Part of Orders of the Day — Supply – in the House of Commons at 12:00 am on 21st June 1978.

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Mr. Heseitine:

The hon. Gentleman does not understand the situation. There have been four years during which the Tories were not responsible for the Liverpool authority at all. I am arguing that the Community Land Act was not in any way essential for the transfer of that land, despite what the Press release suggests. What we have argued consistently is that what is needed is not the Community Land Act but a very much greater sense of realism and urgency about the need to release inner city land. I am delighted that the right hon. Gentleman should have used his good offices to get that land in Liverpool transferred, but it is a drop in the ocean compared with the land owned in the public sector, a great deal of which should be put on offer for development, particularly in the private sector.

The second feature of the Government's policies which undoubtedly is already aggravating the house-building industry and will make the position worse is the proposal to move the development land tax up to 80 per cent. The right hon. Gentleman is aware that the concern in the building industry over the provision of land is growing, and that the large-scale building companies believe that by 1980. unless there is a significant increase in the stream of land, it will adversely affect the industry's capacity to provide new houses. The Government should announce at once that they have no intention of moving up to that level of taxation and ensure that under the taxation of gains the rate of the tax is pitched at a level acceptable both to those who own the land and those who seek to buy it.

Thirdly, the Government will argue that their new legislation to provide loans and grants for house purchasers is a significant contribution to young people's ability to buy their own homes. It is worth checking the facts.

The Home Purchase Assistance and Housing Corporation Guarantee Bill to provide these incentives to young people was introduced last February. Five months later, the price of the average new house has risen by well over £1,000 since February—the period that it has taken to get the legislation through the parliamentary processes so far.

What would the Government scheme contribute to anyone now wanting to buy those homes? A maximum grant of £100 and a loan of £600. Therefore, the Government's incentive scheme, and the time it took to get it through the processes of the parliamentary system, actually leaves average purchasers hundreds of pounds worse off at the end of the process than they were had they bought their home at the beginning of the process. The fact is that if someone manages to scramble together the resources to buy, it is almost certain that he will need to take out a substantial mortgage. Such a person will find that the average mortgage today costs about an extra £2 a week than is did a few weeks ago.

But, of course, mortgages always cost more under a Labour Government. If one takes the average level of mortgage interest rates under the whole of the four years of the previous Conservative Government and under the whole of the four years of this Government, one finds that approximately 2 per cent. extra is having to be found by everyone who has an average mortgage on a house.