Good afternoon, and thank you for inviting me to speak here today. It’s a pleasure to speak with so many people, from a variety of sectors, all of which critical to our housing market, and all of which vital to our economic recovery.
I know it’s been a tough and a slow year for housebuilders. As Minister for public expenditure I’ve probably made greater use of the tin hat over the last year than many of you here today.
But the housing and construction sector is at the heart of our economy, and has been for decades.
And I want to congratulate the NHBC on its 75th anniversary. The council plays a huge role in the new build market in the UK…setting building standards and providing warranties to over one and a half a million home owners. And its testament to your standing and reputation that today’s lunch has brought together so many of the biggest names in the industry.
It’s also good to see Nick Robinson here. I thoroughly enjoyed the first episode of your new series last night: Your Money and How They Spend it.
On a more serious note though, what we spend is of course an important matter. The most important issue for this government.
And we’ll have more to say in the Autumn Statement on Tuesday.
As you all know as well as I do, we are facing extremely tough economic conditions. The UK economy is still growing but recent figures on growth, borrowing and unemployment make clear the size of the challenge we face.
We always said that the recovery would be difficult. But the depth and global nature of this crisis makes this recovery particularly tough.
As you all know, the Eurozone has been at the epicentre of the latest phase of the crisis. As a leading member of the EU, we continue to press the Eurozone to implement its plans and resolve its problems.
After all, the EU is our largest trading partner. More than 50 per cent of our exports are to the EU.
We cannot ignore the impact of the harsh winds of the Eurozone crisis on our own economy.
It’s why a resolution to the crisis is in our vital national interest. It would provide the single biggest boost to our economy this autumn.
But it’s not a resolution that comes easy.
Ending the crisis means taking tough political decisions on the future framework of Eurozone and the European Union.
It means taking painful but necessary decisions to tackle mountains of sovereign debt that have been built in the last decade.
It means taking the kinds of decisions that this Coalition Government did when it came into office.
It’s easy to forget that we came to Government inheriting the largest UK peacetime deficit on record.
We were borrowing one in every pound that four we spent – a totally unsustainable path.
Spending more on debt interest than we did on schools in England. Our triple-A credit rating was on negative watch.
And the cost of borrowing for the UK Government was similar to that of Spain and Italy.
Our economy faced the risks that are becoming reality in too many European countries.
Facing that future, we knew that the national interest demanded that the politicians of two very different parties work together to take the tough decisions to tackle the budget deficit.
It wasn’t easy, but it was right.
But it’s because of that resolve the UK has been sheltered from the debt storm that now engulfs our European partners.
Our bond yields are now more than 4% lower than both Italy and Spain.
Instead our interest rates now track the likes of Germany.
The result is low and stable interest rates which make a huge difference to households and businesses across the country. It means businesses can secure and refinance their debts.
And it means families can pay their mortgages and stay in their homes.
Even a 1 per cent increase in interest rates would take £10bn out of the economy through higher mortgage repayment costs.
Every business, and every family, understands that you can’t keep borrowing forever live beyond your means. There will always be a reckoning. And that time is now.
Labour tried their Plan B for the economy. We were borrowing one pound in every four we spent, our interest rates were above both Italy and Spain and the credit ratings agencies had us in their sights.
Plan Brown didn’t work then, Plan Balls wouldn’t work now. Plan Berlusconi is all the evidence you need.
Tackling the deficit we inherited from Labour was always going to be a long march
And I’ll be frank with you, the challenge is not getting easier. As a result of the instability in Europe, that march will be longer than we had hoped.
But the destination is the right one.
The IMF, the OECD, the European Commission, the credit rating agencies, and UK business organisations all agree with us.
Cutting the deficit will not bring growth by itself, but it’s the vital foundation for it. Without financial discipline, there can’t be a recovery.
And the latest phase of the crisis in Europe should serve no doubt that credibility is our most precious asset.
Our job is to keep the country safe and strong.
So let me be clear that the Liberal Democrats and Conservatives remain fully committed to meet the fiscal goals we have set.
We will stick to our plans, not because it is politically easy, but because it is right for our economy.
We must all work together to deal with the problems of the past, and make our economy stronger than before.
That’s why it is so disappointing that there are some who seem determined to damage our economy, even at this most difficult time.
There is no case for strike action next Wednesday over public service pensions.
The talks are still going on. The Government has made an exceptionally generous offer – conditional on reaching agreement.
We are committed to the talks until the end of the year. Strikes are unreasonable, but also dangerous.
The strikes are not in the interest of public service workers or the British economy - Union leaders must think again
PLAN FOR GROWTH
We will deploy all the tools at our disposal to return the economy to rebuild our prosperity.
That means supporting growth through private sector enterprise, investment and innovation.
Supporting growth across all sectors of the economy.
Supporting growth across the whole of the UK.
As we are doing through our Plan for Growth the second phase of which we will publish next week.
Of course, as part of the second phase, earlier this week the Prime Minister and Deputy Prime Minister set out the Government’s new and ambitious strategy to support the housing market.
A market that continues to suffer more than most from the shortage of credit where lenders won’t lend, so builders can’t build, and buyers can’t buy.
That’s why we are taking action to drive up the level of housebuilding and make it easier for people to secure mortgages on new homes.
We don’t want to revert to the unsustainable housing boom of recent years.
