Previous Section Home Page

Column 233

Trotter, Neville

Twinn, Dr Ian

Vaughan, Sir Gerard

Viggers, Peter

Waldegrave, Rt Hon William

Walden, George

Walker, Bill (N Tayside)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Waterson, Nigel

Watts, John

Wells, Bowen

Wheeler, Sir John

Whitney, Ray

Whittingdale, John

Widdecombe, Ann

Wiggin, Jerry

Wilkinson, John

Willetts, David

Winterton, Mrs Ann (Congleton)

Winterton, Nicholas (Macc'f'ld)

Wolfson, Mark

Wood, Timothy

Yeo, Tim

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Tim Boswell and

Mr. Sydney Chapman.

Question accordingly negatived.

New Clause 3

Stamp Duty (Temporary Provisions) (Extension)

.--Section 1 of the Stamp Duty (Temporary Provisions) Act 1992 shall be amended, by leaving out the words "20th August 1992" in subsection (2)(b) and inserting the words "31st March 1993.".'.-- [Dr. Marek.]

Brought up, and read the First time.

Dr. Marek : I beg to move, That the clause be read a Second time. The Opposition have taken the Government at their word in respect of the Stamp Duty (Temporary Provisions) Act 1992 and now propose extending the exemption from stamp duty on the purchase of homes until March 1993. We had a trailer at Prime Minister's Question Time this afternoon. I did not get to the Chamber until about two minutes after the Leader of the House, on behalf of the Prime Minister, quoted me as having said that this legislation was a racket and a gimmick. I certainly remember saying that it was a gimmick--it was an election gimmick--but not that it was a racket. If any Minister can find the report of my words, I shall be delighted to hear exactly what I said.

It is possible that this was a genuine attempt by the Government to intervene in the market with a view to encouraging recovery from recession. If so, the Government ought to accept our new clause. If they do not accept it, we can conclude only that the Act was a gimmick for election purposes, an expedient from a Government who knew that it would not have any effect in the event of our failing to move out of recession.

7.15 pm

The reality is that we are not recovering from recession. That being the case, and as the purpose of the legislation, which was to give the economy a kick start, has not been fulfilled, what objection can there be to extending the exemption until 31 March 1993? That is a simple question to which I hope we shall get a favourable reply. On 20 January 1992 Opposition Members said that the Bill would provide little help, that there were better ways of spending money to assist the manufacturing and construction industries. We said that capital allowances could be used and, above all, that lower interest rates would be a significant advantage. But the Government are not taking any of these steps. For a number of years we have looked in vain for Government intervention in the market to get us out of recession. The Act to which I referred amounted to Government intervention in the

Column 234

market, and if it was not just a gimmick we should be able to regard it as an attempt to get the economy back on its feet. But the Ernst and Young Item Club, which published a forecast yesterday, now expects the gross domestic product to shrink by a further 0.6 per cent. this year. It says that this forecast is gloomier than most recent City predictions. That is very poor. The Chancellor of the Exchequer said that the economy would bounce back to a level of 1 per cent. growth this year, having contracted by 2.5 per cent. in 1991. In the Budget, he forecast that the economy would expand by 3 per cent. in 1993. Patently that is not happening. If there is to be a further contraction of 0.6 per cent. this year, as the Ernst and Young Item Club has predicted, we have a serious situation in which none of us can take any pride.

We must all agree that something has to be done. The return of consumer confidence is an absolute prerequisite. If the extension of stamp duty exemption that we seek were granted, and if it were to give the housing market a kick start, the whole economy would benefit. When people move into new houses, construction is not the only industry to benefit. New carpets, refrigerators and beds are needed, and the whole engine of the economy benefits. That is why the Opposition regard this as a very important proposal.

In an interview with David Frost on TV-am on 24 July 1991, the Chancellor of the Exchequer, referring to the recovery, said : "It may be slow at first. It will begin probably in the housing market. These are just vague stirrings, but the signs are there." Recently the Evening Standard published a long list of the Chancellor's sayings about stirrings and green shoots. I expect that hon. Members know most of them by heart, but as no doubt the House wants to make progress I shall not quote any of them. I do not think that the stirrings or signs to which the Chancellor referred in his interview with David Frost existed. He may have been right when he said that the housing market might be one of the engines of recovery upon which other recovery would depend. It is a year since he made that statement, and unfortunately house prices have continued to fall. The latest Halifax price index shows that house prices fell by 0.5 per cent. in May. They are now 6.2 per cent. lower than they were a year ago.

