/YTKjq8.

Jobseekers (Back to Work) Bill

Sandwiched between these two events was a day of debate on this piece of emergency legislation. The Government passed regulations in 2011 that were meant to give the Department for Work and Pensions the power to impose sanctions on people who did not co-operate with one of their various work schemes. One of these – named simply Work Experience – was at the centre of a legal case where a young woman – Cait Reilly – took DWP to court after her Jobseekers Allowance payments were stopped following her refusal to work in Poundland. The Court of Appeal declared the regulations unlawful because jobseekers like Ms Reilly were not given enough information about what was involved and the consequences. However it’s important to emphasise that the Court did not say that schemes of this nature should not continue, and following the Court’s judgment, the Government immediately put down new regulations to allow this to happen.

The focus of the Jobseekers Bill was to prevent the Government having to pay out up to £130 million to claimants who had been sanctioned while the unlawful regulations were in force. I have had a number of constituents expressing a strong view that the Opposition should have voted against the Bill rather than abstaining. I have written more about this on my website at http://bit.ly/Xi8naY.

The debate is not over, and many of us will be reflecting on the policies around this. I have made my position clear on work experience and its place in employment programmes (see further pieces on my website here, here and here).

The wider picture is what Labour did in Government and the policies we are now developing. One example of the former is the Future Jobs Fund which provided six months of paid work for young unemployed people. This was abolished almost immediately after the Coalition came to power, with Ministers claiming that it was too expensive and had been unsuccessful. However a DWP evaluation published afterwards concluded that it had been very effective. Recently the party stated clearly that in Government it would reintroduce a similar type of scheme. This case in illustrates the genuinely distinct approach being taken by Labour compared to the Conservatives and Liberal Democrats.

Bedroom Tax

As implementation date looms, the main thrust of this regressive and unfair policy remains. The Government offered up some small concessions; exempting families with adult children in the armed services, some families with severely disabled children, and foster parents.  Among those left still affected are many people with disabilities or medical conditions, people in adapted homes and separated parents with shared care responsibilities. Nor should we just talk about these groups, because it is highly unfair for so many people who have lived in their homes for many years, who are now expected either to move or lose a sizeable part of their weekly income.  The Government has started to use is to say that the current position is ‘unfair’ to people who are in private rentals where housing benefit is paid subject to size of property restrictions. It is typical of this Government’s approach to play one group off against another and also to suggest that ‘fairness’ also means equalising downwards.  Interestingly there was no mention of this as a reason for the bedroom tax in all the debates when the Welfare Reform Bill was going through Parliament. Bedroom Tax Council and housing association homes are permanent tenancies and people quite reasonably invest in them to make them comfortable.  Generally private lets are short term and when the Local Housing Allowance (the name for housing benefit in the private rented sector) was introduced it applied as people entered into new leases. More people are spending longer in the private sector than they would like due to the poor supply of social housing. There are very real differences between the sectors.  Restrictions on the amount of housing benefit paid for private lets have always been in place, not least because landlords would up rents if there was a ‘blank cheque’. When the housing benefit system has been relatively generous on private rents a sudden increase in ‘DHSS welcome’ signs appear.  If we really want to see the Housing Benefit total spend reduced we need to tackle high rents in the sector, and increase supply.  One of the ironies of Government policy is that they are forcing councils and housing associations to build new homes at much higher rents to compensate for reduced subsidy.

Full details of my work regarding the Bedroom Tax are available on my website at http://bit.ly/ZXZIZY.

In Opposition we have been continuing to take lots of opportunities to press the Government on the bedroom tax, and I took part in a debate on this on 27th February. See p58-60 http://bit.ly/ZXZzWq.

Universal Credit

On 6th March the Commons debated the introduction of Universal Credit.  As often happens with debates on social security issues opposition speakers exceeded Government numbers. It is significant that on this occasion only the Minister replying to the debate showed any great confidence and enthusiasm. Most of the government backbenchers expressed concerns about various aspects of the new benefit, especially the heavy dependence on the IT system and online application systems. I spoke about the concerns arising from the pilots taking place where housing payments go via to claimants rather than direct to landlords, and also about the position of single parents. The Government is making in the way conditions are applied to jobseeking single parents, and the structure of the new benefit itself, have drawn much criticism from organisations representing these families. My speech is available from p42 http://bit.ly/ZXYBct.

