MORTGAGE INTEREST
(TAX RELIEF)
Q1. Mr. Bruce Douglas -Mann
asked the Prime Minister whether he is satisfied with the co-ordination between the Secretary of State for the Environment and the Chancellor of the Exchequer with regard to the administration of mortgage interest tax relief.
The Prime Minister (Mr. James Callaghan)
Yes, Sir.
Mr. McCrindle
rose——
Mr. Speaker
Mr. McCrindle.
Hon. Members
Oh!
Mr. Douglas-Mann
rose——
Mr. Speaker
Order. The hon. Member for Mitcham and Morden (Mr. Douglas-Mann) did not rise initially. I shall call him later, if he wishes. I looked in his direction but he did not rise after the Prime Minister had said “Yes, Sir.” The hon. Gentleman merely smiled. We are now wasting time. I have called the hon. Member for Brentwood and Ongar (Mr. McCrindle).
Mr. Douglas-Mann
I was, perhaps, too anxious to congratulate my right hon. Friend on what has obviously been a most successful visit——
Mr. Speaker
Order. I shall call the hon. Gentleman later, if he wishes. I told him that I have called the hon. Member for Brentwood and Ongar.
Mr. McCrindle
Does the Prime Minister agree with the National Executive Committee of the Labour Party that the maximum mortgage upon which tax relief should be allowed should be reduced from £25,000? Is this because the price of houses has decreased or because the influence of the Left has risen?
[column 210]The Prime Minister
The NEC has put forward a series of very interesting proposals, which were drawn to my attention this morning and which I shall study with great care. As for the limit on the value of houses—£25,000—I understand that for the past two years since the limit was fixed the price of houses in that range has not varied very much, and therefore the figure is pretty well stationary.
Mr. Douglas-Mann
Does the Prime Minister agree that there are many owner-occupiers at present receive far too little help? I have in mind particularly those buying for the first time, those who have bought within the past five years, and retired people who cannot afford to keep up their mortgages. On the other hand, there are others who bought their houses a good many years ago and whose housing costs now represent a very small proportion of their income and who, therefore, are receiving too much help?
Will my right hon. Friend also pay attention to the NEDC Report, the contents of which were leaked by the hon. Member for Hornsey (Mr. Rossi), which drew attention to the extent to which savings are diverted from productive investment to investment in housing? Does my right hon. Friend consider that there would be social and economic benefit if he were to ask the two Ministers concerned to review this matter with a view to ensuring that there was at least some redistribution within the owner-occupier sphere?
The Prime Minister
My hon. Friend raised a number of very important points, including the position of those who are first-time buyers as well as others who have to move their place of residence because of their work. The trouble with our mortgage interest relief system is that, like Topsy, it has “just growed.” I think that there is a very good case for reviewing it, as the Housing Finance Review is now doing, and we shall present our conclusions to the House in due course—[Interruption.] I agree that it is taking rather longer than I had hoped, but this is a very complex topic and we must balance equity and fairness in studying these matters. I would sooner not rush it, as the system has grown up over such a long period. [column 211]
I observed some of the newspaper remarks about the NEDO report. It may well be that my hon. Friend is right in saying that investment in housing has increased faster than investment in manufacturing. I do not think that that necessarily means that we should cut down investment in housing so much as increase investment in manufacturing.
Mr. Cormack
Will the Prime Minister discuss with the Chancellor of the Exchequer the very special problem facing the clergy and other low-paid people who must live in tied houses and who at the moment are denied mortgage interest relief on their retirement homes? This is a very deserving class of people.
The Prime Minister
I understand that the Financial Secretary to the Treasury discussed this matter with the House last year, during the Finance Bill debates, and that he said that he would consider the matter again in the light of the inter-departmental review of the tax treatment of representative occupiers. At this stage in the financial year it is not right that I should anticipate my right hon. Friend's Budget.
Mr. Allaun
Is it not fairer that we should devote to owner-occupiers and council house tenants at the lower end of the scale some of the subsidies that now go to the richest house purchasers, some of whom are receiving over £40 a week in housing subsidy? Will my right hon. Friend devote some of the savings that I hope he will secure in that way to restore the cuts in house building and improvement?