It may be said that the Opposition are proposing that the Government give money away liberally. Yes, this measure will cost money and the Opposition, as I said in January, believe that the money could be better spent on getting the economy working again. However, as the Government are not prepared to entertain any of our ideas on how to do that which we have put forward over a number of years, the Opposition are left with no alternative but to support the Chancellor's initiative.

The Stamp Duty (Temporary Provisions) Act 1992 could easily be extended to the end of this financial year. It could be paid for by further postponing the exemption of duty on share transactions. That has already been done once and could easily be done again for another six months if the Government did not want to increase the PSBR. That is already £28 billion, and could be £30 billion soon, which is almost 4 per cent. of GDP, so I have every sympathy with the Government if they do not want to increase the PSBR.

Column 235

There is no need to do that. I do not know whether TAURUS--the transfer by automated registration of uncertified stock --will be ready by next April, but another six months will not do any harm. If there were a choice between spending the money on the abolition of duty on share transactions and on giving further relief on stamp duty on house transactions, the Government should spend money on the latter. In January and February, when the Bill was going through the House, we said that we thought it was an electoral gimmick with which the Government were fishing for votes. This evening, the Government have a chance of proving the Opposition wrong by admitting that we are still in recession and that the other aspects of the recessionary cycle have not changed and by agreeing to continue the exemption. If they did that and accepted the new clause, I would pay full tribute to them.

Mr. Tony Marlow (Northampton, North) : I am grateful to the Opposition for tabling the new clause and allowing us to debate this important issue. However, it is absurd that, having said recently that exemption is a gimmick, they should now feel that it is not a gimmick and should want to table a new clause to extend it. In Northampton we have the Carlsberg brewery, which claims that its beer is probably the best in the world. We also have Wilcon, a well-known company, which is probably the best house builder in the country. It knows a thing or two about house building and has been successful for a long time, and is probably more successful than anybody else at the moment. Life in the building industry in general is not easy. There are two deductions to be made from that. When I was at Cambridge university, I read engineering, and there were about 135 of us in the engineering department, one of whom had a rather disgusting beard, wore a CND badge and was obviously barking mad. All the rest had short hair and were decent, beer-drinking, women-chasing, rugby-playing, Conservative-voting undergraduates. What was true of the engineering department of Cambridge university is true, man and boy, of the building industry. It is not just that they do not read The Guardian --they have never heard of it. They are Tory voters to a man.

This is not a point that I am concerned about, but I suggest that the Government take it on board. There is distress in the building industry. It does not matter if industries come and go--some industries grow, other industries come up afterwards, disasters occur, bankruptcies take place and it is all part of the general gaiety of the economy. However, by and large, all these people vote Conservative.

The second point--I think it is important even if the Government do not-- concerns the green shoots of recovery. Of course they are there for everybody to see, provided that one looks carefully, has a magnifying glass, and is an optimist. I am sure that they must be there. The Government wish to get the recovery moving more quickly, so they made this concession in the Budget. It was wise of them to do so. The Government will agree that it has had an effect. Houses that would not otherwise have been bought have been bought. Therefore, it has had a positive impact on the housing market and the building industry. It may be that we have not moved very far forward, but without the exemption we might have moved backwards.

Column 236

Everybody knows that there are two house buying periods a year. First, when the daffodils come into bloom and the spring starts, people start to think of moving house.

Mr. Tony Banks : And of other things in the hon. Gentleman's case.

Mr. Marlow : It takes one to know one.

In most springs, there is an upsurge in the housing market. Then people go away for their summer holidays, come back in September and have a second bite of the cherry. That is the second time in the year when the housing market is active.

I know that the Government have two cases against the extension. The first is that it will cost money. That is a bad argument, and I hope that my hon. Friend the Minister does not adduce it. One may not get the revenue from stamp duty because people are not paying it, but by buying houses people generate activity. As the hon. Member for Wrexham (Dr. Marek) said, they buy carpets and equipment. Those green shoots will start thrusting through, the economy will start moving more quickly, there will be more tax revenue, and the Department of Social Security will spend less money. What might be lost from tax revenue could be gained by growth in the economy.

