Stamp Duty (Temporary Provisions) Bill

– in the House of Commons at 9:41 pm on 20th January 1992.

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Order for Second Reading read.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury 10:15 pm, 20th January 1992

I beg to move, That the Bill be now read a Second time.

Just before the Christmas recess, my right hon. Friend the Chancellor made a statement announcing a package of measures designed to help with the problem of mortgage arrears and repossessions and to stimulate the housing market generally. The Bill gives effect to one aspect of my right hon. Friend's package—his proposals to increase the stamp duty threshold from £30,000 to £250,000 for eight months starting from 20 December last year. We debated last week the resolution that founds the Bill.

This is a short Bill. Clause 1 lifts the stamp duty threshold for purchases of land and buildings up to £250,000, applying to documents executed between 20 December last year and 19 August 1992. Clause 2 provides a procedure for giving refunds where documents have been executed since 20 December 1991 and stamped before 16 January, the date the resolution took effect.

Stamp duty on property transactions runs at 1 per cent. of the purchase price, and it applies to all transactions above the threshold. During the eight-month moratorium, about 90 per cent. of private house purchases—about 600,000 transactions—will not bear stamp duty. That means that housebuyers, the people who generally pay the charge, will be able to save up to £2,500 on the cost of a house. For someone buying the average-priced house, it means a very useful saving of £600.

The purpose of the measure is to encourage people considering buying homes to get on with buying their houses or flats and to prompt others to bring forward their purchases to take advantage of the moratorium. That is why the threshold is lifted for only eight months; on 20 August it will go back to £30,000.

It will, of course, be a little while before the effects of the measure show up in the levels of house sales. It takes time to decide on the right house and to go through the formalities of buying, so it would be nonsensical to argue, as some have sought to do already, that the measure has failed. It is far too early to see its effects, but the measure has been very widely welcomed by the Council of Mortgage Lenders, the House Builders Federation and many others as a helpful spur to a depressed housing market.

The cost of the measure to the Exchequer will be about £110 million in the current financial year, and £310 million in 1992–93. As my right hon. Friend said in his statement, that cost will be met out of the public sector borrowing requirement saving of £1 billion from deferring the abolition of stamp duty on shares.

Over the coming months, the measure will mean that many thousands of people will pay less to buy their new homes because they will not have to pay stamp duty. I am sure that it will encourage and facilitate house purchasers and so provide a real stimulus to the housing market. I commend the Bill to the House.

Photo of Dr John Marek Dr John Marek , Wrexham 10:19 pm, 20th January 1992

In the eight or nine years that I have been a Member of the House, I have not heard any Minister make a Second Reading speech as short as that which has just been made by the Financial Secretary to the Treasury. It sounded as though it was being read from a prepared script. Indeed, I seemed to recognise in it large sections of the press release issued on 19 December.

The Financial Secretary gave no explanation of why the Bill is suddenly necessary. He gave no reason for the Government suddenly being able to find £400 million, although the press release said something about where the money has come from. He gave no reasons for why the Government have chosen to spend that money in this way.

It was a pity that the Financial Secretary's speech took such a short time because that means that the Opposition will have to pursue the Bill just that little bit further than normal because we want to ensure that the Government are acting properly and to ascertain their intentions. As I do not know the Government's intentions from the Financial Secretary's speech, I shall have to think of some myself.

I begin by asking whether the Bill will reduce homelessness. This country has a housing crisis and homeless people. I know that several of my hon. Friends will seek to address that topic if they catch your eye, Mr. Speaker. Homelessness will not be affected by the Bill. People will continue to be homeless. I must also ask whether the Bill will stop houses being repossessed. It may help a little if, as a result, the lenders—the building societies and the banks—are a little less keen to repossess. I should have liked the Financial Secretary to comment on that but, unfortunately, he did not. However, I do not think that the Bill will help to alleviate the problem of repossessions. The Bill will not rescue those who are in arrears with their mortgage interest payments—not a bit of it. It will not lower interest rates. Furthermore, it will not extend housing benefit to people in difficulties.

The Government could have addressed all those issues. If they could not make provision for them all in this Bill, at least we might have expected to hear from the Financial Secretary why all those important and serious matters, such as homelessness and people's difficulty in repaying their mortgage at a time of very high interest rates, were not included in the Bill and why the Government did not take action. Of course, it is a question not of a Government who cannot take action, but of a Government who will not take action.

The Bill contains one major provision—that stamp duty will be relieved for about eight months. That means that for eight months those who would normally have paid 1 per cent. stamp duty when buying a property priced between £30,000 and £250,000 will not now have to do so.

The Bill is supposed to kick-start the market. The Government have come up with this solution and are taking up the time of the House to debate kick-starting the market by a Bill that will ease stamp duty payments. It is a great pity that the Government have done that and that they did not seek instead to introduce a Bill to increase manufacturing because that might have increased trade between this country and other European Community member states. The Government could have introduced a Bill to increase employment. All those measures would have given a kick-start to what the Government desire—a better "feel good" factor before they have to face the electorate at the polls. If manufacturing was increased, more people would be in work, paying taxes and have disposable income to spend. More people would "feel good". The same effect would be created if trade or employment were increased. But that is not what the Government have done. That shows the serious difference between the Conservative party and the Opposition. The Conservative party is playing politics. It is not interested in tackling the root causes of our decline during the past 10 years or our economic problems.

The Conservatives have a one-club solution to our economic problems. Interest rates must be high enough to ensure that inflation is low enough. The Opposition take the diametrically opposite view. One club is not enough. Of course, inflation must be low for prosperity. But high interest rates are not good for prosperity. There are ways of increasing manufacturing, trade and employment. The Government could have introduced a Bill to tackle those issues. They have not done so because the Tory philosophy is built on the market.

The Tories believe that the market must not be meddled with but left to its own devices. But unfortunately the market does not make anything. It does not export anything. The market is greedy and does not take account of the well-being of the economy of the United Kingdom. It is not in the interests of the market to do so. That is indisputable.

It has been the Tory philosophy to leave the market entirely alone, yet with this Bill they are interfering in the market. If they were true to their philosophy and left the market strictly alone, the Bill would not be before us tonight. They would have said that the housing market was of no concern to them. It would be of no concern to them if citizens of Britain who bought houses three or four years ago when interest rates were low had a cross to bear when interest rates suddenly and catastrophically doubled.

Photo of Mr Geraint Howells Mr Geraint Howells , Ceredigion and Pembroke North

The hon. Gentleman knows my constituency well. There is a great deal of anxiety there about repossession of homes. The number of homes repossessed last year was 100 per cent. up on the figure for five years ago. There is a great deal of anxiety about repossessions, whatever views the Government hold on the issue.

Photo of Dr John Marek Dr John Marek , Wrexham

I am grateful to the hon. Gentleman for making that point. It is true that there is a great deal of anxiety about repossessions. I shall seek to persuade the House that the Bill will do nothing or very little to alleviate the problem of repossessions that we are suffering at present.

Photo of Mr Frank Haynes Mr Frank Haynes , Ashfield

The Minister has not taken a blind bit of notice of what my hon. Friend has been saying about what the Government could and should do. I think that he is going to listen now. It is the obvious thing that my hon. Friend should say straightforwardly to the Minister that the Bill is a racket. It is a quick fix job because we are coming up to an election. The Government hope that they can catch one or two votes because they know what the position will be when the election is called. The Bill is a fix and a racket. That is what the Government stand for as far as the electorate out there is concerned.

