Category: Press Releases

The press release issued by HM Treasury on 10 December 2003.

Launching her Interim Report  – “Securing our Future Housing Needs” – Kate Barker said:

“Housing has a huge impact on people’s quality of life. The Government is already doing a great deal to tackle housing supply problems.  However, it is clear that the UK housing market is not working as well as it should. In particular there is a problem of weak supply, with major implications for the UK’s economic well-being and house price volatility. The review’s final report next Spring will set out policy proposals for addressing the problems I have identified.”

• In 2001, around 175,000 dwellings were built in the UK – the lowest level since the Second World War (see Chart 1, page 9).  And over the past ten years, the number of new dwellings built has been 12.5% lower than in the previous decade.
• Over the last 30 years, UK house prices went up by 2.4% a year in real terms – compared to the European average of 1.1%. In Germany it was 0%, and in France 0.8%.
• If UK house prices had risen in line with the European average, since 1975, the UK economy would have been £8 billion better off.  As a result of these price rises first time buyers in 2001 paid on average £32,000 more for their homes.

The Review considers a range of factors that might be constraining the supply of housing in the UK, arising from industry failures or the policy environment.

The main constraint identified by the Review is land supply.  This problem relates in part to the housebuilding industry, in particular, its response to risk which leads to reluctance to build out large sites quickly.  The regulatory relationship and control over the use of land also influences the way in which land is made available for development.

Key findings:

Housing supply and its implications

Historically, UK housing supply has been unresponsive to changes in price – three times less responsive than in the US and four times less responsive than Germany. Over the last 10-15 years, UK housing supply appears to have become entirely unresponsive – as prices rose, housebuilding did not increase. Inadequate housebuilding constrains economic growth, damaging the flexibility and performance of the UK economy, reducing living standards for everyone.   Regional price differentials also reduce labour mobility and hamper economic growth.  Too few houses and consequent higher house prices also create affordability problems:

• In 2002, only 37% of new households in England could afford to buy a house, compared to 46% in the late 1980s.
• The ratio of lowest quartile house prices to lowest quartile earnings has increased significantly in most English regions. In 1993, a London house cost around four times the annual income of a low income household. By 2002, the same house had risen to almost eight times annual income (see Chart 1.7 page 34).
• Reduced housing supply contributes to homelessness – households in England in temporary accommodation have more than doubled between 1995 and 2003 from 46,000 to over 93,000.
• 35 per cent of first time buyers in London pay at least part of their deposit with a third party contribution, compared to 22 per cent in the North and the Midlands.  Increasing reliance on inheritance and donations drives a wedge between first time buyers who have access to wealth and those who do not.

The housebuilding industry and the availability of land

The housebuilding industry is characterised by a reluctance to invest in brownfield development and low levels of innovation.  Many housebuilders hold considerable portfolios of undeveloped land with planning permission.  There is little evidence to suggest, at any rate across the country as a whole, that these landbanks prevent other housebuilders entering the industry, or allow housebuilders to exercise market power.  But, once land and planning permission has been acquired housebuilders have little incentive to compete for consumers or innovate.

• Only 54% of new home buyers say they would buy a new home or another home from the same housebuilder.
• In order to best maximise profits many housebuilders control production rates and “trickle-out” no more than 100-200 houses per annum from a large development.  This may not be desirable from society’s point of view.
• Modern methods of construction are not well established in England where housebuilding techniques are very labour intensive – around 50 per cent more than Denmark, and 25 per cent more than Scotland. Labour intensity has not changed significantly in England over the last 25 years.  The housebuilding sector suffers from significant skill shortages with 80 percent of firms reporting difficulty finding bricklayers, carpenters and plumbers.

Government policy levers

The Government is an important player in addressing problems with housing supply.  Through the Sustainable Communities Plan and current housing and planning bills, it has already embarked on major reforms of the planning system and of social housing.  Nevertheless there are significant challenges:

• Local authorities have few positive incentives to build and few sanctions if they fail to meet targets, while the planning framework could respond better to market signals and take better account of costs and benefits of development.
• Infrastructure barriers hold up construction of over 40,000 dwellings in the South East alone.
• Only 1% of property institutional investment is in residential property. A tax-transparent vehicle (based on the US Real Estate Investment Trust model) could encourage more investment.
• Higher land and build costs have meant that public money for housing is not going as far as it used to. Social sector building has not risen in line with increased public expenditure in the sector.