There is a good argument. That is, if the Government give an exemption with a time bar and then keep extending it, people will feel that, with one shove or push, the whole structure will come caving in and the Government will give in again. I can sympathise with the Government on that. However, they should extend the exemption until the end of the year. Such a concession would put into people's mind the message, "Buy while stocks last". If the exemption continues until December, it will improve the second house-buying period of the year. People will feel more impelled to buy than they might otherwise. They will feel that if they do not get on with it now, they will have to pay more later. It will give the boost to the housing market that my right hon. Friend the Chancellor suggested that it would when he introduced the measure in the Budget. The moratorium should be taken on until the end of the year. The housing market and the economy need a boost. The moratorium is part of the boost that would help us to move more quickly out of recession. 7.30 pm

If the moratorium proves that assistance, it will not make it more difficult for the Government to lower interest rates--something that we all want. It is not valid for the Government to argue that they cannot reduce interest rates because they would be forgoing the income from stamp duty if they extended the moratorium.

The concession should continue until the end of the year. The housing market should not be depressed ; it should be helped. People should be helped in the second buying period of the year to bring their purchases forward. That would help the Government and the country as the economy would be moving once more.

Mrs. Barbara Roche (Hornsey and Wood Green) : Anyone who looks at the housing market in London, and anyone who, like me, is trying to sell a house and buy another one, would not believe that green shoots are sprouting as though springtime--although it is summer now--is about to arrive in the housing market. It is a

Column 237

desperate time in London for people who are anxious to buy houses. Many of those people are first-time buyers, and they are essential to ensure that the housing market picks up.

Figures released today by the Association of London Authorities show that first-time home buyers in London will be particularly hard hit when the Government's eight-month stamp duty moratorium ends on 19 August. Higher house prices in London and the south-east mean that only 6 to 8 per cent. of first-time purchases in the region fall below the £30,000 stamp duty threshold compared with 22 per cent. nationally. The average amount paid in stamp duty in the region is higher because it is levied as a percentage of the purchase price. These figures are devastating news for Londoners who will look with absolute dismay at the Government position this evening.

My hon. Friend the Member for Wrexham (Dr. Marek) was right to question the Government's motives and the timing of the moratorium when the stamp duty proposal was introduced to the House. He said : "If a general election were not to be held in the next four months, the Government would have shed crocodile tears and Ministers and the Prime Minister himself at Prime Minister's Question Time would have said that nothing could be done about house repossessions."--[ Official Report 15 January 1992 ; Vol. 201, c. 1064.]

Given the background, the difficulties and the moratorium on stamp duty, the housing market will face worse straits if the concession is removed.

Many things need to be done for housing. There should be a proper mortgage rescue scheme. Although it is outside the scope of the new clause, I believe that the housing market also desperately requires the phased release of receipts from council house sales so that adequate rented accommodation can be provided for the thousands of families living in unsatisfactory and high-cost bed-and-breakfast accommodation.

It would be a shame and a scandal to have a debate about housing without mentioning the thousands of families throughout the country who are in the misery of bed-and-breakfast accommodation and whom we see every week in our surgeries. We deal with their cases every day and we have to tell them that basically nothing can be done because the Government do not have the heart or decency to act.

Having established the moratorium, the Government, although they claim that they do not believe in interfering with the market, do not seem to be able to leave it alone. It is worth considering the comments of the hon. Member for Faversham (Mr. Moate) :

"the housing market will certainly come to a stop on 20 August. How many property transactions will take place on that day or during the succeeding weeks? Are we really contemplating cessation of this exemption in mid- August? That is hardly a practical proposition, and I ask Ministers to think again about it Ministers must recognise that it is impractical to suspend a tax for eight months while applying it to sums above an artificial threshold."--[ Official Report, 15 January 1992 ; Vol. 201, c. 1068.]

Indeed, Mr. Melville-Ross, the chief executive of the Nationwide building society and chairman of the Council of Mortgage Lenders, has also said that the decision not to extend the stamp duty holiday beyond the August deadline could be "fatal". Ministers must deal with this and respond to it.

Column 238

Given the background and the dire straits of the housing market, I urge hon. Members to support the new clause in order to make a small impact on the horrendous mess which is the housing market under the Conservative Government.

Sir Malcolm Thornton (Crosby) : There is no doubt that the construction industry faces severe problems and that the housing market is depressed. The House will know of my interest in such matters.

Without any doubt, the Government's decision earlier this year was welcomed by the industry at large. Ministers have said on many occasions over many years that the construction industry is the barometer of the economy. So much depends on confidence. Whether or not the green shoots are there, as my hon. Friend the Member for Northampton, North (Mr. Marlow) said, it is generally held that the elements for the recovery are in place, but there is little evidence of that recovery taking place in substantial measure at the present time.

The moratorium on stamp duty had some effect, although I am bound to say that it did not have the dramatic effect that some of us might have hoped for. There was a slight post-election surge in interest in the housing market, but unfortunately that has fallen back. The House will be interested and, I hope, concerned to note that the figures from the House- Builders Federation for May are worse than they were for May 1991. Indeed, the June figures are likely to be worse than the May figures. The present position on stamp duty has not had the desired effect.

