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Mr. Clifton-Brown: My hon. Friend describes the situation as bizarre. It is particularly bizarre since the VAT rate for such schemes in most European countries is in single figures. This country faces a peculiar anomaly.

Mr. Gray: Indeed, we face a strange anomaly. I hope that the Government will address the issue.

Mr. Tom Harris (Glasgow, Cathcart): Will the hon. Gentleman remind the House which Chancellor raised the rate of VAT in this country from 15 to 17.5 per cent? That happened after the rate had been raised from 8 per cent. to 15 per cent. in 1979. Will the hon. Gentleman remind us who did that?

Mr. Gray: The hon. Gentleman may have misunderstood the thrust of my remarks. I was not talking

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about the rate of VAT, but he is right to suggest that we raised it to 17.5 per cent. He will recall that we did that to do away with the poll tax. Perhaps he would prefer the poll tax still to be in existence and VAT to be at 15 per cent. My remarks had nothing to do with the level of VAT. I was referring to the differential in the rate of VAT for rebuilding on inner-city sites and for brand-new building on greenfield sites. That differential has remarkably unfortunate effects on planning decisions.

I know that my hon. Friends will focus on other issues, but I should like briefly to focus on the problem of housing. If we can get the bricks and mortar right, we can get the rest right. The Labour party has been bold in its comments about what it will do for housing. When I was a special adviser to a Minister with responsibility for housing, we were constantly placed under pressure because people said that we were not building enough council houses. Shelter and others shouted at us, and Labour Members spent much time telling us how disgraceful our housing policy was.

However, the House will recall that, between 1993 and 1996, we built precisely 150,600 new social dwellings. In the equivalent three years between 1997 and 2000, the Labour Government have built 95,500 new social dwellings. Their provision of social housing has fallen by 37 per cent. compared with ours, but they said that the figure that we achieved was lamentably low. If that is their view, they must put their money where their mouth is.

We have housing problems throughout the nation. People with homelessness problems come to my surgery all the time. The Government are not building new housing. They say they are doing all sorts of things and they blame us for the problems. The truth is that we have a significant homelessness problem and the Government are doing nothing to address it.

Mr. Tom Harris rose

Mr. Gray: The hon. Gentleman may be about to tell us what the Government are doing about it.

Mr. Harris: I am delighted that the Conservative party has suddenly discovered the value of social housing. Does the hon. Gentleman agree that we have a major problem with council house stocks because his Government sold off so many council houses and refused to allow local councils to use the receipts to build new ones?

Mr. Gray: The country will note that the hon. Gentleman opposes the right to buy. Some 2.5 million families now live in a house that they own. Previously, they would have been tenants of pretty useless landlords in Labour local authorities. They will have heard what he said and will be thankful to the Conservative Government for allowing them to determine their own future.

Ms Oona King: Although everyone would agree that it is proper that people, and low-income families in particular, have the right to buy their houses, does the hon. Gentleman agree that we should move towards the equity-based approach that the Government are trying to introduce? Although 3,000 new houses were built in London last year, 11,000 were sold off through the right to buy.

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Mr. Gray: The hon. Lady makes my point for me. It is a disgrace that the Government are building so few new houses. She is right and must address her remarks to her Front-Bench spokesmen. We cannot understand the situation. In our years in government we built countless new social housing units, but her Government are failing to do so.

Tom Brake rose

Mr. Gray: I have taken enough interventions. Labour Members do not seem to understand that they are not building sufficient social housing.

The Labour party is also failing badly with regard to empty council houses. All the time that we were in power, we were under attack by Labour Members who said that it was scandalous that so many council houses were empty. The fact is that when they came to power, there were 81,200 empty council houses in England. In April 2000, there were 87,186 empty council houses. The figure has increased enormously. One has only to glance at the political control of the local authorities where those empty homes are to discover that in Conservative-controlled councils 1.5 per cent. of the stock is vacant and in Liberal Democrat-controlled councils, to do them a favour, 1.9 per cent. is vacant. Labour-controlled councils, however, have 2.7 per cent. management vacant, as they are called. I suspect that the local authority that covers the constituency of the hon. Member for Bethnal Green and Bow (Ms King), Tower Hamlets, is one of the worst offenders.

Mr. Harris: Will the hon. Gentleman give way?

Mr. Gray: I am sorry, but the hon. Gentleman has intervened twice, neither time with much effect.

Ms Oona King rose

Mr. Gray: I shall give way to the hon. Lady as I mentioned her constituency.

Ms King: To put the record straight, Tower Hamlets has one of the lowest voids of properties in London.

Mr. Gray: I accept the correction, and no doubt we can look at the figures later on. It is true, however, that Labour authorities across the nation, perhaps partly because of the type of authority that they are—

Mr. Harris rose

Mr. Gray: Oh, all right.