Increasing housing supply

The Review reaches no conclusions on how many houses we need to build in future. Government faces choices about how far to meet growing demand, given the environmental and social costs of housebuilding. The report published today does contain estimates of undersupply to help inform the debate:

• 39,000 additional houses a year are required simply to accommodate population growth and changing patterns of household formation in England.
• In recent years between 93,000 and 146,000 households per annum have been priced out of the housing market in England compared to affordability levels in the late 1980s.
• The review has commissioned academic modelling work, to investigate estimates of the number of additional houses consistent with various long-run house price scenarios.  This suggests that an additional 145,000 homes per annum would be required in the UK to lower real house price inflation to the European average of 1.1% and that an additional 240,000 houses would be needed in the UK to lower real house price inflation to zero.  These are likely to be over estimates as greater supply would affect expectations and change the response of prices to additions to the housing stock.

The press release issued by HM Treasury on 10 December 2003.

Improvements in regional statistics are vital to improve decision-making in regional economic policy, according to the First Report of Christopher Allsopp’s independent Review of Statistics for Economic Policymaking, published today.

The Report explains how the devolution and regional economic policy agendas have led to a growing demand for regional data that is not met adequately under present arrangements. Its recommendations respond to the needs of policymakers and the wider user community, including business and academics at both national and local levels. These include:

• bringing Regional Accounts more into the National Accounts framework, including a better quality and more timely measure of real regional Gross Value Added;
• expanding the range of micro-economic and sub-regional data already available, with the infrastructure used by the Office of National Statistics’ (ONS) Neighbourhood Statistics Service becoming  the primary platform for area-based National Statistics;
• ONS or Government Statistical Service presence in the English regions to complement that which already exists in Scotland, Wales and Northern Ireland; and
• greater access for the ONS to administrative data held within government, which could improve both regional and national data while offering important savings in the compliance burden on business.

Publishing his First Report, addressed to the Chancellor of the Exchequer, the Governor of the Bank of England and the National Statistician, Christopher Allsopp said:

“Government policy is, increasingly, emphasising regional and local decision-making.  To be successful, this change must be underpinned by high quality and timely statistical information.  These new demands present a major challenge to the statistical services and a large gap has opened up between what is needed and what is available.

“My Report identifies ways of addressing the demands of regional economic policy.  But this will require significant investment in, and commitment to, the UK statistical services.  The pay-off would be better informed policy at all levels and in all regions and countries of the UK.”

The Report highlights a number of areas where consolidation and review of existing arrangements, some already under way, could offer savings and efficiencies, while recognising the resource and business-compliance requirements of such a statistical agenda.

The Report is consultative and comments are invited in time to inform the Final Report by the time of Budget 2004. It also looks to the second stage of the Review, discussing the extent to which the UK statistical system has reflected the changing structure of the UK economy, in particular the relative importance of the manufacturing and service sectors.

The press release issued by HM Treasury on 17 December 2003.

The Chief Secretary to the Treasury, Paul Boateng, today announced that a consortium of charities has been selected to administer and distribute the £125m futurebuilders fund.  The consortium will be led by Charity Bank, NCVO and Unity Trust Bank. Other organisations that will play a key role are the Impetus Trust, the Community Fund and the Northern Rock Foundation. Together, they bring a wide range of experience in grant-making, loan finance and funding information and advice to the voluntary and community sector.

Chief Secretary to the Treasury, Paul Boateng said:

“In selecting this consortium, we are ensuring that the voluntary and community sector will continue to be in the driving seat in running the fund. This has been a unique and rewarding project to work on and I wish futurebuilders great success as it now begins to filter down to the organisations in the sector that need it most.”

Fiona Mactaggart, minister in the Home Office, who will assume lead responsibility for futurebuilders in the New Year, said:

“This is good news. This investment will help voluntary and community organisations play a more central role in service delivery. It will mean improved and expanded services that offer greater choice to local people. What we all want to see is this money out and working in the sector as soon as possible.”

Sir Michael Bichard, Chair of the Compact Working Group, commented:

“The consortium that is taking on the task has the strength and depth of experience of the voluntary and community sector and of social enterprises to ensure that this exciting new fund reaches far and wide in its investments, and makes a real difference in improving and expanding public services.”

Chief Executive of Charity Bank, Malcolm Hayday said:

“We in the consortium are very pleased to have been selected provider of choice. We are now eager to get on and put our systems in place so that the fund is up and running as soon as possible. We will announce further details just as soon as the formalities of the contract are concluded.”

The press release issued by HM Treasury on 18 December 2003.

“In the face of sizable global shocks over the last few years, the economic performance of the UK has been enviable” the International Monetary Fund said today.