However, it is equally clear that if one accepts that the construction industry is capable of leading the recovery, the signals that we send to it are very important. Confidence is at the heart of the exercise. I believe that this debate is about confidence. That is what the Government are attempting to address at the moment. If the elements for recovery are in place, it is clear that the only element that is lacking is confidence. When it resumes, people will begin to buy houses and that will have a ripple effect throughout the housing market which will be of enormous benefit.

Mr. Hoon : The hon. Gentleman referred to a surge in house buying after the general election. Does he accept that there was actually a 9 per cent. reduction in property transactions between April and May?

Sir Malcolm Thornton : I am not certain what the hon. Gentleman is basing his figures on, but the evidence from the organisations concerned showed that there was an increase in interest after the election, which reflected people's confidence in the return of a Conservative Government. Clearly, the anticipated recovery has not proceeded in the way for which we hoped.

Much has been made of the early-day motion to which I and many of my hon. Friends have put our names. It reflected our belief that the Government's policies of encouraging home ownership over the years have been right and that there is still among our fellow citizens a substantial desire to own their own homes.

The construction industry has played a major part in making available at the right price homes that people want to buy. The early-day motion said that we hoped--the words were picked very carefully--that the Government would recognise the importance of doing everything that they could to stimulate the building and construction

Column 239

industry. It added that if the Government could see their way to keeping or extending the moratorium, that would help. That remains the position.

We want the Government to give every assistance that they possibly can to an industry which we firmly believe is capable of leading the country out of recession and of leading us to the confidence that we believe is necessary.

We recognise that our right hon. Friend the Chancellor has enormous difficulty in balancing the various competing claims. At the end of the day, my right hon. Friend and his Treasury Ministers must judge exactly where they can best use the resources that are available to them. I shall have no difficulty in accepting what my right hon. and hon. Friends have to say in making their judgment. They are in possession of all the facts, and they know exactly-- [Interruption.] Opposition Members can scoff as much as they like, but they cannot have it both ways. They previously regarded the measure as a gimmick and they are now seeking to try to embarrass the Government because some of my colleagues have ventured to suggest that the Government should consider something. We do that all the time. Putting one's name to an early-day motion is not a gesture of rebellion ; it is an expression of opinion. The sooner Opposition Members realise that, the better.

I reiterate that the building and construction industry is capable of making a major contribution to the recovery that we badly need. It is capable of leading the economy out of recession, particularly that difficult sector, the housing market. If my right hon. and hon. Friends will consider what they can do to stimulate the industry, we shall be content that the matter has been raised. For argument's sake, perhaps they will want to consider lowering the ceiling, recognising that a large proportion--about 70 per cent.--of all housing transactions involve sums of less than £80,000.

Sir Michael Neubert (Romford) : My hon. Friend speaks, as he has acknowledged, for the major construction companies. I should like him to accept--I am sure that he does--that his views are shared by smaller and medium-sized companies as represented by the Federation of Master Builders, whose parliamentary adviser I am. Does my hon. Friend accept that, in view of all that we have done for home ownership, one point that the Government might consider is that the time might come when the Chancellor is able to consider abolition of stamp duty altogether? It represents a tax on home ownership. What are we as Conservatives doing perpetuating a tax which has already been abolished for shares and other transactions and which remains a tax on home ownership?

Sir Malcolm Thornton : I am grateful to my hon. Friend. I am sure that, in the long term, that very desirable matter will be fully considered by my right hon. Friend the Chancellor and the Treasury team. Bedevilled as they are by advice from every quarter--many people urging them to spend money as though it is going out of fashion, yet urging them to contain public expenditure--they have some very difficult choices to make.

7.45 pm

My right hon. Friend the Chancellor received a letter from the managing director of a major construction company, the Berkeley Group plc, who said :

"I personally believe that the housing market is the barometer of the economy and until such time as it recovers

Column 240

and the public in general have a feeling of well being, I do not believe that the economy as a whole will recover as the Government is hoping for."

I endorse that remark. We recognise that until confidence is back and the recovery starts, we will be in a depressed period. I do not envy the task of my right hon. and hon. Friends, but I urge them to recognise the importance of that major industry and the vital contribution that it can make in leading us into the recovery that we all want.

Mr. George Mudie (Leeds, East) : The hon. Member for Crosby (Sir M. Thornton) overestimates his importance and that of his colleagues who signed the early-day motion. It is not their credibility that is at stake ; it is that of the Chancellor and the Government.

