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9.45 pm
The Council of Mortgage Lenders has said that the Budget package contains a prudent set of measures. The Halifax has said that it will allow the steady recovery in house prices to continue. The Budget has been welcomed by the Institute of Directors and a number of other building societies which are clear that there is need for action now in the housing market. Opposition Members have also referred repeatedly to comments made by my right hon. Friend the Prime Minister. It is necessary to apply a gentle brake to the housing market because of the increase in prices and in order to secure the stability that all house owners want. In the three months to June, prices were up 2.1 per cent. on the previous month and 6.8 per cent. on the year as a whole. That shows why it was necessary to dampen down the housing market.
Mr. Boswell:
Will the hon. Lady comment on the second quarter's report of the Halifax, which said:
Dawn Primarolo:
We need to ensure stability in the housing market so that those who own their houses and those who seek to own their houses are not at the mercy of the market from which they suffered under the Conservative Government. What we do not want to see is rising house prices or people trapped in negative equity and unable to provide for themselves.
The Government's proposals are sensible and modest. The amendment would not work and is not viable. It would not give stability and it would deny mortgage lenders time to plan for and adjust to the changes. The Government's proposals seek to prevent a return to the boom and bust policies of the previous Government. On that basis, I ask the Committee to reject the Opposition amendment and to support the Government's measures to provide stability and to assist home owners.
Mr. Boswell:
This has been an interesting debate, and merely reinforces the official Opposition's determination to press the amendment to a vote.
I will deal first with the contributions of Labour Members, which have contained two themes. Two new Members, the hon. Members for Croydon, Central (Mr. Davies) and for Eastwood (Mr. Murphy), emphasised the importance of stability, as did the Financial Secretary--they were obviously all on message. That concept is rather like motherhood and apple pie, and one from which I cannot dissent, although three successive interest rate rises and a series of unpromised and uncovenanted tax increases on a large scale in the space of eight weeks does not seem to suggest a Government bent on stability.
Labour Members also showed some MIRAS scepticism. The hon. Member for Workington (Mr. Campbell-Savours), who has been in the House a long time, said that everyone knew that Labour would breach its election pledge. He characteristically suggested that there might have been a conspiracy between Members of the two Front Benches to produce a collective guilty secret. Neither my constituents nor I saw any sign of that being offered to us during the election campaign.
The hon. Member for Dudley, North (Mr. Cranston), who outed himself as an opponent of MIRAS, said that he was not able to include this measure in his election address due to inadequate space--the only Labour election address in history that could have been a little longer so as to be a little more informative. His theme was that we all knew that MIRAS was coming to an end, and so it should. He implied that we should not take too seriously the matters of trust invoked by his leader.
The hon. Member for Northavon (Mr. Webb) made an interesting contribution. He and my hon. Friend the Member for Ashford (Mr. Green) touched on the possibility of restructuring, which was open to the Government and could be in subsequent Budgets. The Government could have introduced proposals, but merely to make a cut is a major breach of faith.
I greatly enjoyed the contributions of my hon. Friends, which contained two underlying themes. They were concerned about the home owner, and not merely about Islington man or those at the top who have cleared more than £0.5 million in a particular sort of windfall which is not being taxed under the windfall levy. According to the Financial Secretary, such windfalls will not be available to any persons bent on making money out of their houses in the future. She said that the housing market was overheating and that action had to be taken, so people will not make a profit on their houses in the future. My hon. Friends emphasised their passionate commitment to home ownership at all levels of income and for people from all walks of life.
I hope that the Government will take note of my hon. Friends' concern about the breach of trust, which goes all the way up to the Prime Minister. It is not possible to construe the words delivered by the Prime Minister to Labour's housing conference in any other way than that MIRAS was safe in his hands. Now we know better.
In the Financial Secretary's brief remarks--she read out her brief, which Ministers have done since time immemorial--she pointed to alleged deficiencies in the drafting of the amendment. As a matter of fact, we did speak to our amendment. Nevertheless, she was unable to answer the serious questions put to her. For example, my hon. Friend the Member for Ashford asked the Financial Secretary to answer a specific question: which home owners would benefit? As she did not appear to understand that perfectly simple question, I asked it again, but I am still waiting for an answer.
What has become increasingly clear during the debate, however, is the Government's approach to taxation. The theme was initiated by the Financial Secretary the other day, when she said that pensioners would welcome the Budget, and that pension funds would benefit from it. That theme was taken up today by the hon. Member for Croydon, Central (Mr. Davies), who said that the
measures were for the good of home owners. This is not the first occasion on which Labour Governments have said that taxes--
Mr. Geraint Davies:
Will the hon. Gentleman give way?
Mr. Davies:
Do you agree that your comments about the Prime Minister--[Interruption.] I am sorry. Does the hon. Gentleman agree that his comments about the Prime Minister were out of context, and that what Tony Blair was referring to--[Interruption.] Does the hon. Gentleman agree that what the Prime Minister was referring to was a housing market that had been crucified by your Government--[Interruption.] The Prime Minister was referring to a housing market that had been crucified by the hon. Gentleman's Government, in terms of negative equity and repossessions. In the present circumstances, is it a good idea to start another cycle of boom and bust? If the hon. Gentleman were in the Government, would he encourage an over-fuelling of the housing market, which would cause a repeat of the chaos and catastrophe that were produced by the hopeless leadership of his party?
Mr. Boswell:
I advise the hon. Gentleman to make his interventions shorter, and to stop digging when he is in a hole.
The law that has been made clear by Labour Members--it might be termed the Bristol, South law--is that if it is bad for you, it is really good for you. It was put very well by Shakespeare, who spoke of taking correction mildly and of kissing the rod. That could apply to taxpayers. It was put even more succinctly by the Roman historian Tacitus, who said, describing methods of classification:
We have heard no explanation from the Financial Secretary of a specific point that I raised both on Second Reading and tonight. I asked why mortgage interest tax relief should be further reduced, given that that breached a pledge made to my constituent. I also asked the Financial Secretary for a commitment that the present Government would at least not make further reductions in MIRAS, but I heard no such commitment from her lips.
Meanwhile, Conservative Members realise that home owners will suffer under the Budget. They will be losing an average of £21 a month in higher interest rates, following three hikes of £7 a month. They will be losing £9 a month following the Chancellor's discretionary decision to withdraw a further tranche of mortgage interest relief. That means that home owners--the ordinary people--will already be losing £30 a month under the present Government. I think that, so far, they are losing about 50p a day each.
I am sorry to say that there is no sign of interest rates coming down. I remind the Committee that our amendment prescribes that the wilful increase in tax caused by the withdrawal of further mortgage interest relief should not take effect until interest rates return to the level that we bequeathed to the Labour Government.
There is no sign of interest rates coming down. There is no need for this hit on the house owner. It should not take effect at least until the Government have, in their own terms, stabilised the economy and reduced interest rates to where they were.
Our proposal is to protect home owners. That is our commitment on the Conservative Benches, and that is why we shall press this amendment to a Division with considerable relish.
Question put, That the amendment be made:--
The Committee divided: Ayes 147, Noes 381.
"there is no need for any specific Budget measures aimed at curbing an allegedly 'booming' housing market"?
Does she agree with that comment, or does she simply beg to disagree?
"They create a wilderness and call it peace."
When the Government create a wilderness for taxpayers, they call it "really in their own best interests."
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