I beg to move,
That income tax for the year 1983–84 shall be charged—
In welcoming the Chief Secretary to our debate, I must tell him that he is coming on to well-chewed food, as we have discussed these matters at considerable length. I also offer my good wishes to you, Mr. Deputy Speaker.
I happen to hold a minority opinion in the House, although not on the Opposition Benches, that the last Finance Act of the previous Government was the best one that they produced. It was the only good one, mainly because of the part played by my hon. Friends who filled their notable role in its final production. It was the only good one because it raised income tax thresholds for the ordinary man and woman and did not widen the gap between the rich and the poor.
I recall the Government's threats to reintroduce some of the lost clauses of the previous Finance Bill, and we see some of them in regurgitated form in the motions before us. We shall, of course, express ourselves amply and fully in the various stages of the Finance Bill produced as a result of these Ways and Means motions, and that will take place in the next week or so.
At the time of the Budget motions in March, we did not divide the House on the motions that have now been presented to us. The only one on which we intend to vote is the first. This is the most offensive, as it continues the Government's philosophy by giving to those with the highest incomes the greatest tax reliefs. The other matters will appear in greater detail in the Finance Bill and they will be subject to the same examination, scrutiny, debate and opposition as we have always provided for the Government's fiscal proposals.
As you, Mr. Deputy Speaker, know so well in your high office, on which Liberal Members warmly congratulate you, the motions before us are a key part of the House of Commons' fundamental responsibility for taxation.
Although I and my hon. Friends are quite content to go along with the proposal of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) to have, as it were, a token vote, it is nevertheless inappropriate that the debate should be greatly foreshortened simply because some hon. Members, though not the 150 new hon. Members, have been over this ground before. I take slight issue with the right hon. Gentleman when he says that we have discussed these matters at great length before, because, although that is literally true of some of us, it is not true of the 150 new Members.
I am sure that Treasury Ministers will not take refuge in the threadbare alibi that all this can be debated satisfactorily in a one-day Second Reading debate. So many matters will be covered in the Finance Bill that it will be impossible for every party now represented in the House to cover the important ground contained in these proposals.
It may be suggested that because Treasury Ministers have simply dragged a dead sheep out of the freezer and brought its form back to the House exactly as it was in March we need not go over the ground again. However, since the middle of March the economy has changed substantially and is in quite different shape. For example, mortgage interest rates have risen substantially, the rate of inflation looks as if it is beginning to rise again, and the balance of trade appears to have deteriorated sharply. We cannot be complacent and take the view that all that was said by some hon. Members in the middle of March covers the ground today.
I should make it plain that, just as they did in March, Liberal Members continue strongly to oppose three of the motions. The first is the raising of all income bands subject to higher taxation by an appalling 14 per cent. —two and a half times the appropriate rate of inflation. Secondly, we continue to oppose strongly the raising of the mortgage threshold on which tax relief is given. Thirdly, we oppose, as we did previously, the sharp reductions in capital transfer tax.
On the raising of mortgage interest relief thresholds, the Prime Minister said that
in the big cities of the south-east about one third of new mortgages are for more than £25,000".
That was the sole point on which the right hon. Lady based her defence for bringing the proposal back to the House three months after it first appeared.
In reply to the hon. Member for Bolsover (Mr. Skinner), who was as pertinent as ever, the Prime Minister said:
The demand for mortgages is so great that the building societies must obtain more savings to meet that demand, which has arisen because Tory Governments give greater opportunities for home ownership".—[Official Report, 22 June 1983; Vol. 44, c. 5–55.]
I assent to that proposition entirely, and that is why we object to this move. As the Prime Minister made so crystal clear, if the Government encourage some people to take out larger mortgages, thus adding to the excessive demand, there is bound to be an increase in the interest rate for everyone.
I shall incur the wrath of the Chair if I give way any further.
How right Sam Brittan was when he said in the Financial Times, on the day after the Budget in March, that
this is the type of distortion which does more to raise interest rates than a quite substantial increase in the Budget deficit would do".
I am grateful to the hon. Gentleman, whose argument I am following closely. As he knows, he has expressed the views of Labour Members. During the election campaign, did the Liberal party or did the Liberal leader make clear that objection to raising the tax relief on higher mortgages?
I am surprised at that question. It is precisely 20 years since the Liberal party published its policy on mortgage interest relief, and up and down the land I have been eloquent in commending it ever since.
It follows from the Prime Minister's excellent analysis of the economics of encouraging larger mortgages that, when additional tax relief is given on larger mortgages, the building societies will be in a worse demand-supply position, and that is bound to mean higher interest rates. Thus, the average first-time buyer—and it was the first-time buyer about whom the Prime Minister was so deeply concerned — will gain no benefit whatever from this proposal but will suffer considerable harm as a result of the higher interest rates which he or she will have to pay.