Photo of Dr John Marek Dr John Marek , Wrexham

My hon. Friend puts the point succinctly and straightforwardly. Of course, his argument hits at the heart of the matter and at the Government's policies. I hope that my hon. Friend will not mind if I delve into Government policy a little further to pin round their necks the policy that they seek to put through the House of Commons. It is, of course, a racket, a gimmick, and they hope that they will be able to reimpose the tax as soon as the election is over.

Photo of Dr John Marek Dr John Marek , Wrexham

It is not rubbish.

One amendment is designed explicitly and purely to help the Conservative party. I shall not deal with it at the moment save to say that it is the one that changes from 20 August to 7 May the date on which stamp duty becomes payable again. Of course it would be very helpful to the Conservative party if there were a great many transactions on 5 and 6 May to make it appear that the market had been kick-started. However, I shall explore that matter later. At this stage my theme is that this is an election gimmick. The Conservative party would not have found this money in a million Sundays if it had not been for the fact that there must be an election by a date in July.

Tory philosophy has been to leave the market alone, yet here the Government are interfering. The reason, of course, is that the election is coming and they want the "feel good" factor to operate in their favour. To emphasise that point I should like to quote from the research note that was produced by the Library on 15 January. On page 5 the note says: The main reason why the Government wants to act is that economists now generally accept that that there is a strong link between the housing market and general consumer wealth effects. Put simply, the price of our houses and, perhaps more importantly, the rate at which it is increasing or decreasing, affects how we, as consumers, spend our money. The Library is always very careful not to take one side—either the Government's side or the Opposition's side—in any argument in this House. Here, however, it says quite clearly that there is a strong link between the housing market and general consumer wealth effects. That is a very telling statement and amounts to a very strong indication of the Government's reason for introducing this Bill. The Library's research note goes on to quote the Bank of England's quarterly bulletin of February 1990. Four effects are noted. The first is: A buoyant house market stimulates considerable purchases of related consumer durables. This is outside the scope of this note, but it is not insignificant in its own right." The second point that the bulletin makes is this:Rising capital values…leads to an increase in net cash withdrawals. This is mainly effected by bequests and is…[an] increasingly common feature of consumers' lifetime income profile following the death of the first generation of home owners on a large scale. That is further support for my proposition as to the reasons for the introduction of this Bill. This is the bulletin's third point: Work was done on 'equity release', the extent to which homeowners manage to release some of the capital that they had in their home either during continued occupation or when they exchanged residences. Although 'equity release' was positively related to buoyant market conditions it was not a significant macro-economic phenomenon. Making the fourth point, the bulletin says: The Bank found that rising capital values influenced consumers' decisions about saving. And this is important: Rising prices persuaded individuals to reduce their savings held in other, more liquid forms. This is what happened three, four, five years ago when we had the last housing market boom. House prices were rising, and home owners were persuaded to part with their savings. The Government think that this move will have the same effect, that it will kick-start the economy and, miraculously, people will forget what happened three or four years ago and will start spending. I have news for the Government: people are not that stupid, and they will not be fooled twice.

Those comments, from the Library and the Bank of England, are not the only ones. One can adduce a further piece of evidence from the Financial Times. I could paraphrase this, but one should always give the source of one's information, and there has been quite a bit of press comment about the Bill and whether it will work. When it was announced before Christmas, the Financial Times reported: In the City, there was scepticism about the effects of cutting stamp duty and speculation that the eight-month period was deliberately timed to coincide with the run-up to the next general election. It does not take much to divine that. Mr. John Wrigglesworth, an analyst at UBS Phillips and Drew, said: We saw in 1988 what a deadline concession does to the market, and a 1 per cent. cut in a falling market does not mean much. There is then the problem of what will happen in the three or four months after 19 August. The Financial Times was right to highlight the problem of going for a Bill that will give a relaxation that will be abruptly cut off on 19 August. I shall not dwell on this now, but we may be able to discuss what will happen after 19 August when we deal with an amendment later. I give notice to the Financial Secretary that I should like to hear, as I am sure that the House would like to hear, a little more about what he thinks will happen after 19 August if the House sees fit to pass the Bill.

Photo of Mr Tim Smith Mr Tim Smith , Beaconsfield

The hon. Gentleman says on the one hand that this is an insignificant measure that will have no effect on the housing market, and then on the other that it is so significant that it will affect decisions about whether people buy or sell before 19 August. Which is it—significant or insignificant?

Photo of Dr John Marek Dr John Marek , Wrexham

We can explore this later. The Financial Times and other commentators have expressed considerable doubt as to whether this move will have a significant effect on the Government's aim of kick-starting the economy. On the other hand, such house purchases as are made will be concentrated in the period up to 19 August. After that, nothing will happen in the market. It is a bit of both. I do not think that it will be effective, but to the extent that it is effective, it will distort the market.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

When we debated the Ways and Means resolutions that were the legislative underpinning for this Bill, the hon. Member for Faversham (Mr. Moate), a Conservative Member of Parliament, made the very point that my hon. Friend has just made—that the Bill will be a disincentive against entering the housing market after its provisions end. He pleaded with the Government to assure him that the cutting of stamp duty would continue after August. Therefore, I was surprised when the hon. Member for Beaconsfield (Mr. Smith) stabbed one of his hon. Friends in the back, and made such sneering remarks.

Photo of Dr John Marek Dr John Marek , Wrexham

My hon. Friend must know what the Conservative party is like. It does not surprise me. The record will show the truth of the matter.

There was further press comment after Christmas. As I am sure that hon. Members would like to know the source of the article to which I shall refer, I shall not paraphrase. The article appeared in The Guardian on 4 January and was written by Simon Beavis, the business correspondent. It reads: The Government's decision to suspend stamp duty payments on housing transactions will do nothing to revive house prices or housebuilding before 1993, a leading construction industry chief said, yesterday.This would make the present downturn in the housing market one of the longest on record, John Smith, chairman of the Building Employers' Confederation, said. The depressed construction sector saw no prospect of recovery this year even if the economy as a whole began to improve. Despite a rise in new housing starts in the third quarter of 1991, 'the housing market as a whole shows no sign of real revival', he said." An eminent person who is involved in the construction industry is saying that the Bill will not help it. I have already said that it will not help manufacturing, trade or employment. It will not help either anyone who has had his house repossessed or someone who is in mortgage difficulties. If the article is right, it will not help anybody in the construction industry. The article continues: His bleak assessment coincided with the new poll by Gallup for Gartmore, the investment management group, which found that one in five people are waiting until after the election before moving home. Four out of 10 thought that the recession would not end before 1993. Even the Prime Minister is hedging his bets now and thinking that it might not end until 1993.

When commenting on the eight-month abolition of stamp duty, Mr. Smith, who is the chairman of the Building Employers Confederation, said that the new measures introduced to stem repossessions would help to reduce the stock of unsold new houses, but did not go far enough. 'It will be 1993 before we see any real recovery in house prices and housebuilding.'

Photo of Harry Cohen Harry Cohen , Leyton

One of the problems with the present level of house prices is that many people have a house that would sell for less than the mortgage which is attached to it. If such a person sold his house he would still be indebted, and possibly considerably. Does my hon. Friend agree that the Government have not addressed that problem in terms of the Bill and, indeed, have not given any consideration to the people who are in the plight that I have described?