Mr. Harris: I understand the hon. Gentleman's criticisms of Labour local authorities. Does he think that they could learn from the example of Dame Shirley Porter?

Mr. Gray: That is the hon. Gentleman's third intervention. He seems to think that this is a party political debate. I do not think that it is. We must find a way to accommodate 55 million people in this small island of ours in the most satisfactory way. To make constant party political points reduces the level of debate unnecessarily.

Mr. Clifton-Brown: Perhaps I can bring the debate back to a more sensible level. My hon. Friend will know

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that we introduced large-scale voluntary transfers, a policy that this Government have continued. Is he aware of the Library figures? They state that between 1998 and 1999, the stock transfer of 400,000 council houses has resulted in £5.9 billion of private investment being levered into the housing sector. Despite that huge amount of money, the Government have managed to build fewer social housing units than we did.

Mr. Gray: My hon. Friend makes a good point. The excellent Westlea housing association in North Wiltshire is a key example of what can happen when we transfer housing from bad local government landlords into the hands of true housing professionals. That was a great triumph of the Conservative Government.

We have mainly talked about inner cities, but rural areas also have problems. It is easy for people to look at North Wiltshire and think that we have it easy. They see it as full of millionaires and people who live in leafy suburbs. It is easy for them to think that people there are lucky and that people in inner-city areas are disadvantaged. Labour Members would be surprised by the cases that come into my surgery in Chippenham. They often involve problems with housing and benefits. Although we do not have as much overall deprivation, our individual cases of deprivation are as severe.

Ms Shipley: Will the hon. Gentleman take if from me that Labour—myself excluded, because I represent an urban constituency—is well represented by MPs for rural constituencies? I believe that we represent more rural constituencies than the Conservatives and my hon. Friends have held their seats through two general elections because their constituents know what it is like to be under a Conservative Government. It is our rural MPs who are fighting to regenerate those rural areas that the Conservative party failed so badly.

Mr. Gray: The hon. Lady may well be right about constituency representation. I invite Labour Members who claim to represent rural constituencies to put their hands up, because there are not an awful lot of them. Remarkably few Labour Members of Parliament truly represent rural seats. For example, on the list of so-called rural seats are my neighbouring constituencies of North Swindon and South Swindon. No one who really knows about the countryside would describe them as rural. However, Labour does represent some rural constituencies in the north of England. I welcome the fact that her hon. Friends who represent them are ready to argue the case on behalf of rural deprivation just as much as her urban colleagues are prepared to argue the case on behalf of urban deprivation. Rural deprivation is just as bad in many ways.

We know about agriculture. Tourism in my area was decimated by foot and mouth disease. As I mentioned in Prime Minister's Question Time this week, Malmesbury, which is a Cotswold town that one would think was in a prosperous area, has been decimated. Lucent Technologies has closed, with 150 jobs being laid off just before Christmas. In addition, Mr. Dyson laid off 180 at Christmas and has announced that 820 more jobs are to go because he is moving his manufacturing base to the far east. Some 1,200 to 1,500 jobs have gone in the past few months in a town with a population of 4,500. I hope that we find ways to avoid the worst effects of that, but I

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anticipate a significant level of poverty and difficulty in the town, which on the face of it seems an extremely pleasant place to live.

That problem is compounded by something that the Government can put right, but they are taking a lamentably long time to do so. We heard how the standard spending assessment grant in London has been reduced by £100 million, but the grant in the rural shire areas has been reduced by £300 million. North Wiltshire spends £2,500 per secondary pupil per year. The neighbouring county of Berkshire and a similar county such as Kent spend about £3,500 per pupil per year. In inner London, about £5,000 is spent per pupil per year. Although those figures are indicative rather than accurate, about twice as much is spent on educating children in central London than is spent in North Wiltshire.

The SSA system is badly skewed. It needs to be put right. The Government have said that they will do that, but the review is taking a long time. When it is complete, I hope that they will find ways to take funds back from some of the areas that do not need them, in the inner cities and elsewhere, and return them to the shire counties that have been so badly treated for such a long time.

My hon. Friends will have things to say about the fragmented nature of what the Labour party is trying to do with regard to the inner cities and funding, which is very low. After four years of a Government who came to power with such great claims that they would put right the wrongs and the ills of the inner cities, it is disappointing to see the figures that demonstrate that things are significantly worse since then. I say, "Come back, the Conservative Government. All is forgiven. What you did in the inner cities was a great deal better than what this lot are doing." All Labour Members are good at is initiatives and spin, and targets and bragging. The only regeneration that our inner cities have seen was in the 18 years when we were in power.

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