The Prime Minister
I cannot add to what has been said in earlier exchanges relating to the last part of my hon. Friend's question. The extent of mortgage interest tax relief and the levels at which that relief should be given are matters that should be left to the Housing Finance Review. I do not wish to anticipate the proposals.
BIRMINGHAM
Q2. Mr. Litterick
asked the Prime Minister if he plans to visit Birmingham in the near future.
Q3. Mr. Rooker
asked the Prime Minister if he has any plans to visit Birmingham.
[column 212]The Prime Minister
I have at present no plans to do so.
Mr. Litterick
Will my right hon. Friend accept my assurance that his answer will be widely regretted in Birmingham, particularly by the laboratory technicians who are now involved in a dispute with the management of Birmingham University—a dispute that is entirely due to the obdurate refusal of the management to implement a national agreement? Will the Prime Minister consult the Lord Privy Seal about inviting the Queen, in her capacity as visitor to the university, to institute an inquiry into the administration of the university, which is being negligently mis-managed?
The Prime Minister
This is a strange situation, where a dispute over five or six days' annual leave has provoked a strike that has now lasted for five months. I do not intend to apportion responsibility in this dispute any more than I would in any other industrial dispute, but with all the resources that have been made available in one form and another it should be possible to find a mechanism to resolve the dispute without involving Her Majesty.
Mr. Rooker
If my right hon. Friend visits Birmingham, will he see the vice-chancellor of the university and tell him that it is incompatible with enlightened management in the twentieth century to use violence against official pickets, including young females, to cause injury and to use blackleg labour to break an official strike? Will my right hon. Friend consider instituting a full and deep-searching public inquiry into the running of Birmingham University?
The Prime Minister
I do not want to give an answer now about a deep-seated inquiry into the running of the university. Apart from this dispute I have no evidence of anything being wrong, although I have not studied in depth the running of this institute of learning.
If there are allegations of criminal action by the police, Section 64 of the Police Act 1964 should be used. My hon. Friend should put Questions to the Secretary of State for Employment if there are allegations of the improper breaking of picket lines.
[column 213]Mr. Eyre
I recognise that the Prime Minister has other heavy obligations, but will he arrange to visit Birmingham as early as possible next week and to hold a public meeting at the Saltley gas works? Will he invite Birmingham housewives to consult him about the fantastic rise in prices and the appalling fall in living standards with inflation running at 21 per cent.? Will he explain to them why the Government have no faith in the Price Commission and why they have, by diktat, imposed an extra tax on gas users?
The Prime Minister
I cannot undertake to go to Birmingham next week, but I shall not hesitate to explain to housewives that our economic policy must be regarded as a whole. I shall explain that as a result of action by the Government confidence in sterling has been restored, the balance of payments is going in the right direction, and industrial production in the last quarter has moved up by 1½ per cent.—although I shall not fall into the habit of the Opposition and multiply that by four in order to obtain an annual figure. I shall also tell housewives that the minimum lending rate for borrowing is now well below what it was when we came into office. I shall explain all these matters and indicate to the housewives of Birmingham and everywhere else that the Government's economic policy stands as a whole and will bring us through to success.
Mrs. Thatcher
Will James Callaghanthe Prime Minister now answer my hon. Friend's question? Why, while the Prime Minister rightly stresses that it is important not to breach phase 2 of the Pay Code, is he nevertheless prepared for the Government to breach the Price Code by raising the price of gas, as they intend to do?
The Prime Minister
This matter was discussed in the House yesterday and no doubt it will be discussed again. There is no breach in this matter. The Chancellor of the Exchequer announced this in December last year and the Opposition did not take it up. There has been neither a breach nor any covert action. Unlike the situation that existed when the Opposition were in power, when the gas industry was allowed to drift into subsidy, when prices were kept down artificially and the nationalised industries ran into debt, this is a case in which the nationalised gas industry, like others, has [column 214]been rescued from the Opposition and is able to pay its way. The money will be used for the benefit of gas consumers.
Mrs. Thatcher
If the Price Code has not been breached, why is the increase not allowable under it?
