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Mr. John McAllion (Dundee, East): Who wrote this?
Mr. Walter: That is a very interesting point. It was not the hon. Member for Hartlepool (Mr. Mandelson).
The Second Deputy Chairman: Order. Hon. Members should not come into the Chamber and make comments from a sedentary position.
9.30 pm
Mr. Walter: Thank you, Mr. Lord.
A further principle is responsibility. The previous Government sought to extend responsibility through opportunity and choice. In the White Paper "Our Future
Homes", which was published in June 1995, we said that continued growth of home ownership for those who wanted and could afford it was a central principle. Home ownership has increased over the years to 68 per cent. of households. The lower and middle-income groups have seen an extension of home ownership. People have been able to buy council houses and houses in the lower range of the market for the first time. MIRAS has been a very real benefit to them.
The Government secured a very large majority at the last election, so, to some extent, they can ignore the effects of this measure on lower-income families. However, those families will be affected most by this very mean measure. The reduction in MIRAS will have exactly the same effect on the City banker, with his £300,000 mortgage on his £500,000 house, as on the first-time buyer, with his £30,000 mortgage on his £40,000 or £50,000 house. There is no distinction: the measure will hit everybody equally. Therefore, the burden is proportionately much greater for those on lower and middle incomes. I have read the full text of the Budget, and I find it most intriguing that the measure is couched in such terms.
This is a very mean measure. It does nothing for housing, for the low-paid and for investment, and nothing for Conservative Members.
Mr. Steve Webb (Northavon):
We have heard some striking contradictions in the speeches of Opposition Members on the amendment. They were exemplified by the hon. Member for Ashford (Mr. Green), who regarded the cut in mortgage interest tax relief from 15 to 10 per cent. as an assault on home ownership. He apparently had no problems with the cut from 25 to 20 per cent. or from 20 to 15 per cent. that the Conservative party implemented a few years ago. Perhaps he would like to take this opportunity to dissociate himself from the actions of the previous Government.
Mr. Green:
If the hon. Gentleman had been listening when my colleagues and I made our speeches, he would know that there is a difference between cutting mortgage interest tax relief at a time of rapidly falling interest rates and cutting that relief when interest rates are rising rapidly. That makes the real difference for home owners, and that is why the measure is so damaging to home owners and to home ownership.
Mr. Webb:
Judging from that response, I suspect that the hon. Gentleman would be in good company with angels and pinheads.
The Opposition are not alone in having a contradictory position on this issue. I welcome the fact that the reduction in mortgage interest tax relief removes some cash from the personal rather than the corporate sector. The Budget did not do enough on that front, so, to that extent, I welcome the measure.
The Budget is supposed to be about welfare to work, but what are the prospects for people with mortgages who want to take a low-paid job? They will find that their mortgages are higher when they are in work. When in opposition, Labour Members opposed the cut in help with mortgage interest for those on income support. If we want
people to move from welfare into work, we must give them security and ensure that, if they lose their jobs, they will receive help with their mortgages. At present, as soon as someone comes off income support, even if it is only for a few weeks, his mortgage will not be paid if he loses his job. For many people, the risk is not worth while. What will be done to help those people under the Government's proposals?
The question has been asked: what would Opposition Members do? We have heard that Conservative Members would do nothing, because they would not have had a Budget. My colleagues and I, however, would have gone one step further: we would have spent part of the money saved from the cut in mortgage interest tax relief on low-income benefit, to which the hon. Member for Dudley, North (Mr. Cranston) referred. That would at least cushion the blow and help people to move from welfare into work. If the Budget is to be seen as a welfare-to-work measure, why has the issue of the low-income home buyer not been addressed?
It is clear that mortgage tax relief is on its way out, either rapidly or slowly. However, unless the position of those who are trying to move from the bottom end of the labour market is not taken into account, we shall never make progress. What will be done to remove the insecurity that is felt by many at the bottom end of the labour market? They are told now to rely on private mortgage insurance, but what private mortgage insurer has any interest in someone on a short-term contract or in a low-paid job?
Will people who are currently in receipt of welfare be in a position to take work, and what will happen when they lose it? We know, of course, that people will be forced to take work. We know that there will be compulsion for young people, for example. What will they live on? What encouragement does the Budget give them to take chances? It seems that there is a paradox in the Government's approach. They talk about welfare to work, but they provide no support for those who are willing to take the chance. That is the fatal weakness of the clause.
Dawn Primarolo:
Apart from a fleeting reference to the amendment in the opening remarks of the hon. Member for Daventry (Mr. Boswell), no further remarks have been directed to it. Our discussion started with a reference to the Conservative Government's six changes to MIRAS, including the announcement of a cut in November 1993. It was introduced in 1995 when interest rates were moving up. Opposition Members never suggested when they were in government that a delayed-mechanism amendment of the sort that they are now proposing was needed.
Various Conservative Members have told us how important MIRAS is and explained that Conservative Members, when in government, never touched it except on principle. As I said in an intervention, however, the then Chancellor of the Exchequer, Norman Lamont, made it absolutely clear why he was cutting MIRAS: he explained that the cut was to raise revenue and to spread the pain.
The hon. Members for Teignbridge (Mr. Nicholls), for Westmorland and Lonsdale (Mr. Collins) and for Ashford (Mr. Green) told us how they were really the friends of the poor. The hon. Member for Teignbridge was terribly
concerned about the working poor. It is a shame that he was not so concerned during the property boom, when thousands of those people were losing their homes through repossession. It is a shame that the hon. Member for Westmorland and Lonsdale did not express his concern for social stability as people were deprived of their homes and savings.
Before the hon. Member for Ashford (Mr. Green) rises, perhaps he can explain exactly what the Conservative Government did to assist negative equity, because my recollection is that it was the building societies and not the Government who made arrangements to assist those people.
Mr. Green:
Will the Financial Secretary tell the House whether she thinks that her measure in the Finance Bill will help poor home owners or make them worse off?
Dawn Primarolo:
Turning to the question--[Interruption.] I know that some hon. Members have had a very good evening drinking and eating. I was about to deal with affordable housing and who benefits in the housing market.
I should remind hon. Members that most lenders have special schemes for first-time buyers and that interest rates are still extremely low compared to the record levels reached under the Conservative Government, when a typical mortgage of £50,000 would have cost £250 more than it does now. [Interruption.] I see that we are all returning from the restaurant.
Mr. Boswell:
When one of my hon. Friends asked the Financial Secretary a question a moment ago, I had the impression that she was reluctant to answer it, so I put it to her again. Does she feel that home owners, particularly those in more modest circumstances, will welcome the changes in her right hon. Friend's Budget, or not?
Dawn Primarolo:
I realise that it is a good sport to trade across the Dispatch Box, particularly at this time of the evening, but as the hon. Gentleman knows, what is most important for those who own their own homes is stability and security in the housing market, and a prospect that they will manage to keep their houses.
Referring specifically to--[Interruption.] Sir Alan, this is very difficult. The Opposition table an amendment, repeatedly complain that it is not dealt with at the Dispatch Box, and then come into the Chamber simply to cause disruption.
Dawn Primarolo:
An amendment is before the Committee, to which I have to respond. I intend to respond to it, and when I have, if there is time, the hon. Gentleman can certainly intervene again.
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