HC Deb 24 July 1967 vol 751 cc25-7
8. Mr. Channon

asked the Minister of Public Building and Works what representations he has received from the building industry about extra costs in the industry; and what reply he has sent.

Mr. Prentice

I have received some representations from the building industry about the effects of S.E.T. on the cost of building. Individual replies have been made explaining the Government's purpose in the application of this tax.

Mr. Channon

Does not the right hon. Gentleman consider it disturbing that house prices are now rising sharply again? Does not this jeopardise the whole of the Government's housing policy, including its mortgage option scheme, because if houses become too expensive people will not be able to buy them?

Mr. Prentice

We are watching everything that contributes to the increased cost of houses. I should have thought that in the last two years or so there had not been a considerable rise in the cost of new houses. But certain factors have come into the picture, including the wage increases which were postponed under the incomes policy but have now taken effect.

Mr. Rankin

Is my right hon. Friend also keeping an eye on the profits which are now being made in the building industry and how they reflect themselves in costs?

Mr. Prentice

We are keeping an eye on all aspects that affect costs, including profits.

Mr. Chichester-Clark

Has not the threat of unforeseen menaces like S.E.T. diminished contractors' enthusiasm for firm price contracts, of which the right hon. Gentleman is presumably in favour?

Mr. Prentice

No, Sir. I think that there is general acceptance of the advantage of firm price contracts. It is true that contractors do not like S.E.T., and I have had to deal with representations from them.

Mr. Urwin

Can my right hon. Friend indicate to what extent the cost of the S.E.T. has been absorbed in increased efficiency by employers?

Mr. Prentice

It is difficult to measure. It was, of course, always our hope that some of it would be absorbed. But even if none of it is absorbed, the increase in building costs due to it alone is only about 2 per cent.