The Prime Minister
The increase is not allowable under the Price Code within the rules that are laid down. [Hon. Members: “Humbug.” ] Opposition Members are the last people who should shout “Humbug” . We have brought the matter to the House and we shall ask the House for its confirmation of what we are doing. If the House refuses that confirmation it will destroy a part of the economic package as a whole. It is easy for the Opposition to pick out an individual item, but the policy is part of a whole. It is succeeding and will continue to do so.
PRIME MINISTER
(ENGAGEMENTS)
Q4. Mr. Charles Morrison
asked the Prime Minister if he will list his official engagements for 15th March 1977.
Q8. Mr. Gow
asked the Prime Minister if he will list his official engagements for 15th March 1977.
The Prime Minister
This morning I took the chair at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.
Mr. Morrison
In the light of the unfortunate fall in the volume in visible exports last month, does the Prime Minister agree that much of the credit for last month's surpluses should go to the City of London? Will he take time off to draw that to the attention of his hon. Friends below the Gangway and suggest to them that they should stop sniping at the City as they did last week, because by so doing they are sapping the morale of one of our best exporters?
The Prime Minister
The fall-off in the volume of exports last month was to some extent due to the position in the car industry. [Interruption.] The trade unions have done a remarkable job in this very serious matter. The Confederation of Shipbuilding and Engineering [column 215]Unions has issued a statement today. It is something that has never happened in our industrial history. It has agreed with British Leyland that if, when the workshops are reopened on Monday, the toolmakers do not get back to work they will have discharged themselves. That is unprecedented. Mr. Scanlon and other trade union leaders deserve the full support of the Opposition and everyone else.
As for the Government's attitude, we of course support the joint statement that has been made by British Leyland and the Confederation of Shipbuilding and Engineering Unions. I am bound to point out, in this very serious situation, that what has happened so far means that the Government will have to review the future of British Leyland in the light of the way in which the situation develops. Whatever happens now, a review of British Leyland's plans will be needed. How drastic it will be will depend upon the speed which the men return to work.
Mr. Gow
Does the Prime Minister recall that in the Chancellor's letter to the Managing Director of the IMF, of 15th December last, he stated that the twin pillars of the Government's strategy were the social contract and the industrial strategy? When, later today, the Prime Minister is preparing his party political broadcasts in advance of the by-election at Stechford, will he take the opportunity of explaining why, it is that those two pillars are pillars of straw?
Mr. Bryan Davies
As my right hon. Friend's engagements for the remainder of the day seem fairly mundane, would he care to switch his list with mine and take the opportunity, this evening, of meeting the Lord Mayor of London near the Tower and perhaps conveying to that gentleman the advantages of holding one's office on the basis of direct election by the people rather than on the basis of a property qualification and a very restricted franchise?
The Prime Minister
I understand that the question of direct elections is a vexed one and that principles can be applied differently in different places. However, certainly in the City of London I understand that elections are not regarded as being necessarily less valuable because [column 216]they are not wholly direct, or because they cover a large number of people. I have read my hon. Friend's recent speech. I thought that it was a very good one. However, the City of London contributes a very great deal financially to other London boroughs over the financial year.
Mr. Donald Stewart
Does the Prime Minister accept that among the services provided to the Government by the trade unions was the selling of the social contract to their members? The appalling rise in food prices has shown that the implied assurances that prices would be kept down have entirely failed. Therefore, there is not the slightest justification for asking the unions to accept a further phase of the pay freeze.
The Prime Minister
This is a very hard case to answer. While it is in the nation's interests that once again we should have another wage round and a wage settlement—the Opposition will take their own view—the truth is that sterling declined in value last autumn and, as a result, and because of the drought last year, food prices and the prices of commodities have risen very much. We are now beginning to see the end of that. As I said to the House previously, this will, I think, work its way through by mid-year, according to our forecasts. After that, because of the recovery in sterling and because of the measures that the Chancellor took, we expect the rate of inflation to diminish rapidly and substantially. If that is so, if we can get another wage round it will be well worth people's while to stick to that rather than have a free-for-all and see inflation go roaring away once again.
We have a real chance in the next 12 months, and I intend to fight as hard as I can—whether it be the Opposition or anyone else—in order to try to get this country through.