Building Societies Association

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 6th November 1986.

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Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

My right hon. Friend has not met the Building Societies Association this year. I have myself met the BSA three times, mainly to discuss aspects of the recent building societies legislation.

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

Will my hon. Friend tell the building societies, and more particularly their customers, that the Government have no intention of restricting mortgage tax relief either to first-time buyers, as has been suggested in some quarters, or to those who are paying the standard rate of tax alone? Would that not create a log jam at both the top and the bottom of the housing market, which would do no one any good?

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

I am grateful to my hon. Friend for drawing attention to this point. He will have noted the answer that my right hon. Friend the Prime Minister gave last week. The building societies and all those with mortgages — 8 million of our fellow citizens — should beware that the Labour party, through the Leader of the Opposition, has now made it clear that under a Labour Government only those who are young, who have many children or who fall on hard times would get the full benefit of mortgage interest relief.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Brent East

Would it not be appropriate to switch the burden of mortgage tax relief to repair and renewal funds instead of incurring the considerable expenditure indulged in by way of relief on the capital purchase? More specifically, will the Minister discuss as quickly as possible with the Building Societies Association putting an end to the idiotic and unfathomable rule which the Treasury imposes and which as a general proposition prevents the investment of millions of pounds in the provision of rented housing, of which we are in dire need, because it will not allow the marriage between grants and private investment in rented property?

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

It is extraordinary that an Opposition Member should speak about the problems of rented accommodation when it is the Labour party's policies that have prevented the revival of the rented sector. Mortgage interest tax relief contributes satisfactorily to the growth of owner-occupation. I am glad to be able to say that that figure has now reached 62 per cent., compared with 55 per cent. when the Conservative party came to power.

Photo of Edward Leigh Edward Leigh , Gainsborough and Horncastle

Has my hon. Friend received any representations on mortgage tax relief from the alliance parties? Before he conveys those views to the Building Societies Association, will he say whether he has decided which alliance spokesman to believe? Is it the leader of the SDP, who appears to believe that tax relief should be abolished altogether, or the experienced and distinguished Treasury spokesman for the Liberal party, who believes that it should be restricted to basic rate taxpayers? Is the alliance as disorganised, as disunited and shambolic on this issue as on any other?

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

The policies of all the Opposition parties on these matters are in a state of confusion, but the one common theme to each is that they want to cut back on mortgage interest tax relief, to the damage of home ownership.

Photo of Dr Oonagh McDonald Dr Oonagh McDonald , Thurrock

Will the Minister care to note, as he seems to have failed to understand the words of either my right hon. Friend the Leader of the Opposition or other Front-Bench spokesmen, that the party's policy is to retain mortgage tax relief at the standard rate, not to allow mortgage tax relief at the higher rate, and to give further help to first-time buyers, such as my constituents, who face not only exceptionally high interest rates, which are this Government's responsibility, but high prices for such houses as they might wish to buy? Those three points have been made clear repeatedly both by the leader of the Labour party and by other Labour Front-Bench spokesmen.

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

I am always interested to note what the hon. Lady says. I note it with particular attention when what she says is so different from what the leader of her party has said.

I remind the House that, only a few days ago, the Leader of the Opposition said that he was advocating arrangements which would mean that young people, people with maximum family responsibilities to children or dependent relatives, and people who experience inadvertant falls in income, derive maximum benefit". The only way that such people can derive maximum benefit, unless extra resources are devoted to mortgage tax relief, is for all others to suffer. The other 8 million had better watch out.