Photo of Dr John Marek Dr John Marek , Wrexham

My hon. Friend is right. I hope that he will seek to catch your eye later in the debate, Mr. Deputy Speaker, with a view to advancing those arguments. There is nothing in the Bill from which anyone in difficulties can take consolation.

The Government have a large majority in the House, although they obtained only 42 per cent. of the vote in 1987, and I do not fancy my chances, along with my right hon. and hon. Friends, of beating them, in trying to improve the Bill or in adding to it measures that would make the Bill more acceptable and protect those who are in difficulties with their mortgage arrears or who have had their homes repossessed. We shall, however, have to wait and see.

The green shoots of the economy have, unfortunately, been frozen off. The plant was left outside in the back garden and the frost has got it. That is being admitted by the Government, including the Prime Minister. There are many glum faces among Members on the Government Benches.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

That is because they are listening to the hon. Gentleman.

Photo of Dr John Marek Dr John Marek , Wrexham

Indeed. They are hearing and agreeing with the veracity of my remarks.

There is no recovery in sight, and any recovery that there may be will be spasmodic and minor. The Government, typically, have not produced a Bill that will get the economy back into shape by kick-starting it. They are trying to kick-start a spurious housing market to try to create a consumer boom, to make people think that they are wealthy and to make them feel good so that they can win the election. It is all about the election and gimmickry; it is not about good government and it is certainly not about consideration for those who have housing difficulties.

I remind the House that this change in Government policy is not the only one. The Prime Minister, when he was a social security Minister, cut mortgage support from 100 per cent. to 50 per cent. for the first six months for people who had to live on benefit either because they had been made redundant or because they had become unemployed. Indeed, when the right hon. Gentleman introduced the measure five years ago he boasted about it. He said that there was too much support for housing. Now, the Government have come round full circle. Suddenly, the reality of an election is before them and they can see the deadline of the buffers only a few yards ahead of them. That is why they are trying to help the housing market in such a peculiar way.

There has been another change in Tory party philosophy recently. Only a year ago, mortgage interest relief at 40 per cent. was withdrawn and restricted to the 30 per cent. tax rate.

Photo of Dr John Marek Dr John Marek , Wrexham

I am sorry——

Photo of Dr John Marek Dr John Marek , Wrexham

It was not a Freudian slip. The real rate of taxation under the Tory Government is 25p in the pound plus 9p for national insurance, which makes 34 per cent. Under the last Labour Government, national insurance was only 6.5p in the pound. Value added tax was only 8 per cent., but under the Tories it is now 17.5 per cent. Under Labour, the burden of taxation was about 34 per cent.; under the Tories, it is 37 per cent. I do not need any lectures on who is the high taxing party—it is the Tories—[Laughter.] They may laugh, but let them challenge what I am saying. I shall give way to any Tory Member who wishes to do so. The high taxing party is the Tory party. The burden of taxation in the 1980s was always higher than it was in the 1970s. I am waiting for a Tory Member to challenge my figures. Of course, no one will do so—[Interruption.] Oh, one will.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

The hon. Gentleman knows that the burden of taxation on present taxpayers rose in the first two years of this Government because the last Labour Government had spread the burden of taxation on to the next generation. We had to unmortgage the country's future, and since then the burden of taxation has steadily fallen.

Photo of Dr John Marek Dr John Marek , Wrexham

My recollection of events is slightly different. Before 1979, the Conservative party said that it had no proposals to put up value added tax. As soon as it came to office, it almost doubled it, from 8 per cent. to 15 per cent. That was why the burden of taxation shot up between 1979 and 1981. That is a slightly different story.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Does my hon. Friend agree that the burden of taxation is actually higher under the Tories, but they carefully differentiate between direct and indirect taxation? The combination of the two is much higher under the Tories. The increase in value added tax bears most heavily on the poor as it is a bigger share of their income than it is of the income of the wealthy. Therefore, under the Tories not only has the burden of tax increased overall; it has actually increased more for the poor.

Photo of Dr John Marek Dr John Marek , Wrexham

There is much in what my hon. Friend says. I do not want to digress too much, but we are talking about taxation: the Bill gives away money and forgoes tax revenue. The Government could have kept that money, or at least given it away in a different manner. Although VAT in this country is not as regressive as it is in other European Community member states, it has certain regressive aspects.

The proportion of our national income that is taken in tax has risen from 34.75 per cent. In 1978–79 to 37 per cent. in 1991–92. In 1978–79, a married couple on typical earnings paid 30.9 per cent. of their income in tax; now, they pay 34.9 per cent. There is no doubt that the burden of taxation has risen, although there may be arguments across the Floor of the House about the reasons for that rise; and the fact is that the Conservatives are the high-tax party.

I cannot argue that, because the Government are giving back a little tax, we should vote against the Bill, and I shall not urge my hon. Friends to oppose its Second Reading—although we retain our right to examine the amendments carefully. None the less, I wish that the Government had presented us with a different Bill, and that the taxation that is being forgone was being forgone in a better way.

It is clear that the Conservative party is rattled, for it has changed its philosophy. At one stage, they say that we should not interfere with the market; at another stage, they say that we should. I think that I have demonstrated that the Bill is an election gimmick, and that after 9 April—or is it 7 May?—it will be speedily forgotten.

Perhaps it is not too late for the Government to propose an adjournment, so that we can return to the Bill next week or at some other time. Perhaps they will change their mind, and incorporate some of our suggestions. Labour's programme is eminently sensible. We propose, for instance, that local authorities be enabled to acquire properties selectively on the private market. Why was not something done? Why was a deal reached quietly, with building societies and banks saying, "We will not go so heavy on repossessions if you—the Government—forgo taxation in the form of stamp duty, and also insist that DSS money is forwarded directly to us rather than being given to home owners"?

Why did not the Bill contain a provision enabling local authorities to acquire properties? Housing associations could and should be encouraged to enter into deals with local authorities enabling them to manage temporary accommodation on authorities' behalf; authorities could be enabled to acquire buildings and convert them into short-stay hostels for homeless people; social landlords could be urged to adopt "living above the shop" initiatives, which have been pioneered in Cambridge and elsewhere. Local authorities could he encouraged to speed up the letting of their empty properties; the Housing Corporation could monitor the number of empty properties that each Department has, and the information would be passed to the relevant Secretary of State and the National Audit Office. That would exert pressure on Departments to bring their empty properties swiftly into use.

The Bill could have launched a real attack on the appalling state of housing in this country, and on the crisis that we face. Nothing in it, however, remotely suggests that the Government are thinking along those lines, or intend to present the House with another Bill in the future. Local authorities could have a right to acquire derelict private properties. Housing association and local authority homes which are unjustifiably left empty for long periods could be given to other social landlords to be managed more effectively. Moreover, it could be made more cost effective for local authorities to lease decent homes from the private rented sector for use as temporary accommodation.

In addition, there is the Labour party scheme to turn mortgage interest repayments into rent. There would be a part mortgage repayment and a part rent repayment, if people got into difficulties. I understand from my Front Bench Environment colleagues that the Opposition have been talking to the Council of Mortgage Lenders for some time about these matters, yet the Government have not seen fit to do anything positive to try to get round this terrible crisis.