We don’t want irresponsible and unaffordable mortgages in excess of even 10 times someone’s salary.
But we do want to help buyers on a good salary to get the reasonable mortgage on a home.
At the heart of the strategy is a new mortgage indemnity scheme. It’s a scheme that will give a helping hand for up to 100,000 prospective buyers of new build property currently frozen out of the market because of large deposit requirements.
Through this scheme homebuyers will be able to secure loans on newly built homes with only a 5 per cent deposit, with the Government and housebuilders providing security for the loan.
We are also helping housebuilders through a new £400m Get Britain Building fund that will kick start construction on stalled building sites. Helping to deliver up to 16,000 new homes.
That in addition to the £500m we secured for the new Growing Places Fund to help provide key infrastructure and unlock economic development to support local jobs and housing.
And of course, we have ensured that we are supporting the poorest and most vulnerable in our society through our commitment to affordable housing.
The Spending Review committed £1.8bn of cash for affordable housing providers, and we have already confirmed £1bn of contracts with providers . Contacts that will help deliver 170,000 new affordable homes across the country in the next four years.
Hand in hand with that, we are tackling the scandal that is the nation’s growing number of empty homes. The strategy announced that Housing Associations and councils will be able to apply for part of £100m of Government funding to help bring some 3,000 empty homes across the country back in to use, with a further £50m of funding available to tackle areas with the worst concentrations of empty homes.
It’s a bold strategy to provide hundreds of thousands of new homes. With your help, it will also support many thousands of jobs.
It’s a strategy to build our future. Laying the foundations for a strong and sustainable economy.
But there is still more that we are looking to do to support the construction market. The Green Deal is key to that ambition.
On Wednesday the Government published its consultation and draft statutory instruments on the Green Deal and Energy Company Obligation.
Schemes that will revolutionise energy efficiency in British properties, and create new employment in the construction sector.
As you’re aware, the Green Deal means that consumers won’t pay upfront for energy efficiency improvements, but instead repay through charges on their energy bill that are no higher than the expected savings generated by the improvements installed.
It’s an initiative that fundamentally changes incentives to invest in energy efficiency.
And the potential benefits are huge. The Green Deal has the potential to transform energy efficiency in Britain, create over 60,000 jobs in construction and insulation, and attract over £14bn of investment in the next decade.
It’s an ambitious programme, but no less than we need to meet our climate change targets, and to support our housing and construction markets.
It shows too that we do not face a choice between ‘green’ and ‘growth’ – the two go together.
And it’s exactly the same kind of ambition we are taking to the UK’s infrastructure.
Through our National Infrastructure Plan, we have already set the stage for some £200bn of investment over the course of this parliament.
Investment that is critical to replacing and updating our ageing infrastructure.
Improving the rail network, reducing congestion on our roads, providing the best superfast broadband in Europe by 2015, and putting the UK in the lead of a revolution of renewable technology and enterprise.
We know it’s always a battle to deliver infrastructure projects on time and on budget, but we’re keeping our foot on the accelerator. We will do everything we can to clear the blockages…regulation, funding, procurement, planning…if we can help unblock it, we will.
That includes hand picking up to 40 of the biggest infrastructure projects which will be given new special priority status. And we will be providing more information on those projects next week.
But more than that, we are shaking the Whitehall tree to makes sure no-one is stockpiling capital that can be put to good use today.
That’s why next week’s announcement will switch funds to capital spending plans. Creating the jobs and growth that we need today, laying the foundations for a sustainable private sector led recovery into the future.
These are infrastructure projects that will create thousands of jobs here and now.
But they also lay the foundations for sustainable private sector growth for the future.
Everyone here knows that infrastructure investment is critical to supporting private enterprises and businesses, to realising our country’s growth potential.
The businesses and enterprises that are vital to leading our economic recovery through innovation, investment and export.
And we will do everything we can to support them in that challenge.
That’s why we are cutting corporation tax to 23% by 2014. The lowest rate in the G7, the fifth lowest in the G20. An important step to reversing years of declining global competitiveness.
It’s why we’re slashing red tape. Removing layers of bureaucracy that stifle the innovation of our entrepreneurial businesses.
And it’s why we are reforming our cumbersome planning rules in England. Embedding a presumption in favour of sustainable development to deliver the housing and infrastructure we desperately need.
ACCESS TO FINANCE
We are doing all we can to remove the road blocks to growth. But removing the barriers isn’t enough. If businesses are to thrive in the new environment, they also need credit.
We know that credit for SMEs is still tight. It’s why we intervened and secured agreement with the big four banks to provide £190bn in new lending to all businesses in 2011. £76bn earmarked specifically for SMEs.
On top of that the Chancellor has announced that we would also look in to credit easing options…to inject money directly into companies.
And we will be providing further details in the Autumn statement next week, alongside a range of other measures that have come out of the second stage of our Growth Review.
We have been working tirelessly over the last few months to do everything that we can to support growth in our economy.
We have a long and difficult path to tread. That was always going to be the case as we recovered from the worst debt fuelled crisis in almost a century.
The crisis in the Eurozone, the political deadlock in the US, the slowing growth in China, mean the challenge will be that much harder.
We are leaving no stone unturned in our pursuit of growth. We will continue to need your insights and your support as together, we build the future of the British economy.