It may already be well known that at present the average mortgage taken out by first-time buyers is reported by the Nationwide Building Society to be about £18,690 and by the Leeds Permanent Building Society, as of last month, to be £16,634. It will be seen from those figures that the means of the average first-time buyer are a long way off even the present threshold of £25,000. Even those in the big cities of the south-east will in the end be no better off, because of the extra interest that they will have to pay.
There are many big cities outside the south-east. As you, Mr. Deputy Speaker, know from your constituency, the aggregate urban population is larger elsewhere in the country than it is in London. I have made some brief inquiries of the daily and 13 evening newspapers in that area, including Liverpool, Leeds, Bradford, Manchester and Sheffield. It is clear that the typical house sought after by the first-time buyer is available on the market. There are perfectly reasonable properties at between £15,000 and £20,000 — miles away from the present maximum figure.
No one voted against this Ways and Means motion in March. We all went along with the civilised view that one or two votes on these motions were sufficient to register our disapproval pending the arrival of the Finance Bill.
One of the features of this largest aggregate of urban population is that, for the first time in many years, that area has returned a substantial number of Conservative Members. I am sure that all of them, being diligent representatives of constituents, will consider carefully whether there is a single first-time home buyer in their constituencies who needs to borrow more than £25,000. All the rest will be put at a serious disadvantage by the effects of this proposal. Certainly, constituencies such as Dewsbury, Pudsey, Batley and Spen and Calder Valley will find that that is the position.
Mortgage tax relief in its present form and context ought to have been allowed to wither on the vine. Why should there be tax relief on adding a room to one's home when there is no tax relief on borrowing money to buy anything else as an adjunct to the quality of life? I ask Treasury Ministers why there is no tax relief on interest of £100 a year—
I shall not give way — incurred solely to acquire an asset that brings in a taxable income of £200 a year? How can the Treasury Ministers say that they will tax credits but conveniently ignore the essentially linked debits? To pick out one form of expenditure and borrowing on which to give tax relief is unjustifiable and primitive and flies in the face of all business sense. It is a symbol of Victorian superstition about bricks and mortar which the House ought to forget as soon as possible.
During the course of the debate, Labour Members showed some zeal for voting against motion No. 3. It was not intimated beforehand by the Labour Front Bench spokesman, who told me that they would be unwilling to vote against this provision for reasons which they might like to explain. [Interruption.] Therefore, we can use the procedures of the House to give those hon. Members the opportunity to vote with us against the motion.
Perhaps the hon. Member for Berwick-upon-Tweed (Mr. Beith) did not hear what I said. I made it clear that no one voted against the Ways and Means motion on the Budget. That does not preclude us from any decision on any of these motions or any other clauses of the Finance Bill as they come up and are debated in the House. That is the position and always was.
|Division No. 4]||[4.15 pm|
|Aitken, Jonathan||Beaumont-Dark, Anthony|
|Alexander, Richard||Bellingham, Henry|
|Alison, Rt Hon Michael||Benyon, William|