Work and Pensions Select Committee

1.    Flat rate pension The Select Committee has been doing ‘pre legislative’ scrutiny of the Bill to introduce the proposed single tier pension.  The Bill is likely to be a key part of next session’s legislative programme.  It was heralded with some fanfare in the early days of this Government but has taken some time even to reach this stage.   What has struck me increasingly is that the proposals are much more evolution than revolution. The changes are less major than Ministers have claimed, and this makes both the expectations of those who move to the new system, the disappointment of those who feel they miss out, less significant than each group thinks. The Government has created this situation by the way it has trumpeted the change.

The new single tier pension builds on much of what was put in place by previous governments, and indeed could not have been contemplated on its apparent ‘no extra cost ‘ basis if the foundations were not already laid

The basic State pension was supplemented by additional state provision initially through the Graduated Pension from the 1960s, and then through the State earnings Related Pension (SERPS) from 1978.  The Thatcher Government weakened SERPS by giving people the freedom to opt out. People were supposed to start private pensions instead but many ceased them after a bit and even those who persisted found that outcomes were poor.  In 2002 The Labour Government introduced a new form of second pension which was more generous than SERPS to those on lower to moderate earnings.  In 2006 the Government announced it would stop people opting out into personal pensions, which happened in 2012, and started a gradual transition to the Second State pension becoming flat rate.

In 1997 pensioner poverty was seen as an urgent issue, with women having especially low retirement earnings. Schemes like SERPS built up over a number of years so didn’t offer any help to the generation of poor pensioners at the time of introduction.  The Labour Government introduced Pension Credit, which currently ‘tops up’ income to £142.70 for a single person.  Respected organisations like the Joseph Rowntree Foundation have acknowledged that this substantially reduced pensioner poverty.  The downside is the fact that it is means tested and there are concerns that not everyone eligible claims (although the shortfall of people claiming applies mainly to the additional Savings Credit rather than the core Pension Credit). Critics suggest that it discourages saving for retirement.  That isn’t just a theoretical argument because I meet a good number of constituents who feel that, while they are not worse off than people on pension credit, they see little benefit from their efforts to save or make pension contributions. These savings were made at a time in their lives when money was tight while bringing up their families.

Copyright: Getty/Mirror

The pros and cons of this approach will continue to be debated, but in the context of the Coalition proposals, the existence of pension credit means that there is already a substantial slice of government expenditure which will be ‘rolled over’ into the new single tier.

At present people coming to retirement have a number of different sources of pension:

  • Some have only the basic State Pension (£107.45 pw for a single person), perhaps because they were out of work for a long time or were unwell, or had caring responsibilities. (Some people have even less than this because they didn’t build up enough contributions and credits)
  • Some have basic State Pension plus additional State Pension (graduated pension, SERPS or the post 2002 S2P) of varying amounts.  This may already be more than the suggested £144 Single Tier Pension the government proposes.
  • Some have basic state pension plus an occupational and/or personal pension, and while they were contributing to this paid less NI contributions than those in the additional State Pension scheme.

The new scheme says that everyone retiring after the start date will eventually receive £144 per week State Pension plus any occupational or personal pension they build.  Some people retiring at the start date will already get that or more from previous contributions. Those who have paid less NI contributions because they were contracted out will not immediately receive the full £144 because they have been paying the lower NI contributions.

It is going to be complicated and contrary to the spin it does not mean that from day one of the new scheme everyone retiring gets £144pw in addition to their existing private or occupational system.

The main gainers are going to be people who didn’t have the chance previously to save for an additional State Pension or private scheme, and the self employed.  This will mean that fewer of them will have to apply for the means tested pension credit (which doesn’t disappear immediately but fewer people will be requiring it).