This is an election gimmick proposal. Interest rates are at a record level. In 1979 the Conservative party promised to keep mortgages below 10 per cent. but they have been below 10 per cent. on only one or two occasions. If anybody looks at interest rates under the Labour party in the 1970s and compares them with the interest rates of the Conservative party in the 1980s, he or she will see the great difference between the interest rate policies of the two parties. I have every confidence that after the next election the Labour Government will pursue the same policy of low interest rates.

The number of mortgage repossessions represents an all-time record. Figures provided by the Lord Chancellor's Department show that 33,778 families were served with mortgage repossession orders in the first six months of 1991. The figure for the whole of 1991 will he about 80,000 properties repossessed, yet the Bill does nothing whatsoever to make that figure 77,999 even. Not one house that has been repossessed will be affected by the Bill.

There is a record shortage of affordable housing. More than 1.25 million homes have been sold, yet very few of those homes have been replaced. The total number of homes built by local authorities in 1990 was a mere 13,000 compared with 92,000 in the final year of the last Labour Government.

Finally, we have record levels of homelessness. In 1990, 145,800 households were accepted as homeless by English local authorities, compared with 56,000 in 1979. That is the legacy of 13 years of wasted Conservative Administration: more repossessions, more homelessness, higher interest rates and a disdain about doing anything for the average human being in this country who, through no fault of his or her own but as the result of the Tory party's policies, has suffered the effects of persistent high unemployment. It is a terrible indictment that has not been lost upon the voting public.

The Bill will help none of those unfortunate people. It will not help the economy. It will not kick-start anything, but the Government will, no doubt, continue to kick everything. However, it will not be long before we have a Government who will do something about the current appalling housing crisis. That will be the Labour Government who will take office after the next general election—when this Government dare to call it.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 10:58 pm, 20th January 1992

The Bill does not address the housing crisis. That does not mean that it ought necessarily to be opposed. I am not clear, having listened to the speech of the hon. Member for Wrexham (Dr. Marek), whether the Labour party intends to oppose the Bill. I do not believe that it should be opposed and I intend to say why. Nevertheless, it is a wholly inadequate response to a desperate housing crisis.

The unlocking of council house money that is in council bank accounts—the receipts from council house sales—and the use of a significant part of that money to replace the houses that have been sold and to deal with the homelessness that so many local authorities face would be of considerable benefit to the housing market. A more determined effort to stem the repossessions and to turn mortgages into rents for those for whom a mortgage is no longer a financially viable option would be a significant contribution to the solution of the housing crisis. An attempt to attract private capital into the purchase and building of homes for rent could also make a significant contribution.

The Government have not sought the most cost-effective solution. The use of the business expansion scheme for building houses to rent has not proved a cost-effective means of stimulating the private rented sector. It is important to enlarge that sector, and the Labour party could encourage the investment of substantial capital by making it clear that there will be no wholesale imposition of rent controls.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Is the hon. Gentleman saying that the Liberal party favours the abolition of rent control so that private landlords can rip off tenants with impunity? That surely is a new aspect of Liberal party policy, on which he might enlarge.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

I thought the hon. Gentleman might say that. We are not arguing for the removal of the remaining limited rent controls, but I gather from what the hon. Gentleman says that the Labour party favours a return to a wholesale rent control system. On the basis of experience, I tell him that it simply will not work. It would ensure, as it did for many years, that no private capital was invested in rented housing because it would not be possible to obtain a return.

Liberal Democrats do not believe that the private housing sector can meet all our housing needs, but it can make a bigger contribution than it has in recent years. One of the tragedies of the post-war years was that the significant contribution that the private sector made—many people of my age grew up in privately rented housing—was gradually whittled away. Our housing opportunities were only purchase and the then large municipal sector; the options in between were insufficient.

There are now other elements in the equation such as the considerable social housing sector provided by voluntary housing associations, assisted by the Housing Corporation. The market is more complex than before, but the private sector has a significant part to play in the provision of rented housing. It will not play that part if there is a prospect of the wholesale imposition of rent controls. As the housing market is so badly off, the introduction of a potential new purchaser—the private landlord buying or building to rent—would be helpful. It would act as a significant stimulus to the housing market.

All those measures would have a more significant effect on the housing market than will the Bill, which is unlikely to make much difference, because houses are being sold for thousands of pounds less than people paid for them or the price at which they were valued 12 or 18 months ago. A difference of £600 on an average price house may be helpful and welcome to purchasers, but it is unlikely to generate more sales than a price drop of £5,000.

I am sceptical about the impact of the Bill. The Government are using the windfall gain of stamp duty revenue that would have been forgone if the stock exchange had been ready with its new transactions system for the abolition of stamp duty on share transactions.

I do not like stamp duty; I would rather get rid of it altogether. However, it is not top of my list for tax reforms or the removal of taxes. I would rather get rid of the poll tax, the council tax or even the 17.5 per cent. rate of VAT, which seems a particularly heavy burden on the pressed consumer market. I would not argue for the permanent retention of stamp duty on housing transactions, especially as we have got rid of it for so many other transactions.

We are not even considering a measure based on the belief that stamp duty should go, because it is to be reimposed on 20 August this year. It is a piece of temporary fiscal fine-tuning and the Government are not supposed to be in favour of fiscal fine-tuning. Ministers are always telling us what a bad thing it is, but I see no reason why we should not give it a go and discover whether it will have a beneficial effect on the housing market.

There will be some concern and opposition on 20 August when the duty is reimposed, but, as the hon. Member for Beaconsfield (Mr. Smith) rightly said, the extent of the anguish will be in direct proportion to its significance to the housing market in the meantime. I assume that it will not be that great, but that it will be welcome to those who are able to benefit from it because they are able to manage a house purchase during that period. Those who buy a house after 20 August will feel considerably aggrieved that they have not been able to benefit. The Government will not gain much popularity, but by then it will all be over so they will not be very worried. They may be sitting on the Opposition Benches by then and it will have long ceased to be a matter of concern to them.

I do not think that the limited nature of the Bill or its temporary character is any reason why hon. Members should want to march enthusiastically into the Lobbies and deprive potential beneficiaries of the short-term ability to purchase a house without the imposition of stamp duty. The duty is an irritant to many people, and many buyers—especially first-time buyers—feel that it is a tax that they should not have to bear. Such buyers are often most stretched when they first undertake a purchase and in the early months of payment, especially when the interest rates are as high as they have been recently.

I shall not oppose the Bill and I invite my hon. Friends not to do so. I hope that it goes through all its stages tonight. I am not aware that it is riddled with so many drafting defects that it need take us all night to dispatch the business, but there seems to be considerable zeal for detailed scrutiny by hon. Members around me. I am not quite sure what the motivation for that is, but I shall be interested to see whether the Opposition discover a drafting defect.

What sticks in my mind after studying the Bill is how little the Government are assuming that the housing market will change. I raised that point when we discussed the Ways and Means resolution. The Minister said that it was not reasonable to talk about revenue forgone in respect of improvements in the housing market because they would not have happened if the measure had not been introduced. However, if the Government expect the measure to cost only £400 million, they must be assuming that during this period there would have been no increase in housing transactions and no increase in housing values, except the little and the few induced by the Bill. That is a pretty depressing forecast for the housing market, but it is perhaps the Government's most honest recent forecast on any of the economic indicators. It suggests that the housing market will be in such a poor way during the coming months that the Bill is unlikely to make a great deal of difference.

