HC Deb 24 May 1966 vol 729 cc253-60
14. Mr. Boyd-Carpenter

asked the Minister of Housing and Local Government what is his estimate of the percentage increase in the cost of a house which will result from the Selective, Employment Tax.

50. Mr. Costain

asked the Minister of Housing and Local Government by what percentage he expects the price of new houses to rise in Great Britain solely as a result of the new Budget proposals.

Mr. Mellish

I would refer to my Answer to a Question by the hon. Member for Orpington (Mr. Lubbock) on 17th May.

Mr. Boyd-Carpenter

Can the Parliamentary Secretary say what social or economic purpose is served by imposing this tax in a way which deliberately adds to the already rapid increase in the cost of a house?

Mr. Mellish

If the right hon. Gentleman looks at the reply which I gave the hon. Member for Orpington (Mr. Lubbock) he will see that the estimate is about 2 per cent. of the cost of the average house, which we think should be partly offset by lifting the import surcharge and the extension of the new investment grants to the construction industries.

Mr. Costain

Does not the hon. Gentleman remember that when the surcharge was added he said that it would be insignificant? Why, when it is taken off, does he say that it is of considerable effect? Does he realise that this increase is adding to the highest increase in building costs in living memory? What are the Government going to do about it?

Mr. Mellish

The effect of this tax in terms of increased costs depends upon how much of the extra cost is passed on. Possibly the hon. Member, with his great influence in the building industry, will be able to persuade that industry, for a change, to take some of this cost to itself and not to try to pass it on.

Sir G. Nabarro

Is it not a fact that the Answer to the hon. Member for Orpington (Mr. Lubbock) was made before mortgages were costing 7⅛ per cent.? Do not mortgages enter into the cost of a house? Why will he not give the House a factual reply?

Mr. Mellish

The hon. Member has been away for some time and has probably forgotten that throughout the reign of the Conservative Party the cost of housing rose continually. We are as concerned about this as anybody else. We hope that these costs will be borne to a great extent by the building industry.

Mr. Rippon

Does the Minister agree that last year the price of a house rose by the greatest amount since records were kept? Does he agree, further, that the Answer that he gave to the hon. Member for Orpington (Mr. Lubbock) means that the cost of a three-bedroom house will increase by £70 or £80, and that the increase in cost of a flat may be even greater?

Mr. Mellish

The information that I have been given by the people in the Ministry who have investigated this matter is that the cost will rise perhaps by £60. As for the percentage increase, last year was not the highest; it was the same as the last year under the Tory Government—10 per cent.

Mr. Henig

Can my hon. Friend give a guarantee that in the event of there being a sharp rise in prices the whole matter will be referred to the Prices and Incomes Board?

Mr. Mellish

My hon. Friend had better direct that question to my right hon. Friend the Chancellor of the Exchequer.

27. Mr. Brewis

asked the Minister of Housing and Local Government what he estimates will be the percentage rise in the cost of a house in October 1966 over the cost two years before, assuming that labour and commodities remain at today's prices and the Selective Employment Tax is imposed.

Mr. Mellish

The average cost to local authorities of a 5-person 3-bedroom house rose by about 15 per cent. between the last quarter of 1964 and the first quarter of this year. As to the effect of the Selective Employment Tax, I would refer to my Answer to a Question by the hon. Member for Orpington (Mr. Lubbock) on 17th May, and my answers on the Floor of the House today.

Mr. Brewis

Is it not true that most of this colossal rise has been caused by extra taxation and other Government action? When will the Government carry out their pledge in the election to cheapen the cost of housing?

Mr. Mellish

That may be the hon. Gentleman's political view, but there are other opinions. An investigation into some of the increased house prices has shown that they may be due to high profits still being made on houses.

Mr. Rippon

Does that apply to local authority houses?

Mr. Mellish

Local authorities still have an enormous problem of having to pay expensive prices for land. That is why we are concerned now with introducing the Land Commission.