Pre-Budget Report

I am grateful to my right hon. Friend for his comments. He will recall that I opposed the move when it was first announced, before it was implemented. One of the silliest things that the Government have done has been to persevere with it. We should all acknowledge that my right hon. Friend the Chancellor has put things right. He has undertaken to correct the matter, and I am pretty sure that he will, but that should absolutely be a priority. The situation is unprecedented. It is a failure across all fronts of Government and private sector activity, as well as internationally. The depth of it is unprecedented, and it is right to use all the levers of government to correct it, which is precisely what the Government are striving to do. The restraint on public expenditure to which the hon. Member for Twickenham rightly drew attention is important. We cannot exempt public sector investment from that. As we come out of this recession, no area of Government expenditure will be exempt from severe restraint. We must prioritise, particularly in relation to investment. I am pleased to agree with several right hon. and hon. Members that social housing should be an unqualified priority. We need to take the same approach with housing associations. They have their difficulties, but they are prepared to advance money—I speak for the large social housing organisation, Orbit Group, which has its headquarters in my constituency. Housing associations can spend their share of the £8.7 billion programme, but they will need some subsidy, because the homes will be built for rent, not for purchase. The cash flow profile for rent is less advantageous than it is for purchasing, but we hope to recoup that when the houses come up for purchase. The associations that I have spoken to are prepared to share with the Government the profit on eventual sales, when the houses come up for purchase, so that the Government can recoup some of the subsidy that they have had to invest. I urge my right hon. Friend the Chancellor, or one of the Treasury team, to engage in a serious dialogue and to pull forward that advanced investment as part of the £8.7 billion. That should be an unqualified priority.