Photo of Mr Hugo Summerson Mr Hugo Summerson , Walthamstow 11:07 pm, 20th January 1992

It is a pleasure to follow the hon. Member for Berwick-upon-Tweed (Mr. Beith). I agreed with much of what he said about the impact of stamp duty on the housing market and what an irritant it is.

I declare an interest as a chartered surveyor. As such, I have been involved in many property transactions and I take this opportunity to welcome the Bill, which will reduce the cost of such transactions. The costs are far too high and have been for a long time. I have previously attacked the conveyancing system which gives many lawyers the opportunity to rake in large amounts of money. I believe that the system should be simplified so that it is not necessary to use the services of lawyers. Of course, it is not strictly necessary to use lawyers in property transactions now, but most people find it convenient, if expensive, to do so.

It is not necessary to use the services of estate agents when selling property. Many people think that they have to use estate agents when selling property. I assure them that they do not have to do so and that they can save themselves large amounts if they do it themselves.

We have heard from the hon. Member for Wrexham (Dr. Marek) about the Bill. I thought that I heard the sound of many red herrings being dragged about, especially the little dissertation on VAT. The hon. Gentleman conveniently forgot that, under the previous Labour Government, there was a higher rate of VAT, at 25 per cent., on so-called "luxury" items, which included television sets. On that basis, that rate being three times as high as the then so-called "basic" rate of VAT, if there were ever another Labour Government, would they apply the same differential, with VAT on television sets being raised to 52.5 per cent?

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

Is the hon. Gentleman aware that the former Prime Minister stated that under no circumstances would the Conservative Government double VAT?

Photo of Mr Hugo Summerson Mr Hugo Summerson , Walthamstow

I am talking about the Labour party, following what it did last time and tripling the rate of VAT on so-called "luxury" items.

Once the Bill has become law, I recommend that the London borough of Waltham Forest reduces its enormous holdings of property. That Labour-controlled council owns property which brings in at least £1 million. Anyone who walks down Hoe street in my constituency will come across two shops side by side which are derelict and boarded up. They been derelict and boarded up for years. That council is always complaining about lack of money, yet is has resources to hand, and if it only used them it could benefit the entire community.

The hon. Member for Wrexham spoke a great deal about whether the Bill would kick-start the market. I remind him that kick-starting is a rather inefficient method by which to start a very small engine. The housing market in such terms is rather a large engine. We shall never be able to kick-start it; we need a battery by which to get it going. The Bill will put some charge into the battery. A number of factors will get the housing market moving and the Bill is just one of them. Any reduction in the cost of buying and selling property is welcome. I welcome the Bill.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde 11:12 pm, 20th January 1992

I believe firmly that the Bill is an out-and-out gimmick. I remember coming into the House in the week in which the legislation was announced when I was dealing with a constituent whose house was being repossessed. I will tell the story later because it makes sense in what I am about to say. It is unbelievable that we should be given such a response when under this Prime Minister, in this year alone, 300 people every day have had their houses repossessed. Last year, 80,000 houses were repossessed. Since this ditherer has been Prime Minister, more than 750,000 people have lost their jobs.

I doubt whether the suspension of stamp duty will help the workers at Ravescraig who will lose their jobs and possibly their homes. It will not help the workers at Armitage Shanks, many of whom have bought their houses. The word "kick-start" is an insult to the thousands of people who have had their houses repossessed during the past decade of the Tory Government. The Government have done little or nothing —in fact, they have caused a massive problem in relation to council housing.

I look to the Government to do something for people. This Government are driving people into early graves. Not content with doing that, they have introduced the Bill while aware that they are not tackling the real problem.

Interest rates are raging. The Prime Minister has kept them at 15 per cent. when all businesses are calling for them to be reduced. Manufacturing and service industries might have been able to develop and allow workers to keep their jobs and maintain their mortgage or rent payments, but the Government have kept interest rates too high and are now introducing desperate measures to try to stop repossessions.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) spoke of house sales. I have never seen such incredible hype from the Tory party and some of their friends out in the country who say that things are not too bad. They should come to my district or I can bring all the local newspapers to show them stories of people who bought their houses at £34,000 and £50,000 and are now taking the desperate measure of emigrating from Scotland for a job. Some of them had to drop their house prices by about £6,000 which gives a lucky chance for anyone with the money to buy them. I am sure that the hon. Member for Berwick-upon-Tweed would agree that there have been many such sad housing tales in Scotland.

I have seen the same problems in London. I am looking for a house—[Interruption.] I cannot hear the Conservative Members who are intervening from a sedentary position as I have a hearing aid—I am glad of that sometimes. Some people are trying to sell their houses for £30,000, £40,000 or £60,000 less than they paid for them. What will happen to those people? We are talking not just about repossession, but about absolute bankruptcy and the moral degradation that goes with it. The Government have placed people into such positions by kidding them and telling them the lie that everything was rosy. The former Chancellor that the Government dumped—

Photo of Alan Meale Alan Meale , Mansfield

Is my hon. Friend aware that 10 per cent. of home owners in Britain are at least two months in arrears with their mortgage repayments? Does that not support his argument and prove that the present position is serious?

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

Yes; it is a tragedy that 10 per cent. of those with mortgages are still behind in their payments. The Government do not seem to care about that.

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme

Is my hon. Friend aware that many people are now throwing the keys of their property on to the building society's desk because they can no longer cope with the mortgage? They tell the building society to keep the keys, then they walk off and disappear.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

I had a phone call from a solicitor tonight who told me that a number of his clients were walking out and abandoning him. They were not attempting to tell anyone where they were going, but simply disappearing from the face of the earth. I am sure that we shall hear of more such cases after tonight.

Not long ago an ambulance man whose house was being repossessed came to see me. He was a young man who had never lost a day's work; he had worked constantly and had a young family of three. He bought a council house in Linwood and took on a mortgage that was not too expensive to repay. I am telling it straight to the Minister, and if he wishes to know who the man is I shall gladly let him know. He came to see me when he was facing the possibility of his house being repossessed and his family being made homeless. His wages had fallen dramatically as he was no longer doing normal hours and overtime. His wife had lost her part-time job because of the prevailing economic climate. He had been conned by the Government. He had been told, "This is great. Buy your house and you will live happily ever after." He took the Government's advice and he is now in desperate straits. He cannot pay his mortgage and his house is being repossessed. He came to me and we tried to get the local council to provide him with a house. The council tried desperately to accommodate him.

I also have a case involving a mother with two children at university who receive grants and loans. Her house was being repossessed and she wanted to know why the Government's provision applied only to new house purchases simply to stop repossessions. The Government could have acted on repossessions in a more meaningful way. She has a small part-time job. Her husband left her and disappeared to another country. The building society wants to repossess her house and she has got to go. I fought for weeks until eventually we found a council house for her. The council had to come up with the goods because the woman was to be made homeless. That was another tragic case.

In those two cases the council fulfilled its obligation and housed those people. However, I have another eight cases involving people whose houses have been repossessed because they have lost their jobs, or there have been massive cuts in overtime or short-time working has been introduced. For the love of it, those people cannot provide enough money to pay their mortgages. There is no guarantee that the economy will improve so much that they will return to full-time work or that their employers will be able to increase their wages at least by the rate of inflation. Those eight people are desperate.

