HC Deb 20 June 1966 vol 730 cc12-5
12. Mr. Channon

asked the Minister of Public Building and Works what was the percentage rise in building costs in the last 12 months.

Mr. Prentice

Between the first quarter of 1965 and the first quarter of 1966—the latest period for which figures are available—the index of new building costs rose by roughly 4.5 per cent.

Mr. Channon

Was not the rise in the new house prices last year in percentage terms higher than in any period since records have been kept? Does not the right hon. Gentleman further agree that the Government, by imposing the Selective Employment Tax, will increase costs still further by 2 per cent., as he himself has admitted? What are the Government doing to get house prices down?

Mr. Prentice

The hon. Gentleman's question related to building costs in general, which I have stated will go up by about 4.5 per cent. This figure, in fact, compares with an average in the last 10 years of about 3 per cent. Indeed, there have been years in which the rise has been higher than last year's figure. I have already answered a number of questions about the S.E.T. I hope that a large part of this extra cost will be absorbed by greater productivity.

Mr. Boyd-Carpenter

Is the right hon. Gentleman aware that I suggested last week that the way to reduce house prices was to remove restrictions and taxation—not impose them?

Mr. Prentice

That is a supplementary question to Question No. 11. When the right hon. Gentleman made that point last week my hon. Friend the Parliamentary Secretary to the Ministry of Housing and Local Government reacted by saying that the right hon. Gentleman was getting near to suggesting price control. My hon. Friend did not say that the Government were suggesting price control.

Mr. Chichester-Clark

Will the right hon. Gentleman now pass the correct housing figures to the Parliamentary Secretary to the Ministry of Housing and Local Government?

Mr. Prentice

I have no doubt that my hon. Friend gave the correct figures to the House.

20. Mr. Eyre

asked the Minister of Public Building and Works what estimate he has formed of the likely increase in building costs in the private sector over the next six months.

Mr. Prentice

Up to 3 per cent., but the figure depends on the extent to which the cost of Selective Employment Tax and the forthcoming wage increase are absorbed by contractors or offset by higher productivity.

Mr. Eyre

Is the right hon. Gentleman aware that last year house prices rose by a record 10 per cent, and that, as a consequence of Government policy, it looks as though that rise may be exceeded this year? Is he not further aware that this rise in house prices will cause severe hardship and resentment among young couples struggling to accumulate deposits to become house owners?

Mr. Prentice

Any rise in house prices is of course serious and gives us concern. But I do not think that the hon. Gentleman need be as pessimistic as that. There is no immediate sign of a rise in the cost of materials. There is to be a wage increase of about 4.3 per cent, in November this year, under arrangements already agreed, but wages account for only about one-third of cost. There is the effect of the Selective Employment Tax, but, once again, I say that I hope that a good deal of the increase in both taxes and wages will be absorbed by higher productivity.

Miss Harvie Anderson

Does the Minister deny the possibility of a further increase of as much as £150 for a Parker Morris house?

Mr. Prentice

That is an excessively pessimistic view. While hon. Members opposite are entitled to attack us as much as they like, I do not think that they help the building industry or people waiting for homes by continually giving currency to the most pessimistic views which increase the pessimism of some people in the industry and may well do further harm by slowing down productivity. Let them join us in encouraging the industry to pull its socks up and do better.

Mr. Frederic Harris

As the right hon. Gentleman keeps saying that he hopes that these higher costs, which are all of Government making, can be offset by higher productivity, can he say how higher productivity is to be obtained?

Mr. Prentice

Not within the scope of what you would allow, Mr. Speaker. There has been some rise in productivity in the building industry in most recent years. There is scope for a further increase. I think that the hon. Gentleman will agree that there is a big variation between the most efficient and other firms in the industry and that many could increase their productivity very rapidly.

Mr. Rippon

Will not the right hon. Gentleman agree that the construction industry in recent years has probably had the best productivity record of any industry? Would he not agree that all that is putting up costs is Government policy?

Mr. Prentice

No, Sir. A number of factors enter into costs, the cost of materials, the cost of wages and so on As the right hon. and learned Gentleman is aware, the best firms in the construction industry have had a very good record of increasing productivity in recent years. Others have not had such a good record and it is our task, through our Research and Development Group and in other ways, to try to get the best methods known and to see that we have a better increase in productivity than there has been in the past.

31. Miss Harvie Anderson

asked the Minister of Public Building and Works to what factors he attributes the increase in building costs over the last 12 months.

Mr. Prentice

Material prices and wages.

Miss Harvie Anderson

Would not the Minister agree that, with the addition of the Selective Employment Tax, the increases relating to prices and wages will make the financial restrictions imposed both on local authority building and on private building still more emphatic in the coming year?

Mr. Prentice

No, Sir. That is similar to supplementary questions on an earlier Question. I repeat that we are entitled to ask for an increase in productivity to offset these costs.