|Amess, David||Berry, Hon Anthony|
|Arnold, Tom||Best, Keith|
|Atkins, Rt Hon H. (S'thorne)||Biggs-Davison, Sir John|
|Atkins, Robert (South Ribble)||Blackburn, John|
|Atkinson, David (B'm'th E)||Blaker, Rt Hon Peter|
|Baker, Kenneth (Mole Valley)||Body, Richard|
|Baker, Nicholas (Dorset N)||Bottomley, Peter|
|Baldry, Anthony||Bowden, Gerald (Dulwich)|
|Banks, Robert (Harrogate)||Braine, Sir Bernard|
|Batiste, Spencer||Bright, Graham|
|Brinton, Tim||Jones, Robert (Herts W)|
|Brown, M. (Brigg & Cl'thpes)||Kershaw, Sir Anthony|
|Bruinvels, Peter||Key, Robert|
|Bryan, Sir Paul||King, Roger (B'ham, N'field)|
|Buchanan-Smith, Rt Hon A.||Knight, Gregory (Derby N)|
|Buck, Sir Antony||Knight, Mrs. Jill (Edgbaston)|
|Budgen, Nick||Knowles, Michael|
|Burt, Alistair||Lang, Ian|
|Butterfill, John||Latham, Michael|
|Carlisle, Kenneth (Lincoln)||Lawler, Geoffrey|
|Carttiss, Michael||Lawson, Rt Hon Nigel|
|Chope, Christopher||Lee, John (Pendle)|
|Clark, Michael (Rochford)||Lennox-Boyd, Hon Mark|
|Clegg, Sir Walter||Lester, Jim|
|Cockeram, Eric||Lewis, Sir Kenneth (Stamf'd)|
|Colvin, Michael||Lilley, Peter|
|Conway, Derek||Lord, Michael|
|Coombs, Simon||Luce, Richard|
|Cope, John||Lyell, Nicholas|
|Couchman, James||MacKay, Andrew (Berkshire)|
|Cranbourne, Viscount||Major, John|
|Crouch, David||Malins, Humfrey|
|Currie, Mrs. Edwina||Maples, John|
|Dicks, T.||Marland, Paul|
|Dorrell, Stephen||Marshall, Michael (Arundel)|
|Douglas-Hamilton, Lord J.||Mates, Michael|
|du Cann, Rt Hon Edward||Mather, Carol|
|Dykes, Hugh||Mawhinney, Dr Brian|
|Evennett, David||Maxwell-Hyslop, Robin|
|Eyre, Reginald||Mayhew, Sir Patrick|
|Fallon, Michael||Mellor, David|
|Favell, Anthony||Meyer, Sir Anthony|
|Fenner, Mrs. Peggy||Miller, Hal (B'grove)|
|Finsberg, Geoffrey||Mills, Iain (Meriden)|
|Fookes, Miss Janet||Mills, Sir Peter (Devon, West)|
|Forsyth, Michael (Stirling)||Moate, Roger|
|Fox, Marcus||Montgomery, Fergus|
|Franks, Cecil||Moore, John|
|Fraser, Sir Hugh||Morris, M. (N'hampton, S.)|
|Freeman, Roger||Morrison, Hon P. (Chester)|
|Gale, Roger||Moynihan, Hon C.|
|Galley, Roy||Murphy, Christopher|
|Gardiner, George (Reigate)||Neale, Gerrard|
|Garel-Jones, Tristan||Needham, Richard|
|Gilmour, Rt Hon Sir Ian||Nicholls, Patrick|
|Glyn, Dr. Alan||Norris, Steven|
|Goodlad, Alastair||Onslow, Cranley|
|Greenway, Harry||Ottaway, Richard|
|Gregory, Conal||Page, Richard (Herts, SW)|
|Griffiths, Peter (Portsm'th N)||Pawsey, James|
|Ground, Patrick||Peacock, Mrs Elizabeth|
|Gummer, John Selwyn||Percival, Rt Hon Sir Ian|
|Hamilton, Hon A. (Epsom)||Porter, Barry|
|Hamilton, Neil (Tatton)||Powell, William (Corby)|
|Hanley, Jeremy||Powley, John|
|Hannam, John||Prentice, Rt Hon Reg|
|Hargreaves, Kenneth||Price, Sir David|
|Harvey, Robert||Proctor, K. Harvey|
|Hawkins, C. (High Peak)||Raffan, Keith|
|Hawksley, Warren||Rathbone, Tim|
|Hayes, J.||Rees, Rt Hon Peter (Dover)|
|Hayhoe, Barney||Rhodes James, Robert|
|Hayward, Robert||Rhys Williams, Sir Brandon|
|Heathcoat-Amery, David||Ridley, Rt Hon Nicholas|
|Heddle, John||Robinson, Mark (N'port W)|
|Hickmet, Richard||Roe, Mrs Marion|
|Higgins, Rt Hon Terence L.||Rost, Peter|
|Hirst, Michael||Rowe, Andrew|
|Hogg, Hon Douglas (Gr'th'm)||Ryder, Richard|
|Hordern, Peter||Sackville, Hon Thomas|
|Howard, Michael||Sainsbury, Hon Timothy|
|Howarth, Alan (Stratf'd-on-A)||Sayeed, Jonathan|
|Howarth, Gerald (Cannock)||Shaw, Sir Michael (Scarb')|
|Howell, Rt Hon D. (G'ldford)||Shelton, William (Streatham)|
|Hubbard-Miles, Peter||Shepherd, Richard (Aldridge)|
|Hunt, John (Ravensbourne)||Silvester, Fred|
|Hunter, Andrew||Sims, Roger|
|Hurd, Rt Hon Douglas||Skeet, T. H. H.|
|Johnson-Smith, Sir Geoffrey||Smith, Tim (Beaconsfield)|