However, thousands of people in my constituency and around Renfrew are homeless and waiting for housing. They are desperate to see council officials because the people about whom I am concerned do not have collateral or insurance to get a house in the private rented sector. They can get houses only from the local council, but the councils do not have enough houses to provide housing for all the homeless or for people such as those I have described, who, as a result of the Government's mismanagement of the economy, have had their houses repossessed and have been driven to desperate measures.

Photo of Mr Jimmy Wray Mr Jimmy Wray , Glasgow Provan

Does my hon. Friend agree that the stamp duty provision for a first-time purchaser will do nothing for people who already have mortgages? It is only a bribe to the building societies to get off their knees the people they have been robbing for the past five or six years. If the Government really intend to do something for people who have had their houses repossessed, they will have to reduce interest rates to 7 or 8 per cent.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

I would go further than that. Renfrew district council has borne the brunt of the Government's mismanagement of the housing economy. Over the past few months, it has housed at least 10 people. That has possibly cost £80,000 a house, or £800,000 in all. In the face of that, the Government come up with a pittance of a few million pounds for all of Scotland to deal with homelessness. That might make one laugh, but it makes me sick to the teeth because the people about whom I am concerned are good people. They want to work and have the right to a decent job. Conservative Members can smile all the way to the bank, but those people can only smile all the way to the dole queue.

Photo of Alan Meale Alan Meale , Mansfield

It is not only in Scotland that severe crises are occurring. At the moment, in my constituency 9,500 people are on the local authority waiting list, and 2,700 of them require special needs accommodation. Terminally ill people, severely disabled people and old people cannot get the right type of accommodation. In my area, 850 people are classified as homeless. Thousands of people throughout the east midlands are in exactly the same position. Thousands of people in the midlands have had their homes repossessed. The problem does not occur only in Scotland; it occurs throughout the United Kingdom.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

I am most grateful for that information. I am aware of the terrible tragedy. The Government have inflicted poverty on Scotland, England, Ireland and Wales. I am terribly ashamed to have a decent wage and to be able to afford a house when thousands of people who voted for us are living in squalid poverty because of the Government's ineffectual handling of the economy.

Photo of Alan Meale Alan Meale , Mansfield

Perhaps my hon. Friend would like to consider that an argument that is often put by Conservative Members concerns empty properties. Will he explain to the House the misinformation that Conservative Members are trying to give? If every house were filled, hundreds of thousands of people would still be homeless or in need of proper accommodation.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

That is a valid point when we are talking about the Government's measures supposedly to stop repossessions and help the homeless.

In Renfrew district, because of the climate. many houses suffer from dampness and condensation. Because of lead pollution in the water, councils have a problem in trying to keep houses fit. There are many empty houses through no fault of the council. I can relate to the Minister chapter and verse of some of the problems that Scotland faces. Councils need support from the Government to tackle the weather problems that create bad housing.

There are many empty houses in our area, but the council needs money to bring them back into a rentable state. The law dictates that those houses must not only be wind and watertight but fit for habitation. At present, Renfrew district council, along with other district councils, has suffered savage cuts. Thousands of millions of pounds have been cut during the decade during which the Tory party has been in power. That has caused a deterioration in our housing stock and put tremendous pressure on local councils to provide people with a roof over their heads.

It is not long since the former Prime Minister stood in a house with a bag of groceries in her hand. Hon. Members may ask, "What has this to do with stamp duty?" I shall tell them in a minute. The former Prime Minister was proud of what that bag of groceries cost. However, she would probably only have a slice of bread in that bag today. The house that she stood in would probably be a tent or a lump of cardboard. Today, the family concerned would not be able to afford the food that was in the bag. Many people can no longer afford to live comfortably.

Tonight I spoke to my mother, who is a pensioner. I told her that this week we would have the poverty debate and that tonight we would have the stamp duty debate. My mother said, "The stamp duty debate, son?" I said, "Yes, mother." She said, "What is that about?" I said, "Well, the Prime Minister has seen his chances slipping away, and the general election will be the nail in his coffin. Therefore, today he is attempting to buy a few votes, mother, and he has come up with this stamp duty measure." "Well, Thomas, tell me what it means," she said. I said, "It means that stamp duty will be abolished for houses that cost between £30,000 and £250,000." My mother said, "Goodness God, do people buy houses that cost a quarter of a million pounds? Son, it must be the biggest family in Britain if they are to live in a house costing £250,000. It must be the Taj Mahal palace." I said, "Mother, unfortunately, there are people who have £250,000 to spend on a house—but not around here. They are down south." I then had to explain what that meant.

At the end of the day, however, when I look in the mirror, I have to ask myself what the Bill really means. It certainly does not mean a lot to the people I know whose homes are being repossessed. It is not the people in the high-flying jobs who are losing their jobs and houses; it is the plumbers, the butchers, the bakers the tailors, the toilet attendants and the council workers. They are the people who are being thrown on the dole and who do not have the money to pay the mortgage. Furthermore, they are not buying houses that cost £250,000. Their houses cost £16,000, £20,000 or £30,000. They are the people who are being thrown out of their homes because of repossessions. They are the first people to lose their jobs, and they are the people who cannot afford to build up a kitty to carry them over.

The Government are sick not to recognise that. Instead of trying to help some of his wealthy friends, the Prime Minister should have taken a look at something that could be targeted at the local councils to provide them with sufficient money to enable them to build homes for local people to rent. Such money would also enable the councils to make many of the empty properties fit for habitation and for renting.

Often when I speak in the House I see cynical smiles and grins on the faces of Conservative Members. That makes me angry. In other places, I might not be as civilised as I am in the House, and if I were to take the Financial Secretary into my community folk there would not be so nice to him as Tommy Graham. They would not sit back and simply accept that the Minister and his hon. Friends grin at their poverty and losses because they blame the Government for inflicting such damage on them. So I make a plea to the Financial Secretary in all sincerity: "When I am speaking with sincerity, please listen with sincerity."

I shall go further. I believe firmly that rural communities are also suffering and that the abolition of stamp duty will not help those in the towns and villages of Scotland and other areas—

Photo of Alan Meale Alan Meale , Mansfield

Perhaps my hon. Friend will tell the Minister what good the Bill will do to those people at Ravenscraig who wish to remain in employment and who, because of the Government's strategy, have to change employment and, in the process, try to sell their homes in an area where massive numbers of houses will be put up for sale. What good will the few pounds of stamp duty that they save be to them?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

The answer is public ownership.

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

I am grateful for help on this matter.

The possibility of 1,200 steel workers selling their houses in the current housing market in Scotland is lamentable. There is no chance of selling even a dog's kennel in the housing market in Scotland if jobs and industries continue to be lost on the current scale. I must advise the Financial Secretary that there is no chance of the Armitage Shanks people selling their houses either—although they live in the constituency where the Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), has his house. As I said earlier, people trying to sell their houses have had to take dramatic cuts in price.

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme

My hon. Friend has mentioned Armitage Shanks. He may be aware that I represent the Potteries and the areas around Stoke-on-Trent and north Staffordshire where more than 600 jobs have been lost in a similar industry involving the manufacture of kitchenware and bathroomware. It is an absolute disgrace. How does the Minister think that people can manage to keep up the repayments on their homes when they do not even have a job?

