Pre-Budget Report

My right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friend the Member for Ludlow (Mr. Dunne) both make the point that we need a great deal more transparency, and that action is required to address the question of banks' balance sheets. Unless banks have the confidence to lend to one another, normal monetary policy will not be resumed. Much has been said about the way in which we might try to encourage the economy to overcome the downturn. I agree with my right hon. and learned Friend the Member for Rushcliffe: I think that that is going to take much longer than the Treasury's heroic idea of ““one year, then we will be out of it.”” The Treasury have forgotten the failures of their own system of forecasting. If we look at successive Red Books over the past few years, we will see a table of endless adjustments of previous projections of tax receipts and, indeed, borrowing, which shows that Treasury forecasting has entered an era of inaccuracy. The Chancellor would be unwise to dismiss many of the commentators who have commented on the likely severity of the downturn. There is a human trait that the House of Commons needs to address, as it is easy to get caught up in the technicalities of economics and monetary and fiscal policy, and forget the fear factor and the lack of confidence among members of the public. Why have retail sales declined? Unemployment has fully to bite in this recession. There are about 25 million people who are still in employment, but many of them are frightened of what might happen. They are genuinely uncertain about the future, and they are frightened when they hear that Government borrowing will rise to £118 billion. They know that that is a big number, and that somebody will have to pay for it. While there is that uncertainty, they will not spend. Most people gain confidence from knowing that the price of their house—their single biggest asset—has some kind of value. Only today in the Tea Room, however, we saw a headline saying that houses in London are to be sold with a further £100,000 off their asking price. When people read that, they do not look beyond the headline—they know that it is a frightening time, so they are cautious with their money. That is why I am concerned that the pre-Budget report has done nothing whatsoever to get the fundamental housing market going. There have been comments on the subject of social housing, but the Government should recognise that there may be an opportunity, particularly for first-time and young buyers, to get into the housing market. Measures could be taken including, for example, a further rise in the stamp duty threshold to £500,000. The number of mortgages for new lending has effectively dropped to an all-time low. Estate agents are lucky if they sell one house a week. Those are all factors that affect not just the housing market and people's confidence but the construction industry. If there was some movement, perhaps that would restore confidence in the economy.