HC Deb 22 March 1973 vol 853 cc647-8
22. Mr. McCrindle

asked the Chancellor of the Exchequer if he will state the value of income tax relief on mortgage interest in March 1971 and at the latest available date.

Mr. Patrick Jenkin

Relief was about £340 million in 1971–72.

Mr. McCrindle

That figure indicates the considerable importance of mortgage lending rates to a large number of people.

Is it too late to suggest that some consideration might still be given to adjusting the rate of tax paid by the building societies in the forthcoming year so that, while it would not affect the rate a society pays to its investors, it would mean that the increase in the mortgage lending rate could be eliminated, or reduced to a figure below that anticipated?

Mr. Jenkin

I took most careful note of what my hon. Friend said on this subject during his speech in the Budget debate. Following the introduction of a unified tax, building societies will have to pay a lower composite rate of tax on behalf of their investors. Many societies have already been able to raise the rates they pay. There is no evidence that unification by itself will make any difference to the rates they charge.

Mr. Frank Allaun

If tax relief to owner-occupiers is to continue at £340 million a year, and is to be increased as house prices increase, is it not unfair to cut the subsidy of £160 million a year to council tenants, as the Government are doing?

Mr. Jenkin

We have always taken the view that these two things are not to be compared. They are different in kind. The rules which provide tax relief for mortgages are exactly the same as those which were on the statute book when we came to office.

Mr. Joel Barnett

Will not the Chief Secretary consider disallowing mortgage interest relief for a second house, or for those with a high level of income? If he is not prepared to do this, does it mean that he is willing to allow mortgage interest rates to rise to 10 per cent. or more as a result of the interest rate war which the Chancellor of the Exchequer started? Did the Chancellor specifically ask the Building Societies Association not to increase the mortgage interest charges until the day after the local government elections?

Mr. Jenkin

As I said, the rules are exactly the same as they were under the Labour Government which the hon. Gentleman supported. I do not believe that the changes in the rules which the hon. Gentleman is urging upon us would have any effect on the mortgage lending rate. We naturally welcome the decision of the Council of the Building Societies Association to defer its decision on mortgage rates until its next meeting, but I must make it absolutely clear that that was a decision of the association. We do not take responsibility for the rates which building societies charge from time to time.

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