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

I am sure that my hon. Friend knows the answer that I will get. It will be the same one that everyone else gets. The Government will give people six months of dole money but after that abandon them to the desert of homelessness and unemployment.

Tonight we have seen an attempt to present a gimmick as a saviour. What an absolute disgrace. What inhumane treatment of the 80,000 people whose homes were repossessed last year. What an inhumane future the Government present to the 300 people daily who have had their houses repossessed this year. The Minister should hang his head in shame.

The Government should have made sufficient funds available to local authorities. There should have been a major house-building programme to give the homeless the right to a roof over their heads. More importantly, the Government should regenerate people's right to work. Instead of the end of stamp duty, our people should see the end of the Government. They have the right to a job that brings home a decent wage and can make them proud to be able to pay their rent or buy their own home. They have the right to a job that gives them consistency and the ability to live in this country decently and pay their mortgage for 25 years, rather than not knowing whether they will have a job this week, next week, tomorrow or the day after. Minister, stand up and fight for the homeless people and those who have had their houses repossessed instead of fighting for the moneyed people.

Photo of Harry Cohen Harry Cohen , Leyton 11:35 pm, 20th January 1992

This measure to remove stamp duty for the next eight months is a stamp-sized effort by the Government to deal with a whole package of problems in the housing market. Stamp duty will be back on 20 August. As my hon. Friends have said, the measure is only for the election. It is an election gimmick. It is tinkering with the problems in the housing market and the suffering that they are causing. However, it is expensive tinkering. It will cost about £400 million. It is the only measure that the Government have taken to deal with the housing problem and it does not measure up to the scale of the problem.

I suspect that when the figures are announced in the next few weeks they will show that 100,000 houses were repossessed in 1991. Many more repossessions are in the pipeline. Every one of those 100,000 repossessions is a terrible tale of misery for the families and people whose homes have been snatched away from them as a result of the economic circumstances in which they have been placed. One in five of the homes on the market are repossessions. That is one of the reasons for the great collapse in the housing market.

That collapse was brought about by three main factors. The first was the uncontrolled rise in house prices which was way above inflation in the 1980s. The Government allowed prices to let rip as a way of making money, not to deal with people's housing circumstances for the future. It was just a way of making money. That bubble has burst with a vengeance. The Government are not prepared to take responsibility for the policies that created the difficulties in the 1980s. So people have to pick up the problem.

The collapse was also brought about by record high interest rates, particularly when set against inflation. People had to pay high mortgage interest rates. Now on top of that we have the impact of the recession. Unemployment has gone through the roof. It rose by 700,000 last year. People have insufficient incomes to meet their bills. Unemployment is not the only problem; the argument about tax is relevant. People have other bills to meet. For instance, there is the poll tax, as well as VAT on the goods that they buy. For that reason, they do not have enough money to meet the record mortgage payments. In addition to all the personal misery that has been created, there has been a collapse of the housing market.

Hon. Members should consider the way in which the collapse has affected the construction industry. The fact is that if there is no housing market people do not have an incentive to build new homes. Obviously that affects the private sector. Many homeless people come to my surgery and to the surgery of the hon. Member for Walthamstow (Mr. Summerson). Homes should be built for such people, but, as the market collapse proves, this cannot be left to the private sector. In present circumstances, it will not do the job.

Photo of Mr Hugo Summerson Mr Hugo Summerson , Walthamstow

I am sure that the hon. Gentleman will mention the housing action trust, which is doing excellent work in the London borough of Waltham Forest and will deal with two of the worst estates in the hon. Gentleman's constituency.

Photo of Harry Cohen Harry Cohen , Leyton

Indeed. I have been arguing for an improvement in council estates. I welcome all such measures. The hon. Gentleman has referred to a particular problem that must be tackled. Overall, the Government have not invested nearly enough to improve council estates. That is why such serious problems have developed over several decades. Indeed, those problems have worsened during the past decade, when investment has been lacking.

However, the collapsed housing market is a different problem. It is a problem for people who want to own their homes. The market has failed to provide the houses that are needed. Only the local authorities can do the job effectively, yet the Government have prevented them from making the necessary investment. The ban on the use, for this purpose, of the receipts from the sale of council houses should be lifted. Indeed, the Government should have done that straight away. What we need is a package of measures to enable local authorities to build homes. While the matter is left to the market, homelessness will increase. Central intervention is required.

The £400 million that this stamp duty relief is costing would be better used to help the victims of repossession to stay in their homes. Those people should be allowed to convert mortgage payments to rent payments. Councils have a duty to house them and, as council accommodation is not available, that is an intolerable burden. The ricochet effect is felt by people in my borough of Waltham Forest —indeed, by people all over London—whose names are on waiting lists. Some families in very poor council accommodation need transfers. There are some, for instance, who need two bedrooms instead of one, but, because councils have a duty to house people whose homes have been repossessed, others have virtually no chance of a transfer. The Government should put this money into helping the victims of repossession to stay in their homes. The fact that one in five of houses for sale is a repossessed home has killed the market. If the Government want to revive the housing market, they should find ways to enable those who face repossession to stay in their own homes.

In my intervention in the speech of my hon. Friend the Member for Wrexham (Dr. Marek), I made the point that, in the current state of the housing market, many people have mortgages that are greater than the value of their properties. If they cannot afford the mortgage repayments and are forced to sell their homes, they will still be saddled with astronomic debts for years to come. In effect, such people will be bankrupt, but the Government have not shown the slightest glimmer of concern; these people have not been given tax assistance.

Photo of Alan Meale Alan Meale , Mansfield

I am pleased that my hon. Friend has mentioned this problem, because in the past few months people have come to my surgery and told me that they can no longer keep up their mortgage repayments but the value of their properties would not be enough to cover the mortgage even if they were able to sell. Some have said that they offered their properties to anybody who would take up the mortgage repayments, thereby forgoing any investment in the properties. This has happened time and time again.

Photo of Harry Cohen Harry Cohen , Leyton

My hon. Friend has made a good point. Many people are caught in the trap of not being able to afford mortgage repayments, and often have mortgages that are greater than the value of their properties. Such people have no way of escape, and the Government should be doing something for them.

On 10 July 1990, I introduced, as a ten-minute Bill, the Mortgage Assistance Bill. Had the Government accepted that Bill, we should not now have a collapsed housing market and 100,000 repossessions. I will not repeat all that I said then—it is to be found at columns 181 to 183 of Hansard of that day. However, I made five main proposals.

The first was to allow mortgage payers to convert to part-ownership, thereby scaling down the ownership element and allowing time to meet reduced payments. The second was to let the mortgage payer convert to shared ownership with a local authority or housing association, so that he would pay half mortgage and half rent, thereby reducing the amount that he would have to pay and the debt that he had incurred.

My third suggestion was that we should facilitate conversion from ownership to rental, and a great deal more needs to be done to allow those faced with debts that they cannot repay to move over to rental but to stay in their own homes. Such a move could be supported by local authorities.

Fourthly, I said that there should be a duty on the lending institutions, the building societies and the banks to sort out alternative arrangements before any court action for repossession. All too often they wash their hands of cases, take people to court and repossess properties before investigating all the means for helping people to stay in their homes.

