I am grateful for the opportunity to debate an industry that was such an integral part of my life before I entered the House. The debate is long overdue, and it is with a sense of sadness that I feel it necessary to highlight the continuing dire state of the UK construction and housing industry. I declare an interest as I remain a director of a building supply company and have worked in the construction and housing industry for more than 30 years in various roles.

The construction industry has more than 250,000 businesses employing more than 2 million people in the UK and has a turnover of about £6 billion a year. We have the second largest industry output in the European Union, and we all know and appreciate the role played by infrastructure in the UK's progress in recent years.

That is not the only story, however. There are vital subsets to the construction industry: for example, construction product companies have an annual turnover of more than £40 billion and employ more than 650,000 people in more than 30,000 companies. In Scotland, almost 12 per cent. of the work force are employed in construction and building-related activities, and further decline would have a profound impact on Scotland in general.

Last July, I wrote to both the Prime Minister and the Chancellor of the Exchequer to outline my concerns about the perilous state of the UK housing and construction industry. Sadly, those concerns have turned into reality; they are still with us today and there is little sign of improvement. It is important to understand that the housing industry has always built speculatively and not to order. Only by speculation can businesses provide continuous employment. The situation is little different from that of the car market, where mass production is not to order. In the housing industry, such speculation has stopped. The sector has lost jobs at an alarming rate, affecting the supply side, design and manufacture, road haulage and even council planning departments.

Past downturns have been different from what we are experiencing today. In Scotland, the industry has not experienced the highs seen in the south of England, but to some extent it has not experienced the same lows either. Arguably, that put Scotland in an advantageous position as part of the UK, as the situation was less volatile and a little more predictable—but not this time. The whole developed world has suffered a financial earthquake simultaneously, and no one was prepared. Almost overnight, credit lines were stopped. Major developers such as Barratt, Taylor Wimpey and Persimmon cut jobs as early as last summer. Speculative house building is virtually dead. Moreover, stock of completed housing units is reducing in value, and land values are plummeting.

The construction industry is vital in delivering our new infrastructure. If there is no construction industry, there is no new infrastructure. There is a huge threat to the future of the construction industry, especially the housing industry, in the UK. Private finance initiatives or public-private partnership contracts created a boost to the construction sector, with schools and hospitals the length and breadth of the UK being improved or newly built. The importance of public spending in a recession therefore becomes even more crucial. With the Scottish Executive delaying the process in search of a new name for PPP or PFI, however, there will not be a continuous flow of contracts in Scotland. That will not only harm the industry but delay the modernisation of our public estate.

On a wider scale, we need the new buildings, roads, railways and stations to remain competitive. Infrastructure is the key consideration for businesses when they want to relocate. In Clackmannanshire in my constituency, towns such as Alloa have been opened up with the construction of the eastern approach road, the reopening of the railway link to Stirling, and the construction of the Clackmannanshire bridge. The last batch of Labour's approved contracts are nearing completion, and Scottish construction companies are looking into the void in search of the next project, more in despair than hope. Government action is important in all areas of the UK, and spending from this Parliament is still strong. But we need clarity on the new projects being brought forward, and action is demanded in Scotland, not political posturing.

Although there is a huge responsibility on Government shoulders to bring forward infrastructure projects, responsibility also falls on the banks to lend at reasonable rates. That lending is required to allow developers to create the infrastructure that our economy will need to rebuild after the downturn, both to allow us to compete and to provide the housing and social environments that the country needs. Reasonable lending is not 7 per cent. above base rate, but that is becoming the norm. Lenders can make any deal competitive if they are all offering it, but that does not make it morally or financially right.

Of equal importance, funding is required for potential home buyers. We need to be much bolder in our action and force all the banks to lend again at reasonable rates to encourage spending. I urge Ministers to look again at recommendations to intervene in the mortgage market by guaranteeing £100 billion of mortgage-backed securities this year and next. Perhaps that will be part of the Chancellor's Budget next month; my hon. Friend the Economic Secretary can take that back to the Chancellor as part of my shopping list from tonight.