Eventually the new scheme is forecast to cost Government less than the predicted expenditure under the current arrangements.

In the Budget the Chancellor announced that the start date was being brought forward to 2016 from 2017.  Cynical commentators have suggested that this may have had as much to do with bringing income to the Treasury (because contracting out ends and both employers and employees pay higher NI) as with generosity to those nearing retirement.

Part of the additional income to the Treasury is being used for the ‘employment allowance’ announced by the Chancellor in the budget (which is a reduction in NI to encourage employers to take on staff).

I would be interested to hear what people think, and try to answer what questions I can.  The Committee Report will be published shortly.

2.    Private Pensions We have also been working on a Report on private pensions which have come under much criticism for their poor outcomes.  These pensions will be increasingly important in the future because in some respects the Single Tier pension will be a ceiling on state provision (as well as a ‘floor’ on which to build) and auto enrolment will mean many more low paid people being covered with separate arrangements, like many better paid workers.

3.    The Work Programme Our other major investigation has been into the Work Programme, the Government’s flagship ‘back to work’ scheme, which was launched in June 2011 as the biggest, best and cheapest such programme ever. At the ‘top’ level performance has not met expectations, and at local level many MPs are picking up disturbing examples of poor delivery.  Our enquiry is looking at whether the financial structure of the scheme is working, and in particular how it is faring for people facing particular barriers to being employed.  I am still interested in hearing from people who have personal or professional experience of how this is working.  The Report will be out in the next few months.

Constituency Report

Castlebrae Community High School Success

The efforts of Save the Brae were rewarded at the Council meeting on 14th March. Persistent hard work and a refusal to ‘give up’ paid off. Well done Save the Brae I know many people were cynical at the outset about the whole consultation process, but I think this shows that there is a political (not necessarily ‘party political’) process which runs in parallel with the ‘council official’ role.  These officers have an important role to play in the way any council works providing a professional input and expertise which has to be taken into account. However, as some of us said at the outset, the issue of Castlebrae High School went beyond that of just one department and narrow budget savings.

This was the wording for the Motion the Council passed. Council Motion From this point on the ongoing process must be open and genuinely seek the input of students, parents and the local community.

Key to what happens next is the promised re-energisation of the Regeneration process. I believe that the Council should now bring forward plans for the building of a new school. There is a design and a site. Planning permission should be applied for now.  In December I suggested that the Council could approach the Scottish Government to request that this project be considered for inclusion in the use of capital funding due to come to Scotland in terms of the Chancellor’s Autumn Statement. See more at http://bit.ly/YVU5rU.

It was argued that the project wasn’t ‘shovel ready’, although it is as prepped as much as many projects put forward from other local authorities. Residents now need a real statement of intent from the Council to make this project shovel ready by applying for planning permission, rather than delaying to 2017.

Bringing the new school forward would address many of the concerns there are about the pressures of sustaining a school with such a small number and a reduced curriculum.  More broadly it would be the kind of construction project the Regeneration process, and the whole country, needs to bring jobs and local traineeships to an industry which is struggling.

I have heard some concerns that any plan to bring the new school forward would be to the detriment of a new Portobello High School. This is not the case and the Council must make it plain that the funding for Portobello is safeguarded.

Together with Kezia Dugdale MSP I have written a letter to the Council leader urging this course of action. You can see the letter on my website after the Easter weekend at http://www.sheilagilmore.co.uk/bringing-forward-a-new-castlebrae-school/.

Portobello High School

The City Council agreed on 14th March to go ahead with lodging a Private Bill in the Scottish Parliament that seeks consent to the building of the new school in Portobello Park.  The Process for Private Bills can be found here http://bit.ly/ZXWCoF.

New Portobello High School

The response to the consultation was substantial and 70% of the responses favoured this course of action. Hopefully the whole community can now move forward, and real progress can be made after ten years of debate and consultation.

