HC Deb 22 April 1969 vol 782 cc243-5
19. Mr. Marten

asked the Minister of Public Building and Works what estimate he has made of the effect on the construction industry of the latest budgetary measures; and if he will make a statement.

32. Mr. Costain

asked the Minister of Public Building and Works what is his percentage estimate of the increase in cost to the construction industry of the latest Budget proposals.

Mr. Mellish

The direct effect of the Budget proposals will be an increase of about 0.75 per cent. in construction costs.

A local authority house costing £3,000 to erect will cost the builder about £25 more.

Mr. Marten

In view of the replies which the Minister gave to my hon. Friends the Members for Meriden (Mr. Speed) and Ludlow (Mr. More) on the subject of Selective Employment Tax and his talks with the Chancellor, does not he agree that where the Government are one party to a contract it is grossly inequitable that they should increase S.E.T.?

Mr. Mellish

I wonder whether the hon. Gentleman listened to my earlier reply. I explained that the 50 per cent. of the building industry employed on Government contracts is covered by the fluctuation clause. Let us have credit where credit is due. The problem is with civil engineering and—if I have said it once this afternoon I have said it three or four times—I am in discussion on this with my colleagues in the Government.

Mr. Costain

Will the Minister reconsider that reply and admit that he has misled the House? How can he make an assessment of the extra cost when the Chancellor of the Exchequer will not tell us the extra contributions which will be needed to pay for the increase in pensions? The Minister has already said that £35 will be added to the cost of a house by Selective Employment Tax. How can he suggest that the total figure will be less when it will have to include all the other expenses, including the 2d. a gallon on petrol?

Mr. Mellish

With repect, the hon. Gentleman is the last person who should be talking to me about misleading the House. If the Press is correct, within minutes of the Chancellor making his Budget Statement the hon. Gentleman ran upstairs to his Committee and informed his colleagues that he had done his sums and that £100 would be added to the cost of a £5,000 house as a result of S.E.T. He was £65 out. He cannot even add up right!

Mr. J. T. Price

Does the Minister realise that whereas he is being pressed from the other side of the House about the marginal effect of £25 on the cost of a £4,000 house because of S.E.T., we do not hear from the other side about the enormous cost of the land required for building the house, which might account for a quarter of the cost of a £4,000 house? The enormous inflation of land value is a major factor in the inflated value of houses.

Mr. Mellish

It must also go on record that in the last four or five years the output of the building industry has increased by thousands of millions of pounds worth of work. The construction industry has done this work and has gained profits as a consequence.

Sir Harmar Nicholls

The Minister has said three times that he is consulting other Departments on the problems of the building industry. He sponsors the industry; what the House would like to hear is that he is battling for it. In view of the squeeze on bank loans, increased mortgage interest rates, increased S.E.T., and the extra contributions, does the Minister realise that the industry is being clobbered to a point which is dangerous for the nation?

Mr. Mellish

The hon. Gentleman is suggesting that the construction industry, like many other industries, wants to be exempt from all matters affecting the economic difficulties of this nation. We are a debtor nation and we must get out of debt. When we do, the nation's construction output will go up and the industry will do better than it has ever done before.