I want to spend another minute or two on mortgages. First, on deposits—or in sector speak, loan to value—not long ago the financial sector was offering mortgages of 100, 110 and 120 per cent. of the value of properties. It is still possible today to get a 100 per cent. mortgage. Plainly, that was and is madness. Lest anyone think that I absolve the individuals from responsibility, I do not. Individuals who used such vehicles have a responsibility, but so does the financial sector. We did not ask the financial sector to create such products; it created them and offered them to individuals on the clear understanding that lenders were content that individuals could afford them.

In general, however, that madness has now gone full circle. Most products now demand a large deposit: 20, 25 or 30 per cent. Why? Could it be that the lenders really have individuals' best interests at heart, and want to ensure that we can all cope with our repayments? I do not think so. If those were the banks' true concerns, they would help by passing on the full falls in interest rates that have been generated recently. I believe that they are protecting their own backs against possible further falls in house values. However, for the industry the solution is simple. We must return to widely available 90 per cent. mortgages if we are to have any hope of saving the industry.

We have all seen and, I hope, welcomed the recent commitments from Northern Rock, the Royal Bank of Scotland and, last week, Lloyds Banking Group to increasing their home lending this year and next, but it really is a case of "Increase it from what?". Northern Rock is to increase lending by £14 billion over the next two years. RBS and Lloyds are to increase theirs by £9 billion and £6 billion respectively over the same period. That is a total of £29 billion over two years. Let me put that into perspective.

According to the Royal Institution of Chartered Surveyors, new home-buying inquiries are at their highest level since October 2006, yet the number of home purchase loans fell to 516,000 in 2008—their lowest level since 1974—down 49 per cent. on 2000. In January 2009, total mortgage lending was estimated at £12.4 billion for that month. It may be said that that is quite a sum, but it is 52 per cent. less than the figure for January 2008, which was about £25 billion. The commitment of £29 billion over two years is arguably needed over a single month.

Sadly, we have not yet seen any move in the sector to affordable loans demanding, say, 10 per cent. deposits filtering through to the consumer. Quite the contrary, indeed. There are 1,398 different mortgage deals available today, but two thirds of them demand a minimum 25 per cent. deposit, and the number demanding a 15 per cent. deposit has risen by nearly 8 per cent. in the last month alone. Deals demanding 10 per cent. deposits are becoming scarcer rather than more available: 101 deals are on offer, compared with 120 last month and nearly 1,200 a year ago. The deals that are available for 10 per cent. depositors carry a penalty. They have an average fixed rate of 6.31 per cent.—whereas someone with a 40 per cent. deposit can secure an average rate of 4.84 per cent.—and they are often subject to significant arrangement fees, which are very clever marketing tools not to sell a product. Let me pose a question to my hon. Friend the Minister. What can he do about a state-funded lender such as HBOS, which since the first quarter of this year will lend only 80 per cent. of the value of any new-build property?

Ninety per cent. mortgages will help the housing sector, but it does not stop there. When people buy new cars, what do they do? Nothing other than put fuel in them and drive them, which is what they did with their old cars. People who buy new houses spend additional money. Any high street retailer will confirm that a buoyant housing market, new or second-hand, fuels spending on the high street. New home owners buy carpets, fixtures and fittings, curtains, white goods, furniture and so on. It is the only industry of which I am aware that directly feeds spending in other sectors.

Here is an interesting figure. In 2007, there were 357,800 first-time buyers. The Halifax has produced data suggesting that the cost of furnishing and equipping a new property is around £6,000, which equates to about £2.14 billion of high street spending by first-time buyers alone. That, to my mind, is quite a fiscal stimulus, but we need to get people into those homes to trigger such a stimulus.