Shared Repairs Service

Many constituents have contacted me about problems they have encountered with the statutory notice system, but on the whole most people support the continuation of council involvement via enforcement.  This came through loud and clear in the consultation which took place last year. We do need major reforms in the procedures and management, and much more involvement of owners at all stages of repairs to improve the system. The very real difficulties which exist in trying to secure agreement and payment from neighbours mean that people value the service the council provided. The historic fabric of our tenemental city needs to be protected.

I was concerned that the consultation document did not include retention of statutory notices as an option, nor did the Report scheduled for discussion on 14th March.

I contacted councillors with my concerns prior to the meeting with the email here: http://bit.ly/Xi77oh.

I was pleased that councillors voted to retain the statutory power and to ask for a further report by the summer of this year on how the new service can be widened beyond just emergency repairs and the giving of advice and information. See http://bit.ly/ZXXGZJ.

Review of Neighbourhood partnerships

The new City of Edinburgh Council administration has set out its plans to strengthen Neighbourhood Partnerships, and Convener of the Communities and Neighbourhoods Committee is looking for your views to help shape NPs to deliver better results for residents. NPs were established in 2007 as Advisory Committees to plan local priorities as well as organising and community events, projects and initiatives such as clean up campaigns. It is now time to develop the model by looking at previous successes and thinking of ways to involve more people. If you want to provide feedback make sure you complete the survey as soon as possible at http://svy.mk/13QYgNf.

Dumbiedykes Bus update

In March residents attended the Transport and Environment Committee to discuss the possibility of a bus service returning to the Dumbiedykes area. Committee agreed to proceed with the plans, asking officials to look at the options and analyse the demographics of the area. Officials are due to bring their full report to the June Transport Committee where a decision whether or not to introduce a bus service will be made.

Craigmillar Urban Design Framework Review

In 2011 the City of Edinburgh Council announced plans to review the Craigmillar Urban Design Framework – the masterplan designed to guide the regeneration of the area. The original plan was agreed in 2005 setting ambitious plans to reconstruct much of Greater Craigmillar, bringing mixed ownership homes, a state of the art High School at the heart of the community and plans to fuel the local economy. After the financial crash of 2008, and the reduction in funding from the Scottish Government and local council, many of the plans were put on ice, or cancelled.

This review aims to look at the progress of regeneration, analyse the development so far and set the tone to complete the process. The City of Edinburgh Council Labour-led coalition has now committed to build a new Castlebrae High School before 2020, and this refreshed review will establish how all development in Craigmillar will look over the next decade.

As Member of Parliament for Edinburgh East, including Greater Craigmillar, I have submitted my own comments to the planning authority, following lengthy discussion with local residents and community activists. What is clear is that the planning department must bring forward new commitments to protect Cairntows Park for future generations, construct a new school as soon as possible and reconsider the type, makeup and format of the housing in the area. The council cannot get this plan wrong, or make a botched job of this process. It is crucial a new Craigmillar fosters a good community spirit, built on a base of families attracted to the area.  You can read the submission here: http://www.sheilagilmore.co.uk/final-submission-craigmillar-urban-design-framework-review/

Garden sharing

I think we’re all wondering where spring is. As gardens jump back into life, constituents across Edinburgh East contact me asking for help keeping their gardens tidy and preened. With changes to Garden Aid and increases in service charges many household have started to look for help with gardens, while at the same time an increasing amount of more able families want allotments. Edinburgh Garden Partners has come up with a scheme to facilitate garden sharing which joins up people who have a garden (but can’t tend to it) with those who want some Greenspace. For further details, or if you want to participate head to: http://www.edinburghgardenpartners.org.uk/

Young People’s Taster Sessions and Consultation Event

Last month I mentioned that a session was taking place at Meadowbank to canvass the views of young people on what activities should be provided locally.  I went along to see how it went. There was a good attendance and it was a bit like ‘speed dating’ with small groups circulating around tables with different themes e.g. activities, use of open space, where you feel safe (or not). That was followed by instant voting which shows results right away on a screen.  One question asked was whether those attending thought this event would make any difference, and there was a considerable degree of cynicism about that.  So it is over to the Council now to listen and act!