In the  concluding statement to its Article IV examination of the UK economy , the IMF notes that “growth has been resilient”, “unemployment has been stable and at a low level” and “inflation has remained close to target”.  It praises the monetary policy framework, which it says has “achieved a high degree of credibility”, and comments that the increase in government borrowing “does not raise sustainability problems” and has “played a useful countercyclical role”.

The IMF also welcomes recent reforms and initiatives aimed at improving productivity and says that it is “encouraged by the success” of the New Deal.

The press release issued by HM Treasury on 24 June 2003.

The government has today launched a nationwide campaign setting out how the public can help to tackle money laundering and the financing of terrorism.

The campaign sees the launch of information leaflets informing customers of the reasons why they need to prove their identity to financial services companies. Effective identification of customers using bank accounts and other financial services makes it harder for terrorists and other criminals to hide and move ‘dirty cash’.

This is an industry-wide initiative, supported and backed by HM Treasury, National Criminal Intelligence Service, Financial Services Authority and the financial services industry.

Announcing the campaign Paul Boateng, Chief Secretary to the Treasury, said:

“Customers should be in no doubt that when they are asked by financial companies to provide personal details it is done to make it as hard as possible for criminals and terrorists to abuse the system. ‘Dirty cash’ comes from crimes like theft, burglary and drug dealing and is used by terrorists to fund their atrocities. It is in the interests of every law abiding person to stop this ‘dirty cash’ being laundered ‘clean’.

“The Government is fully behind this campaign to widen awareness of why it’s so vital for people to provide personal details. These leaflets will help financial services customers understand the key role they can play in cracking down on this abuse and making Britain a safer place.”

Carol Sergeant, Managing Director of the Financial Services Authority, said:

“These leaflets are designed to explain to customers why they are asked to prove their identity by their financial services provider when buying a product or opening a new account. It is an important part of the government’s overall strategy to reduce crime.”

Peter Hampson, Director General of the National Criminal Intelligence Service, said:

“Top level criminals and terrorists are known to abuse the financial system for their own illegal ends. Asking customers to provide personal details is a vital element in the law enforcement clampdown against such persons.”

Ian Mullen, Chief Executive of the British Bankers’ Association and Chairman of the Joint Money Laundering Steering Group, said:

“We welcome this initiative to explain to the public why banks and other financial services providers need to ask their customers to prove their identity in order to help fight crime and terrorism.”

The press release issued by HM Treasury on 14 January 2003.

A massive transfer of resources – up to £2 billion – will go from men to women through the new Tax Credits from April this year, said Chancellor Gordon Brown today, as a new poll shows that two-thirds of people believe that all support for children should be paid to the mother, and only one per cent think it should be paid to the father.

Even the vast majority of men believe all support for children should be paid to the mother: 64 per cent believed that it should be paid to the mother and only 1 per cent that it should go to the father.

70 per cent of all those polled said that the mother is most likely to ensure that the money goes to the needs of the children. While 28 per cent said it made no difference which parent received the money, only two per cent said fathers would be most likely to ensure that the money goes to the needs of the children.

Mr Brown and Trade and Industry Secretary Patricia Hewitt also published wide ranging proposals to help parents balance work and family life.

Chancellor Gordon Brown said:

“April’s new Tax Credits are the biggest financial boost for mothers since the introduction of Child Benefit, and evidence shows that money paid direct to mothers is more likely to be spent on the child, than if it goes to fathers. Up to £2 billion will be transferred from dads, to mums – for their children.

“We want to put families first by helping parents as they do the most important and difficult job of all – getting their children off to a good start in life.”

Trade and Industry Secretary Patricia Hewitt said:

“The new package of rights we are bringing in next April will give parents more choice and support than ever before to balance work and family life in ways which will be good for everyone – employers, employees and their children. The ‘right to request’ will help deliver modern, flexible, productive workplaces for all, with balanced benefits for both employers and employees.”

Mr Brown and Patricia Hewitt launched Balancing Work and Family Life: enhancing choice and support for parents which looks to enable parents to make choices and balance work and family life and asks for views on possible next steps including:

• following consultation on the home childcarers scheme, how to widen entry into the scheme to include people who are not already childminders;
• improving the tax and NICs exemptions on employer-supported childcare, including how they could offer a better incentive to employers to support childcare provision;
• whether to allow fathers time off to attend ante-natal care and the case for extending paid paternity leave in cases of multiple births and disabled children; and
• the case for allowing a mother on paid maternity leave to claim support with the childcare costs for her new child in order to settle her child into childcare prior to returning to work.