As I said earlier, there is still a huge demand for housing, social and private. Nearly 500,000 people in Scotland are on local authority and housing association waiting lists for affordable homes, and with Scotland needing an extra 17,000 houses per year to meet rising demand, the mortgage situation is bound to have a serious impact. While I give the Government the benefit of the doubt when it comes to whether they grasp the importance of the home-buyer's effect on the high street, the banks have moved from one extreme to the other.

Shared equity schemes are valuable and have a role to play, and the homebuy direct programme will, I hope, be of significant help, but such schemes depend on how the lender views the share. If a 30 per cent. state-funded and industry-funded shared equity scheme is available, it is no good if the lender demands a 25 per cent. deposit on the remaining 70 per cent.; that defeats the purpose. I acknowledge the steps taken to extend the Government's shared ownership programme and the £270 million being allocated through the Housing Corporation—and the new clearing house with £200 million to allow developers to sell unsold stock for use as affordable housing is to be applauded when it delivers genuine results.

The industry itself has many shared equity schemes, and I am advised of one developer whose company held £1 million of shared equity. Obviously, there was a need to turn that into capital, but when the markets were approached, the best offer he got was £400,000. Why? Because the markets said it would be worth £1 million in 10 years' time, but not today. The truly sad thing was that he was thinking about taking that offer.

I would like my hon. Friend the Minister to take away another point for the Chancellor. We could invest in building 100,000 new social rented homes over the next two years, with an investment of £6.4 billion, which could be a tool to offset some of the intransigence of the banks, provided that it is Government-driven.

I would like to talk briefly about training as well. The Government have a target to increase the number of apprenticeships in the UK, and similar plans were secured by Scottish Labour during the recent budget process in Holyrood. However, many of these apprenticeship targets are earmarked for the construction industry, and if we do not support the industry, there will be no point in having a construction and related trades apprenticeships scheme in an industry with no work.

Negotiating planning procedures and processes takes time, and it may be one or two years before planning permission is granted and construction workers are on site. This will be too late for many construction companies. I would therefore be grateful if the Minister would expand on when Departments will be issuing detailed plans of all construction projects that are being brought forward on a constituency-by-constituency basis. While these companies tighten their belts simply to survive, there is little spare capacity to develop new products such as more effective insulation techniques, which can help us to meet our climate change objectives.

There are real threats to other Government objectives, too. Without support for the housing industry, the Government can wave goodbye to any meaningful progress on their target for zero-carbon housing in 2016. This initiative was not particularly welcomed with open arms by the industry in the first place, and there is still a struggle to achieve an appropriate definition, but if the Government do not step into the mortgage market with an underwriting guarantee or pressure to increase lending adequately, the lack of finance in the industry will make zero-carbon housing a dream, not an aspiration. It is not only the house builders that we need on board to meet these targets; we need the product manufacturers on board, too. These businesses need profit and investment to develop these products, and product development is currently not high on the list of priorities, but survival is.

What makes the housing and construction industry so vital and in need of support and of being moved up the list of endangered species? I have already talked about the benefits to the high street, but another advantage is related to imports. Only 15 per cent. of construction products are imported, and they make up only about 6 per cent. of the total turnover, so there would be a far better return for the UK economy than expenditure on a wider range of consumer goods.

I urge the Government to be bolder on VAT. They could reduce it to 5 per cent. on home extensions, repairs and maintenance. That would motivate home owners to invest, and provide real jobs in the industry. This was supported by UK MEPs of all major persuasions only last month. Individuals with private capital are simply not investing in the industry, and we need to change that.

The value of the housing and construction industry is massive. The skyline of this city—and, indeed, of this very building—displays an array of structures that showcase the talents, creativity and passion of the UK construction industry past and present. However, as well as the aesthetic achievements of the industry, there is a background of stable and valuable employment, which I am proud to say has supported many families, including my own, for a great many years. If we want to prevent its collapse, we need continued strong action now.