Dates for your diary

Tuesday, 2nd April – Southside Association: special meeting to discuss plans for the Odeon – from 7pm – Southside Association, 117 Nicolson Street Friday, 26th April – SPACE Green Day – 12pm to 5pm – 11 Harewood Road – Clothes recycling, crafts, tombola and music – entry £1 Saturday, 27th April – Craigmillar Books for Babies 15th Birthday Celebration – 11am-12pm – Craigmillar Library, Niddrie Mains Road Tuesday, 30th April – Abbeyhill Student Accommodation PAN exhibition – 2pm-7pm – Chatham Honda Garage, Abbeyhill – Planning reference number 13/00726/PAN

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The Chancellor’s housing stimulus – the wrong answer to the wrong question?

Finally George Osborne seems to accept that housing investment is badly needed to stimulate the economy. But for ideological and economic dogma reasons what he announced in Budget 2013 may neither help people who need homes, nor have much impact on economic growth.

Rather than go for direct investment in ‘public’ building, he has chosen to try to encourage more demand into the private housing market and through this more building.

Two schemes have been announced under the title of ‘Help to Buy’.  The first is a shared equity scheme. This replaces last year’s housing idea which was ‘first buy’.   Buyers of new build property from April 2013 (England only) can seek up to a 20 % equity loan from the Government.  It is no longer restricted to first time buyers – because the Government hopes that extending it will start to free up the ‘housing ladder’.  The loans will be interest free for the first five years.   There is no income ceiling and properties can be up to £600,000 in value. Buyers will need a 5% deposit only.

Shared equity schemes are not new. The previous Government encouraged such schemes, and some developers have offered their own schemes in response to the sluggish market. Generally, however, they have been targeted at those who need help getting into home buying, with both income and house value limits.

Outside of London £600,000 is even now a fairly expensive house. Anyone buying at the top end would need to have a pretty high income to service the mortgage required even after the equity loan is take into account. Will this just encourage some people to trade up further than they might otherwise have done, so increasing house prices? Should the taxpayer be subsidising buyers at this level (even if the subsidy will be repaid when the property sells?  The Government is offering a finite amount overall so could it be quickly soaked up by high value purchases by people who could afford to buy their own first or second home, albeit maybe one which is a bit less expensive?

And will it attract takers anyway?   The Prime Minister promised the previous scheme would provide help to 100,000 first time buyers (and therefore encourages the building of this number of new homes) but so far only 1500 households have been helped.

In addition the Chancellor announced the Help to Buy Mortgage Guarantee scheme, again available to a people who can put down a 5% deposit on properties that could be up to £600,000 in value.  This is not restricted to new build and so will not necessarily stimulate supply.  The Government will give lenders £12bn of guarantees to support up to £130bn of loans.  There are widespread concerns that this will push up prices, and encourage people to take out larger loans than they can really afford.   By definition anyone accessing this scheme for the higher value properties will have a reasonably high income or they would not get a mortgage at all.   Government ministers have been pressed to say whether someone buying a second home could be excluded from getting help and they have been unable to clarify this so far.

The Government’s assumption seems to be that the slowdown in the market is solely due to people being unable to provide the demanded deposits. But there may be other reasons for people not trading up and the market being slow. Worries about job prospects, and the general fall in real incomes (described in detail by the Resolution Foundation – http://www.resolutionfoundation.org/publications/squeezed-britain-2013/) may be just as important.

And is it wise to encourage people to overstretch themselves through borrowing? is that to repeat some of the pre- credit crunch problems?

If Government really wants to boost the construction industry direct housing investment would be much more effective. In many places the land and planning permission exists on sites ‘stalled’ by the recession.  In 2010 the incoming Government cut investment in new affordable homes in England by 63%.  New affordable home building almost ground to a complete halt for a year while the Government laid out a new funding scheme. But numbers are still lower than before and the term ‘affordable rent’ is something of a misnomer for the new funding model. Rents on these new homes will be up to 80% of local market rents, with the funding structured to ensure that happens,.   In this budget ‘affordable’ rented home building was increased by enough to build 15,000 additional properties with a grant subsidy each of only £15,000 per house.  This low subsidy level is what pushes up rents. In turn this will increase Housing Benefit spending if new tenants are unemployed or low earners.   This could more than undo the ‘savings’ made through the Bedroom Tax.   Basically this new funding system transfers subsidy from capital to revenue. It reduces ‘up front’ costs now but pushes much greater cost overall into the future.

