Mortgage Interest Payments

Part of Orders of the Day — Finance Bill – in the House of Commons at 8:45 pm on 15th July 1997.

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Photo of Damian Green Damian Green Conservative, Ashford 8:45 pm, 15th July 1997

When the housing recession occurred, the Conservative Government put in place a rescue package for those who were in trouble. This Government are hitting householders in two ways: cutting mortgage tax relief, and steering an economic course that has made interest rates go up. The Government are walking into another housing crisis. Because their spending priorities lie elsewhere, unlike the previous Government in the early 1990s, they will not want to organise a rescue package for those hit by negative equity. Labour is not interested in home owners, and we can be quite sure that the measures in the Budget that will damage the housing market will not be made up for by any rescue packages.

There are some who agree with the hon. Member for Dudley, North that there should be changes. Some groups are not instinctively in favour of home ownership and have argued for different types of housing subsidy. Even they, however, are not in favour of the measure. The Shelter briefing on the 1997 Budget says: The announced cut in MIRAS will hit the poorest owner-occupiers hardest". That is hardly a piece of central office propaganda. When a Labour Government introduce a measure that alienates millions of home owners and Shelter at the same time, they should realise that they are on the wrong tack.

Shelter states: For those on low incomes, a monthly increase in mortgage payments of around £10 per week will be critical to their budget … Reductions in the level of MIRAS ought to be redirected into a mortgage benefit or mortgage security scheme. The Government have given us the worst of all worlds. They are hitting the home owner, while not doing anything that might meet the demands of those who misguidedly think that a specific and more targeted form of tax relief for certain classes of home owner would be more effective.

We can see the outlines of the effect of the measure if the Government do not accept our amendment and proceed with their original policy. There will be continuing uncertainty in the housing market, which will inevitably spill over into the wider economy. Labour Members have repeatedly said that they want a climate of certainty. No home owner and no prospective home owner can be certain about the housing market because of the Government's actions.

Contrary to all their swords and propaganda before the election, the Government's first action is to cut mortgage tax relief. They will give no guarantee that they wish to preserve mortgage tax relief through this Parliament, and are being urged by their Back Benchers to get rid of it. That is a recipe for uncertainty, and will damage the housing market for years to come.

The Government are making mortgage tax relief less and less of a cushion for home owners when interest rates rise, as they are doing. As the financial markets have become increasingly uncertain about the Government's grip on the economy, they have put up interest rates—those interest rate rises are likely to go further. Home owners have every right to be uncertain and prospective home owners are even less likely to want to enter the market, which will create a spiral of decline.

The motivation behind the measure is clear: it is the Labour party's underlying hostility to home ownership and home owners. The measure is a traditional Labour measure. The Labour party does not like home ownership; its members regard it as a Conservative ideal, which it is. It gives people a direct, individual stake in society. It is one of the cornerstones of Conservative philosophy, and has always been opposed by the Labour party.

The Budget proves that, whatever weasel words were spoken before the general election, one of the Government's first acts on taking power has been to damage home owners and the housing market. Many millions of home owners will feel betrayed by the Government, the Budget and this particular measure.