|Jones, Gwilym (Cardiff N)||Soames, Hon Nicholas|
|Speller, Tony||Trippier, David|
|Spence, John||Twinn, Dr Ian|
|Spencer, D.||van Straubenzee, Sir W.|
|Spicer, Michael (Worcs, S)||Waddington, David|
|Stanbrook, Ivor||Wakeham, Rt Hon John|
|Stern, Michael||Walden, George|
|Stevens, Lewis (Nuneaton)||Wall, Sir Patrick|
|Stevens, Martin (Fulham)||Waller, Gary|
|Stewart, Andrew (Sherwood)||Wardle, C. (Boxhill)|
|Stokes, John||Watson, John|
|Sumberg, David||Watts, John|
|Tapsell, Peter||Wells, Bowen (Hertford)|
|Taylor, Teddy (S'end E)||Wheeler, John|
|Terlezki, Stefan||Whitfield, John|
|Thatcher, Rt Hon Mrs M.||Wiggin, Jerry|
|Thomas, Rt Hon Peter||Wood, Timothy|
|Thompson, Donald (Calder V)||Woodcock, Michael|
|Thompson, Patrick (N'ich, N)||Yeo, Tim|
|Thorne, Neil (Ilford, S)||Young, Sir George (Acton)|
|Thurnham, Peter||Tellers for the Ayes:|
|Townend, John (Bridlington)||Mr. David Hunt and|
|Tracey, Richard||Mr. Michael Neubert.|
|Abse, Leo||Hughes, Sean (Knowsley S)|
|Alton, David||Hughes, Simon (Southwark)|
|Archer, Rt Hon Peter||John, Brynmor|
|Ashdown, Paddy||Kaufman, Rt Hon Gerald|
|Ashton, Joe||Kilroy-Silk, Robert|
|Atkinson, N. (Tottenham)||Kinnock, Neil|
|Bagier, Gordon A.T.||Lewis, Ron (Carlisle)|
|Barron, Kevin||Lloyd, Anthony (Stretford)|
|Beckett, Mrs. Margaret||Lofthouse, Geoffrey|
|Beith, A. J.||Loyden, Edward|
|Bennett, A. (Dent'n & Red'sh)||McCartney, Hugh|
|Bermingham, Gerald||McDonald, Dr Oonagh|
|Bidwell, Sydney||McKelvey, William|
|Boothroyd, Miss Betty||Maclennan, Robert|
|Bray, Dr Jeremy||Madden, Max|
|Brown, N. (N'c'tle-u-Tyne E)||Marek, John|
|Bruce, Malcolm||Mason, Rt Hon Roy|
|Buchan, Norman||Meadowcroft, Michael|
|Callaghan, Rt. Hon. J.||Mikardo, Ian|
|Campbell-Savours, Dale||Millan, Rt Hon Bruce|
|Clarke, Thomas (Monkl'nds)||Mitchell, Austin (G't Grimsby)|
|Cocks, Rt Hon M. (Bristol S.)||Morris, Rt Hon A. (W'shawe)|
|Cohen, Harry||Nellist, David|
|Cook, Frank (Stockton North)||O'Neill, Martin|
|Cook, Robin (Livingston)||Orme, Rt Hon Stanley|
|Corbett, Robin||Owen, Rt Hon Dr David|
|Corbyn, Jeremy||Patchett, Terry|
|Cowans, Harry||Penhaligon, David|
|Cunliffe, Lawrence||Pike, Peter|
|Davies, Rt. Hon. Denzil (L'lli)||Powell, Raymond (Ogmore)|
|Davies, Ronald (Caerphilly)||Randall, Stuart|
|Deakins, Eric||Redmond, M.|
|Dixon, Donald||Rees, Rt Hon M. (Leeds S)|
|Dobson, Frank||Richardson, Jo|
|Dormand, Jack||Roberts, Ernest (Hackney N)|
|Douglas, Dick||Robinson, G. (Coventry NW)|
|Duffy, A. E. P.||Rooker, J. W.|
|Dunwoody, Mrs. G.||Ross, Stephen (Isle of Wight)|
|Fatchett, Derek||Rowlands, Ted|
|Faulds, Andrew||Sheldon, Rt Hon R.|
|Field, Frank (Birkenhead)||Shore, Rt Hon Peter|
|Fisher, Mark||Silkin, Rt Hon J.|
|Forrester, John||Skinner, Dennis|
|Foster, Derek||Smith, Rt Hon J. (M'kl'ds E)|
|Freud, Clement||Soley, Clive|
|George, Bruce||Spearing, Nigel|
|Hamilton, W. W. (Fife Central)||Stewart, Rt Hon D. (W Isles)|
|Harman, Ms Harriet||Straw, Jack|
|Harrison, Rt Hon Walter||Thomas, Dafydd (Merioneth)|
|Hattersley, Rt Hon Roy||Thompson, J, (Wansbeck)|
|Haynes, Frank||Tinn, James|
|Heffer, Eric S.||Wainwright, R.|
|Hoyle, Douglas||Wallace, James|
|Hughes, Mark (Durham)||Wareing, Robert|
|Hughes, Robert (Aberdeen N)||Welsh, Michael|
|Wilson, Gordon||Tellers for the Noes:|
|Winnick, David||Mr. Allen McKay and|
|Woodall, Alec||Mr. Mr. Norman Hogg.|
|Young, David (Bolton SE)|
That income tax for the year 1983–84 shall be charged—
In that case, instead of reading out each motion in extenso, I propose to follow the procedure used in recent years. That is to say, I shall first state the title of the motion and then simply put the Question, That the motion be agreed to.