‘The problem is a form of stasis in Government.  The housing part of CLG wants to see rents rise to fund new supply.  The welfare part, DWP, wants rents to fall to reduce housing benefit costs.  The Treasury wants both of these mutually exclusive things simultaneously.’ (David Orr, Chief Executive of the National Housing Federation (NHF))

The  NHF’s  advice to the chancellor was to restore the cut in capital funding and indeed increase spend further to build properly affordable homes to meet the very real need, and reduce the use  of temporary accommodation , which is another cause of rising housing benefit spend.

  • If the Government’s plans are intended as social policy to assist people on lower incomes access home ownership, they are poorly targeted.
  • If they are plans to unblock the lack of activity in the housing market, they may work if lack of deposit finance is the main thing holding buyers back.  The track record of the existing policy suggests impact may be limited
  • If they are plans to stimulate building and therefore economic growth they may fail as they are not sufficiently targeted on new build.

Ideologically the Government is lukewarm about public sector house building.  Ministers like to accuse the Labour Government of failing to do enough on affordable housing, with some truth, but all the Coalition’s own actions will end up doing even less.

Stuck to his own mantra that ‘you can’t solve a debt problem by borrowing’, the Help to Buy Schemes allow the Chancellor to apply a (little) stimulus to the market ‘off balance sheet’, because eventually this money comes back to the Treasury.   Direct investment would count as government borrowing.

Housing, some will point out is a devolved issues, so from a Scottish perspective does any of this matter?  Yes it does. If the UK economy still fails to grow this affects us all (and this applies as we have seen from the wider European perspective too.)  The Mortgage Guarantee will be available in Scotland but not the shared equity scheme, although there should be a ‘Barnet consequential’ from that. The Scottish Government already has a mortgage guarantee scheme, but limited to much lower value homes.  Shared equity forms part of the affordable housing funding provided by the Scottish Government, but the total investment in affordable housing by the Scottish Government has fallen dramatically. New starts of affordable homes have fallen from 7900 two years ago to 3400 now. Moreover within that total there is an increasing push towards provision of ‘mid market rent’ homes, not so different outcome from the Coalition’s rent policies.   (Mid Market rent fro a 2 bed flat is typically around £620 per month compared with £370 for a council flat of the same size). Councils and Housing associations are encouraged down this route to produce more ‘units’ and thankfully this is not envisaged as a full substitute for lower rent homes.  I think Mid Market rent has a big role to play in providing well managed homes for people who cannot afford to buy. But the need is additional to the well researched need for low rent affordable homes.  The reduced funding is being stretched to cover both types of housing.

The Scottish Government will claim ‘its hands are tied’ but somehow all will be solved through independence.  However it suits their argument to wring their hands, while putting much needed house building on hold.  Choices can be made across the Scottish block and there is a strong case for housing investment to be given priority. We could be using the financial powers we already have.  Councils who want to could be freed to raise borrowing through a modest increase in council tax, to allow building to take place.  The Scottish Government could use its income tax varying powers for the same purpose.  Why keep asking for more power if there is a reluctance to test out the willingness of Scots to pay for the investments we all say we need?

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Press Release: Edinburgh MP slams decision to privatise East Coast Trains

Edinburgh East MP Sheila Gilmore today slammed the Government’s decision to privatise passenger services running on the East Coast Main Line by February 2015 – just three months before the next General Election.

Sheila Gilmore said:

The East Coast Main Line has been publicly run for the last four years. During that time services have improved and profits have been retained for public benefit, rather than lost to shareholders.

As a result my Labour colleagues and I have been calling for the service to remain publicly operated in the long term.

Today’s announcement to privatise East Coast just before the next General Election in May 2015 is a cynical attempt by Tory Ministers to wreck this plan.