The fifth measure that I proposed was special funds for local authorities and new borrowing arrangements to enable them to enter shared ownership schemes, and special funds to housing associations. The Government still ignore that suggestion. They will not give local authorities money to tackle the problem of repossessions.

This puny, stamp-sized measure that the Government have introduced is far too little, far too late.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone 11:50 pm, 20th January 1992

The Bill will only tinker at the edges of a housing crisis that the Government fail or do not wish to recognise. Anything that helps to solve housing problems is welcome, and I am advised by the building societies that the Bill will go a small way to easing problems for them; they do not say that it will ease the problems of my constituents. The lowering of the mortgage interest rate is to be welcomed, but all the comments about that have been made in terms of helping the housing market, not of helping those of my constituents who are homeless.

During my time in local government and central Government I have never known such a housing crisis. About 90 per cent. of the letters in my postbag concern housing. I hold a surgery every Saturday and Sunday somewhere within the constituency, and about 90 per cent. of the complaints that are brought to me involve housing. The Bill will go nowhere to deal with the problems. I have never known circumstances in which young people with children are facing the possibility of going into hostel accommodation because no housing is available. We should be disgusted with ourselves. The Government should be especially disgusted with themselves for allowing such a crisis to develop. Young mothers of 18, 19 and 20 years of age are facing the prospect of hostel accommodation.

What is the reason for this? The answer is that the Government turned their back on local government itself, and on the way in which local government deals with its housing responsibilities. In 1979, when the Government came to power, those of my constituents who placed their name on the local authority housing list had a home within three weeks. A single person who placed his name on the list had a home within 10 weeks. There is not a chance in hell of getting a house in my constituency now because there are none. That is because the local authority has been unable to build houses for the past six years.

The Government stand condemned because they have not provided sufficient money to enable local authorities to get rid of old housing stock that should have been condemned and cleared away. This stock is having to be used because of the Government's housing policy.

The Government stand condemned for many things but especially for the housing crisis that their policies have created. As I have said, the Bill will do nothing to house people. It must be understood that 300 families a week are losing their homes. Those people turn to local authorities and they are being turned away. As a result, those without their own home move in with friends, parents or relatives. The overcrowding should never be tolerated. I thought that we had got rid of it some time ago. Indeed, we did, but because of the Government's ideology on home ownership unacceptable overcrowding has returned.

I agree with the Government about home ownership. There is no finer state within a community—for those who wish to buy. Unfortunately, many people either do not wish to buy or are unable to buy. When there is a 40 per cent. unemployment rate in a constituency, as there is in mine, many people are unable to buy and will be unable to do so for many years. There is not a market to satisfy such a position.

The private rented sector is milking the position; it is all right. There is certainly a market there. When people are turned out of their homes they have to go into rented accommodation. My constituency is a fairly-low-rent area, but people are now having to pay £60 to £70 a week. In fact, they are not having to pay, the DSS has to pay. The people whom the Government talk about—the community charge payer and the taxpayer—have to find the money for that rent. There is a lucrative market in the private rented sector because people have nowhere else to go.

My local authority, which had 16,500 houses, has now sold about 8,000–50 per cent. of its stock. That has left a huge gap because the local authority cannot replace them. However, some of the 8,000 people who bought those houses are now themselves becoming homeless. Why cannot the local authority buy back those houses? Why cannot it be reimbursed for doing so? Those houses could then be put back into the rented sector, which would sort out a great number of problems for a great many people.

Why cannot local authorities return to the position in which they can buy rented and owner-occupied accommodation that is for sale at a competitive price? Why is not the money available for them to do that? Until that happens, all the tinkering at the edges will be to no avail. The Government may think that it will get them off the hook, but the people whom the Government's housing policy has affected will not let them off the hook. They and their families will not forget the misery that that policy has caused.

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme 11:57 pm, 20th January 1992

I want to talk about the state of the building industry both in my constituency and throughout the country. Steetley is a well known and large employer in the brick industry. It was encouraged by the Government to make massive investment in its plant in my constituency. It has been working at only 50 per cent. capacity ever since.

Since September 1989, about 3,000 people have lost their jobs in the brick industry. Steetley is spending its time fighting a takeover bid which it does not want, which the workers from my constituency certainly do not want, and which the workers and management throughout the company do not want. The company could better spend its time producing bricks to build homes for people, rather than fighting takeover bids.

In the slate and tile industry—again an important industry in my constituency——

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I regret to tell the hon. Lady that she is a long way away from the subject under debate. She must relate her remarks more closely to the Bill.

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme

Does the Minister want to say something?

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme

My remarks are relevant because the relief on stamp duty is intended to encourage people to buy homes.

The building industry seems to be closing all over the country, at a time when homes are needed. Where is the necessary production to take place? The same is happening in the ceramic industry. In Scotland, Armitage Shanks is closing, with attendant job losses, and the industry is also suffering in north Staffordshire. Industries do not start up again simply because of a change in Government policy.

Photo of Alan Meale Alan Meale , Mansfield

If the trapped £18 billion in local government receipts from the sale of council properties throughout the United Kingdom were released, the building industry could construct some 550,000 new homes, accommodating more than 1 million people. Given that—according to Shelter and the Salvation Army—that is the number of people who are registered as homeless, the housing problem would be greatly eased by such a move.

Photo of Mrs Llin Golding Mrs Llin Golding , Newcastle-under-Lyme

My hon. Friend is absolutely right. What the Government's policy is doing to people is disgraceful. So many of them are coming to all our surgeries: young couples with children living in top-floor flats, for instance. How can mothers with babies and small children in pushchairs climb stairs? Old people are living in homes that are entirely unsuitable; they desperately need ground-floor accommodation, but they cannot obtain it.

You may think, Mr. Deputy Speaker, that I am wandering slightly from the subject of the Bill. The Bill is designed to release people and to make the housing market move, but the Government will not succeed with it. What is needed is a concerted policy: that is clear to us when we talk to local authorities, housing associations and, indeed, manufacturers. Doors need handles; windows need catches and glass. Then there are all the ceramic fittings for bathrooms and kitchens, and the bricks and tiles. All those things must be produced, and we cannot simply flick a switch and expect production to start up again.

The Bill goes a little way, but it is only a very little way. What we need is a Labour Government, committed to housing the homeless.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury 12:03 am, 20th January 1992

It is usual on these occasions to say what a useful debate we have had. I do not think, in all sincerity, that I can say that this time; by and large, this has been a fairly sterile occasion.

We have presented a measure that has been widely welcomed. We never claimed that it would transform the world, or switch on a light in darkness. We said that it was one part of an important package, which would have a measurable and serious impact on the housing market and would greatly benefit a large number of people. It is therefore mildly irritating when Labour Members come along, shedding copious crocodile tears about all the problems and refusing to address the issues raised by the Bill.

Labour Members seemed to veer wildly between saying that the Bill would be hopelessly ineffective and would make no difference to the housing market before 20 August, and saying that it would devastate the housing market after that date. They cannot have it both ways. As was pointed out by my hon. Friend the Member for Beaconsfield (Mr. Smith), either it will have no effect before, or after, 20 August, or the reverse.

The fact is that the Bill will bring forward transactions, as all who have studied the position recognise. It is a good and useful measure, and I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Boswell.]

Bill immediately considered in Committee.