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Mr. Lilley: The hon. Gentleman purports to know what goes on in Cabinet sub-committees. I can assert, from my knowledge, that he is wrong on both counts.
Mr. Campbell-Savours: I am very surprised indeed, because we were being--
Mr. Campbell-Savours: I now give way to the hon. Gentleman.
Mr. Boswell: I thank the hon. Gentleman for giving way. While he is speculating about what may or may not have taken place in the Cabinet, of which I would not, of course, have direct knowledge, does he nevertheless agree that the words that I quoted from my constituent suggest that it was reasonable for my constituent to decide, in placing his vote on 1 May--the date which is the subject of the amendment--that there was no proposal from the Labour party for a change in MIRAS? Does the hon. Gentleman accept that that was the import of that telephone conversation, or is there some other explanation?
Mr. Campbell-Savours: I think that to some extent there is an element of truth in what the hon. Gentleman is saying, but the reality is that everyone knew that surgery would be required after the general election. All the public opinion polling about what the public considered would be the position after the general election showed that they believed that, whatever Government were in power, there would be increases in taxation. That is a reality.
In many ways, I am arguing is that this is a totally false debate. The reality is that everyone knew that something was going to happen, and now the Opposition lecture us that somehow it is all our fault, when they know that we are dealing only with reality. We are dealing with the inevitable consequences of the underlying weak economy that we inherited.
I believe that the reason why we have to raise interest rates in this country, and why we have the problem with the exchange rate, is because this country is economically weak. Over the past 17 years, we have seen the economy's industrial base shattered. As a result, we cannot withstand the pressure of increased consumption without forcing up interest rates to block it off, for fear of provoking inflation.
If proof is needed, just look across the world. How can the Japanese have such low interest rates? How can Japan allow its consumption to rise without provoking heavy increases in interest rates? Why do we in the United Kingdom generally have a higher interest rate regime? It is because the British economy is fundamentally weak and was immeasurably damaged over those 17 years.
I am prepared to concede that many parts of the British economy are now leaner, more efficient and more effective in the way in which they use resources, and that their management is better. Some policies introduced during the years of Thatcherism had that effect, but I am complaining that, in securing those objectives, a major part of the British economy was destroyed and, in the process, an interminable number of people were placed on the unemployment queue. That is the problem. How are we to strengthen the underlying economy of the United Kingdom, particularly the manufacturing sector, without provoking massive inflation in the United Kingdom? In many ways that will be the test for my right hon. Friend the Chancellor.
I shall move on to a comment that was made about the impact of the tax change on the property market. The impact on the top end of the market will be zero. There will be no impact at all. It will have no effect on properties costing hundreds of thousands of pounds, which in effect means most of the property in the London stock. Indeed, the inexorable trend towards higher and higher prices will continue in London, it being the part of the country that is leading the nation.
Because, historically, prices in the regions follow prices in London--whatever happens to the national economy--we await greater rises in the provinces than we are currently seeing, because of the delayed effect. That delayed effect will, to some extent, mitigate any damage that might arise from lower-priced properties. I believe that, at the last general election, in deciding what property to buy, people discounted the fact that they would have to pay more taxes. Therefore, on lower-priced properties, these measures will have little effect.
I come finally to some interesting statistics that I am having trouble understanding. Every week I follow a sample of building society lending rates, published by the Sunday Times--in particular the variable fixed and capped rate mortgages. They provide some interesting reading. I am unable to understand--hon. Members may be able to explain it to my simple soul and perhaps simpler mind--why it is that, in times of rising interest rates, capped rates are now lower than they have ever been, and fixed rates are now as low as they have ever been.
It is interesting to note that the Skipton building society's capped rate is now 7.49 per cent. Some six to nine months ago it was 0.5 per cent. higher. With regard to the five-year fixed rates--anything less than a five-year term is not a particularly meaningful statistic--a number of building societies offer between 7.5 per cent. and 7.95 per cent., which is less than the variable rate, certainly for the privatised mutuals, but the equivalent of many mutual variable rates.
There must be a message in all that. Perhaps it is that the markets believe that interest rates will fall and that at the moment we are simply experiencing an interest rate blip.
Mr. Patrick Nicholls (Teignbridge):
The hon. Member for Workington (Mr. Campbell-Savours) said that he had not intended to make a speech at all, but felt provoked to do so. I noticed, however, that he had sheafs of notes to call to his aid. I, too, am minded to say that I had not intended to speak but was suddenly provoked by the hon. Gentleman and I, too, have the benefit of being able to produce spontaneous notes.
I want to follow on from what the hon. Gentleman said in a completely spontaneous way, because it just happens to fit in with what I might have said had I intended to speak in the first place. However, I want to say a word first about the context in which the debate is taking place.
We are here today because of the way in which the Bill has been guillotined. I am old-fashioned enough to remember a time when Bills were guillotined because of filibustering or, at the very least, because debates had been going on for so long that it was only right that the Government should be entitled to draw things to an end. That clearly is not the position in this case.
We have some three hours to talk about MIRAS and what has been done to it, but it might have been appropriate had we debated it in Committee Upstairs where the measure could have been examined at far greater length and where we could have tabled a series of amendments in order not only to find out exactly what the Government had in mind but to suggest ways in which the measure might have been adjusted, which might even have appealed to Labour Members.
Sadly, when the Committee stage is taken on the Floor of the House, the debate has to be far more general and it is not possible to have such a specific debate. One of the consequences is that it is not so easy for Labour Members to make the sort of contributions that I am sure they would have wanted to make had the matter been dealt with in Standing Committee. Such an opportunity would have
given Labour Members the chance to show that they can think and speak, a talent which many will find particularly useful after the next election.
The Financial Secretary to the Treasury (Dawn Primarolo):
I wonder whether the hon. Gentleman's brief says that the reason we are discussing MIRAS on the Floor of the House is because his Front Bench chose to do so, and we were as surprised as he says he is that it is being debated here rather than in Standing Committee.
Mr. Nicholls:
One does find with Finance Bills that the Opposition find certain parts that they do not like, so they table amendments in order to debate them. That is not particularly revolutionary. I am not in the slightest bit surprised that my right hon. and hon. Friends thought that it would be a good idea to debate MIRAS. Such a debate is a good idea.
Mr. Boswell:
Is it not also in my hon. Friend's mind that this is the biggest single imposition of direct taxation on the ordinary citizen in the Budget? Some much bigger hits on the ordinary household budget come indirectly through the windfall tax and advance corporation tax, but this is the biggest single identifiable measure which strikes at the householder.
Mr. Nicholls:
I am sure that that is right.
The hon. Member for Workington, in his spontaneous contribution, was generous enough, as he so often is in these debates, to say that there might be an element of truth in the fact that, if a constituent telephones the shadow Chancellor to ask whether he intends to do something and he says that he does not and then changes his mind and does it, the constituent might feel that he had been misled. A more straightforward way of summarising what the hon. Gentleman said would be to say, "Yes, the man was completely misled."
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