HC Deb 07 July 1971 vol 820 cc1321-2
17. Mr. Urwin

asked the Secretary of State for the Environment what estimate he has now made of the effect on house prices consequent upon the halving of selective employment tax payments.

Mr. Peter Walker

It is estimated that the halving of selective employment tax will result in a decrease of between 1 and 2 per cent. in building costs. This represents about £60 on the cost of an average three-bedroomed house. The reduction in tax will affect public sector housing prices in cases where the existing fixed price contract includes a tax fluctuation clause.

Mr. Urwin

Is the right hon. Gentleman aware that his reply is, to some extent, at variance with informed opinion in the industry, which is that there is very little likelihood of the reduction in the tax being passed on to the consumer? What steps does he intend to take to ensure that it is passed on and that there is an effective reduction in house prices?

Mr. Walker

I think it will result in an effective reduction in house prices and will certainly be of much more help than the action which the Labour Government took in increasing selective employment tax and putting the betterment levy on land.

Mr. Marks

Has the right hon. Gentleman made an estimate of the percentage increase which builders made in the price of houses when selective employment tax was introduced?

Mr. Walker

It was a very considerable addition to their costs.