Before the West Coast Main Line debacle, Ministers were planning to let a number of other franchises before dealing with the East Coast. Now several have been given an extension into 2016, but East Coast has been brought forward to February 2015.

The decision to bring forward the East Coast deal is a political fix to allow Tory Ministers one last hurrah before they leave Government.

This shows that the David Cameron and his Ministers put ideology before the needs of passengers and taxpayers.

ENDS

For more information please contact Matt Brennan, Parliamentary Assistant to Sheila Gilmore MP, on 020 7219 7062, 07742 986 513 or matthew.brennan@parliament.uk.

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Final submission: Craigmillar Urban Design Framework Review

In 2011 the City of Edinburgh Council announced plans to review the Craigmillar Urban Design Framework – the masterplan designed to guide the regeneration of the area. The original plan was agreed in 2005 setting ambitious plans to reconstruct much of Greater Craigmillar, bringing mixed ownership homes, a state of the art High School at the heart of the community and plans to fuel the local economy. After the financial crash of 2008, and the reduction in funding from the Scottish Government and local council, many of the plans were put on ice, or cancelled.

This review aims to look at the progress of regeneration, analyse the development so far and set the tone to complete the process. The City of Edinburgh Council Labour-led coalition has now committed to build a new Castlebrae High School before 2020, and this refreshed review will establish how all development in Craigmillar will look over the next decade.

As Member of Parliament for Edinburgh East, including Greater Craigmillar, I have submitted my own comments to the planning authority, following lengthy discussion with local residents and community activists. You can read the submission here.

Final submission: Craigmillar Urban Design Framework Review

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Jobseekers (Back to Work Schemes) Bill

A number of constituents have contacted me in recent days regarding the Jobseekers (Back to Work Schemes) Bill, which went through all its stages in the House of Commons on Tuesday. I abstained in the vote on the bill and, given the interest, I have decided to set out my reasons for doing so below.

I have maintained a number of concerns regarding the Government’s work experience schemes for some time now. I have written several posts on this issue for my website which you can read here, here and here.

The most recent post followed the recent legal victory of Cate Reilly over the Department for Work and Pensions on 12 February 2013. The Judge ruled that the regulations that allowed DWP to sanction Ms Reilly’s JSA were unlawful. This reflects incompetence on the Government’s part. This has had two consequences.

Firstly the Government was no longer able to sanction claimants who refused to participate in not just their work experience schemes but also the broader Work Programme. DWP Ministers immediately laid new regulations before parliament that amended the law with a view to preventing similar legal challenges in the future. I felt these regulations should receive full parliamentary scrutiny and be put to a vote. I thus signed Early Day Motion 1072. Please see my signature here. Unfortunately the EDM did not attract sufficient support and these new regulations came into force on the day of the court case concluding.

Secondly taxpayers became liable to pay back Jobseekers Allowance to all the people who had been sanctioned following their refusal to participate in various work experience schemes. This would have come to £130 million. I chose to abstain because I did not think it reasonable to expect the taxpayer to have to foot the bill for the Government’s incompetence.

The Parliamentary arithmetic is such that that, as this was a matter on which there were no disagreements between the coalition parties, this Bill was going to be passed. Furthermore even if it had been defeated, this would not have had any impact whatsoever on the continuation or otherwise of the Government’s various work experience schemes or its Work Programme. These were secured by the aforementioned regulations that, as I said earlier, I believed should have been debated and voted upon.

I also wish to draw attention to the two concessions that my colleague the Shadow Secretary of State Liam Byrne secured from the Government in order to make the bill fairer. The first will ensure that those people who have good cause for not participating in work schemes are still able to claim their JSA back. This will guarantee that their appeal rights are protected. The second will ensure that the Government will now also launch an independent review into the sanctions regime, with an urgent report to Parliament.

I made a number of these points when I spoke in the debate yesterday. A transcript of my speech and the rest of the debate is available here. I appreciate that this response may still be disappointing for many constituents. I would be happy to discuss this issue further  at one of my regular surgeries. Please see here for details.

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