Margaret Beckett

The Rt Hon Margaret Beckett MP

Minister of State

Minister for Housing and Planning, attending Cabinet

Address to the Home Builders Federation 2008

Date of speech 15 October 2008
Location The Institution of Engineering and Technology, 2 Savoy Place, London

Transcript of the speech as delivered.

Thank you very much for the opportunity to speak with you today.

I am told that Caroline and Hazel have always found you to be frank and constructive colleagues, and I look forward to working with you.

As you may have spotted, this is actually my first speech as Housing Minister.

It seems absolutely right that this should be with you.

Not only because of the severity of the problems that your members are presently facing.

But also in recognition of the considerable contribution that you have made over recent years.

I know from Caroline and my other colleagues that the HBF has often been an invaluable partner in both policy development and delivery - it's hard to be sure which of those is most important.

On difficult issues - from zero carbon housing or planning policies - where it would have been easy for the industry to hang back or be cynical, I am told you've been really progressive and forward thinking.

While also striving, as you must, to act as the reality check that policy makers always need to keep their ambitions achievable.

As a result, you've played an important part in some genuinely striking developments - perhaps most notably, the shared commitment to zero carbon housing.

And now, more than ever, it is critical that we maintain this constructive and honest relationship.

That we continue to strike the right balance between realism and ambition.

The partnership that you have forged with government will stand us both in good stead during these more difficult times - and hopefully may even mitigate those difficulties.    

Let me start by saying that I'm not here today to lecture at you, or to pretend that I already have all the answers.

But I am here to show willingness to listen - not least to the difficulties you're experiencing. To hear your ideas about how we can work through this together.

And to stress that all my colleagues across government are absolutely committed to supporting you through these more difficult times.

Like all countries across the world, we are being hit hard by the credit crunch, made worse by high prices for food and oil.

This genuinely is the first economic crisis of the global age.

But while the causes may be international, the effects are all too local. Every family, every business in the country is feeling the pinch at the petrol pump, at the checkout.

And housing, as you hardly need me to tell you, is among the industries being hardest hit.

As mortgage lending plummets, people can no longer afford to move home.

Potential first time buyers are among those worst affected.

Lending to first time buyers has halved over the past year - with, inevitably, a knock on effect through the rest of the market.

House prices have fallen sharply in response.

No one in government is going to be Pollyannaish about this.

No-one underestimates these very serious concerns.

And no-one is complacent about the scale of the problem facing all of us - and particularly facing you.

And as the depth of the crisis has become clearer, we have already stepped up our response.

The basis of the crisis lies, as you know, in exceptional instability in the international financial markets.

That is where we have taken the most urgent and radical action. With extraordinary measures for exceptional circumstances.

This should help to address the underlying issues, the lack of liquidity and credit which has frozen the mortgage markets.

As banks begin to lend again, the housing market should, we hope, start to feel the benefit.

But clearly, this won't happen overnight. And during my first weeks in this post, doing what I can to address this crisis will be absolutely my first priority.

But as you'll know, over the Summer, we've developed a package of support designed to support stability and fairness in the housing market.

With new support for first time buyers, to get the market moving again.

The stamp duty holiday now means that half of buyers will no longer have to pay.

And as people find it more difficult to borrow large sums, we're finding different ways of helping them get their foot on the ladder by starting off with a share.

We have expanded the HomeBuy programme, so that all households earning under £60 000, who can't otherwise afford to buy, can now apply.

We've introduced "Rent-to-Home-Buy" so that people can save for a deposit while paying lower rent.

And finally, we're setting up the Homebuy Direct scheme, offering people equity loans on new build properties - funded and delivered in partnership with developers.

I know that members of the HBF have been instrumental in developing this scheme, and I am grateful for your contribution.

Together, these products are about offering people different options to finance their first home, rather than a choice of a huge mortgage or nothing.

That's especially important for those who can't rely on family and friends to help them scrape together a substantial deposit.

But we've also announced support specifically for housebuilders as such.

In particular, we are investing in new properties that you are finding hard to sell.  Already, we've spent over £70 million buying up more than 2000 homes for low cost homeownership or social rent.

There is far more money available to buy up good quality homes - the right properties at the right price. And I hope that more of you will come forward with suitable schemes.

It makes good business sense for both of us. We get more social housing at a time when waiting lists are increasing around the country. And you are able to increase turnover.

We've also looked again at spending on social housing over the coming years to see how it can work most effectively for you.

We know that many affordable housing schemes are at risk in the current climate. 

And so we've given the Housing Corporation greater flexibility on the grant rates that they pay.

Still looking for value for money, of course, but balancing that with the need to support you.

And we're bringing forward £400 million to invest in new social housing over the next two years.

This will help somewhat to maintain capacity across the industry while demand from the private sector is weak.

But this will absolutely not be the last word on the subject.

If there is more that we could do, if there are ways in which you believe we could help, then you have an open door to myself and all my colleagues.

I am determined that we will not just hang back and respond to the changing circumstance, but show real leadership.

This could mean difficult decisions. And where you have concerns about your capacity to deliver, I will listen.

But we must also continue to work closely together on the longer term objectives, in both of our interests.

As I said at the start, there's a balance to be struck between ambition and realism, and I want to work with you to find it.

I do think that effective partnership working is going to be absolutely essential.

Already, we're developing new ways of working together, on the HomeBuy Direct scheme.

We should look at other ways in which this partnership might work in your best interests.

On land supply, there may be ways that we can reduce the risk of new developments, by bringing forward public sector land for development.

Not only could this help in the short-term, by offering you greater security, but it will also help to lay the foundations for recovery.

And this too is the kind of thing I want to explore with you over the coming weeks.

Let me finish by saying that, despite all the difficulties ahead, I do believe that over the long-term, the industry could be well placed to weather the storm. Indeed, share prices already seem to have taken a generally positive turn.

And the recent report from the OFT found that you were a strong and competitive industry, in good shape overall - though, I understand they said you may have room to improve customer service.

And while never forgetting the problems, we should remember the wider context for this recent crisis.

Many people's homes are still worth far more than when they first bought them and remain an attractive purchase.

Mortgage rates are low by historical standards.

And we know that the demand for housing is strong, and likely to remain so, though people may be unable to pursue it in the short-term.

Longer lives, changing lifestyles and a legacy of undersupply have led to considerable and lasting un-met need.

None of this is in any way meant to diminish the very real frustration and anxiety that I know many of you are feeling.

But it is to stress that we are facing these challenges, together, from a strong foundation.

And I personally, am absolutely committed to trying to support you during these difficult times, working together towards steady and sustained growth again in the future.

I look forward to the start of a productive dialogue about how best to do that.

Thank you very much.

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