I am grateful to the hon. Member for Northampton, North (Mr. Marlow) for referring to the green shoots of recovery, as that is the background against which the matter should be viewed. I shall add a northern voice to the discussion and tell the House what is happening to the green shoots of recovery in my home city. In Leeds in 1990, the unemployment figure was 22,476. That and the other figures that I shall give are the registered unemployed figures. The House knows the difference between the real level of unemployment and the real poverty that it causes and the registered figures which totally understate the position. In 1991, when the Chancellor introduced the measure, unemployment in Leeds climbed to 30,122, a 30 per cent. increase. As we discuss this matter, the unemployment figure is 35, 102, which represents a 47 per cent. increase since 1990. Does that sound like the green shoots of recovery? If Conservative Members think so, let us consider employment in the construction industry. Unfortunately, the 1992 figures will not be available until Thursday, but the 1991 figures relating to employment in that industry both in the country and--

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. I ask the hon. Gentleman to relate his figures to stamp duty. He is straying rather wide.

Mr. Mudie : I hope that in a moment, Mr. Deputy Speaker, you will see the picture that I am attempting to draw.

I was dealing with the green shoots of recovery. The suspension of stamp duty was either a cynical measure to take matters relating to repossessions and so on off the front pages, or a genuine attempt by the Chancellor to bring forward the recovery by making a move in the housing sector that would help the construction industry, the retail industry, and unemployment. I give two figures to demonstrate my point. Employment in the construction industry, despite the suspension of stamp duty, continues to decline. In Leeds 95,000 people were employed in the construction industry in 1990, but that has fallen by 14 per cent. For Britain as a whole the figure has fallen by 13 per cent.

The second figure is for property transactions--Conservative Members will surely accept that they are closely related to the matter with which we are dealing. The hon. Member for Crosby challenged my hon. Friend the Member for Ashfield (Mr. Hoon) about the figures for property transactions in England and Wales. In May last year there were 111,000 property transactions. In May this year, with stamp duty abolished, the figure was 83,000. Conservative Members may think that that is a one-off

Column 241

figure but the figures for the preceding months are April : 91,000 ; March : 90,000 ; February : 89,000 ; January : 79,000.

So if we consider unemployment in the construction industry and property transactions, the picture is bad. Unemployment continues to grow generally. Unemployment in the construction industry continues to grow and property transactions continue to fall. [Interruption.] You are well aware, Mr. Deputy Speaker, that in Yorkshire that is the highest office that one can assume. So you will understand the tribute that I take from that remark.

When stamp duty was abolished the Chancellor of the Exchequer was accused of being cynical because of the closeness of the election. On 19 December he said :

"But I recognise that there is a wider concern about the depressed state of the housing market, which has consequences for home owners in general and for the wider economy. I therefore have one further announcement to make."

The announcement was the abolition of stamp duty. He continued : "I have decided to use a portion of that additional revenue to help encourage and facilitate transactions in the housing market."--[ Official Report, 19 December 1991 ; Vol. 201, c. 454.]

If in those circumstances he felt that it was necessary to encourage property transactions, we must ask the Economic Secretary as we approach August, with unemployment continuing to rise, home sales continuing to fall and unemployment in the construction industry continuing to grow, why on earth he is reintroducing stamp duty.

Mr. David Hanson (Delyn) : We take it that the Government are genuine in this matter. I have received a letter from a building firm in my constituency saying that it had hoped that the Government's measure of a moratorium on stamp duty

"would have provided a little extra confidence and possibly urgency within the house sale market. Unfortunately this has proved not to be the case".

That is a major building firm in north Wales, Cheshire and the north-west. If the Chancellor was genuine, surely he should have given the measure time to work. The Minister should therefore support the Opposition new clause. That would meet the point that my hon. Friend makes.

Mr. Mudie : My hon. Friend makes a valuable point-- [Interruption.]

Mr. Deputy Speaker : Order. Let us have some tolerance in the House. We all appreciate the difficulties for new Members.

Mr. Mudie : When stamp duty was abolished the right hon. Member for Berwick-upon-Tweed (Mr. Beith) and others said that if £410 million were available, the money could have been spent better elsewhere. That is still a valid point and that is the issue tonight. Has the Minister come to the Chamber to say that the money will be spent elsewhere or is the measure a precursor of the autumn expenditure cuts? Will the money be spent elsewhere? It will not be spent on training, research and development or any measure to help the economy. Is it simply the beginning of public expenditure cuts?

Next Section

  Home Page