The press release issued by HM Treasury on 21 January 2003.

West Midlands business will be on the agenda, when Economic Secretary John Healey visits Birmingham Chamber of Commerce on Tuesday 21 January.  The Minister will be listening to the views of business leaders from across the region on local enterprise.

The Economic Secretary’s visit to the West Midlands is part of a national pre-budget consultation by HM Treasury, with Ministers visiting different regions to hold discussions on key budget topics.

The West Midlands has benefited from a range of enterprise and productivity initiatives by the Government:

• Employment has risen by more than 73,000 and unemployment has fallen by 18,000 in the region since 1997;
• Over 93,000 young people in the region have gained new skills and experience through the New Deal, over 30,000 of whom have already moved into jobs;
• Making work pay for all, with the Working and Child Tax Credits, from 2003, will help over half a million families in the West Midlands;
• Creating almost 120 Enterprise Areas in the region, giving more people the chance to start and develop new business;
• Providing extra support to tackle barriers to business growth including the extension of the VAT flat rate scheme – the West Midlands has almost 58,000 businesses eligible to use the scheme;
• Tackling pensioner poverty and rewarding savings, with an estimated 350,000 pensioner households benefiting in the region.
• 61,500 children typically born in the region each year will benefit from further development of the new Child Trust Fund, ensuring that young people start their adult lives with a pot of savings.

John Healey commented: “The West Midlands has a strong tradition of industry and enterprise. We acknowledge the pressures that businesses are facing, and now I want to hear first-hand from local businesses how we can better support Britain’s entrepreneurs. This is a valuable discussion as we put in place preparations for the Budget.

“The Government wants to build a stronger, more enterprising economy and a fairer society. The West Midlands can make a huge contribution to that.”

The Minister then visits a social enterprise in central Birmingham, which works with people suffering from addictions – helping them to overcome their problems and giving them the opportunity to learn about and actually run a business.

The press release issued by HM Treasury on 21 January 2003.

Representatives from a variety of Leicestershire companies and other organisations met the Economic Secretary to the Treasury, John Healey, on Tuesday 21 January 2003 as part of a series of pre-Budget consultation visits throughout the country.

The East Midlands has benefited from a range of enterprise and productivity initiatives by the Government:

• Employment has risen by more than 98,000 and unemployment has fallen by 27,000 in the region since 1997;
• Over 54,000 young people in the region have gained new skills and experience through the New Deal, over 20,000 of whom have already moved into jobs;
• Making work pay for all, with the Working and Child Tax Credits, from 2003, will help 400,000 families in the East Midlands;
• Creating over 130 Enterprise Areas in the region, giving more people the chance to start and develop new business;
• Providing extra support to tackle barriers to business growth including the extension of the VAT flat rate scheme – the East Midlands has almost 38,000 businesses eligible to use the scheme;
• Tackling pensioner poverty and rewarding savings, with an estimated 300,000 pensioner households benefiting in the region.
• 45,800 children typically born in the region each year will benefit from further development of the new Child Trust Fund, ensuring that young people start their adult lives with a pot of savings.

John Healey commented: “The East Midlands has a strong tradition of industry and enterprise. We acknowledge the pressures that businesses are facing, and now I want to hear first-hand from local businesses how we can better support Britain’s entrepreneurs. This is a valuable discussion as we put in place preparations for the Budget.

“The Government wants to build a stronger, more enterprising economy and a fairer society. The East Midlands can make a huge contribution to that.”

The Government continues to support Regional Development Agencies as a strategic driver of economic development, regeneration and competitiveness in the regions. Through the Spending Review 2002, RDAs were granted a 4.5% real increase in resources between 2002-03 and 2005-06, taking the total single pot to £2bn by 2005-06.

Achievements of the East Midlands Development Agency include:

• The regeneration of a disused stretch of waterfront, to bring new prosperity and a better quality of life to the south east area of Nottingham City Centre;
• Championing the value of social enterprises as powerful tools against exclusion by investing £255,000 in a new multi-partner initiative to promote growth in the sector.

Local organisations involved in the visit include Wilson Bowden plc, Advanced Tapes, de Montfort University Business School, Hallam Construction, Northcliffe Publishing plc and the Leicestershire Chamber of Commerce and Industry.

The Minister also travelled to Lutterworth to see the work of learndirect at Focus Four which provides “any time, any place, any pace” learning for individual adults and businesses through three training centres in south Leicestershire.   Since becoming a learndirect centre in August 2001 and a learndirect Premier Business Centre in November 2002, more than 2,000 learners have enrolled for courses.