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Mortgage Interest Payments

Part of Orders of the Day — Finance Bill – in the House of Commons at 9:30 pm on 15th July 1997.

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Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury 9:30 pm, 15th July 1997

An amendment is before the Committee, to which I have to respond. I intend to respond to it, and when I have, if there is time, the hon. Gentleman can certainly intervene again.

The reduction in the rate of mortgage interest relief is an important measure to give economic stability. The point of the amendment is that it delays the implementation of that reduction—a delay that was not sought by the Conservatives when in government. The delay would not assist mortgage lenders. The very notice that we are giving them in the Budget would be denied them in terms of being able to deal with their mortgagees.

The amendment simply will not work, because there is no recognised average mortgage rate or prevailing rate, and it does not tell us who will decide what that rate should be. The amendment will cause instability rather than provide stability in the market. Opposition Members have referred continually to election manifesto promises, but the Conservative party's 1992 election manifesto promised to maintain mortgage tax relief, only for it to be cut when they came into office.

9.45 pm

The Council of Mortgage Lenders has said that the Budget package contains a prudent set of measures. The Halifax has said that it will allow the steady recovery in house prices to continue. The Budget has been welcomed by the Institute of Directors and a number of other building societies which are clear that there is need for action now in the housing market. Opposition Members have also referred repeatedly to comments made by my right hon. Friend the Prime Minister. It is necessary to apply a gentle brake to the housing market because of the increase in prices and in order to secure the stability that all house owners want. In the three months to June, prices were up 2.1 per cent. on the previous month and 6.8 per cent. on the year as a whole. That shows why it was necessary to dampen down the housing market.