HC Deb 09 March 1982 vol 19 cc750-2

I now revert to my principal theme: help for business and industry, and hence for jobs and people. Last year's Budget contained a number of measures to help the construction industry, an industry which can make a particularly significant contribution to the creation of new jobs. It is, accordingly, right to give it further help this year.

As I have already mentioned, our new public spending plans provide work for the construction industry in 1982–83 worth about £10¼ billion—an increase of 14 per cent.

This year local authorities have greatly underestimated the success of our policy of selling council houses and land. The extra revenue which this is bringing in has not been spent. For 1982–83 they have been assured that they can spend up to a total of some £3 billion on housing. This will include about £1 billion of funds which they can expect to receive mainly as a result of the success of the right-to-buy legislation. This should allow an increase of nearly one-third in the scale of their capital spending, compared with what they seem likely to spend in 1981–82.

In addition, I now propose a change for 1982–83, designed to help private home owners whose houses fall well short of today's standards.

The value of grants given for major repairs, and for the provision of basic amenities in the home, under the home improvement grant system, will be increased for a limited period, to a maximum 90 per cent. of the eligible cost, instead of the 75 per cent. currently available.

This increased rate of grant will apply only to applications received before the end of 1982. The purpose is not to add to longer term demands on the industry hut to encourage the early take-up of immediate spare capacity. We also intend both to enable more people to g et grants for home insulation and to increase the value of those grants.

To pay for these changes and to encourage local authorities to make more general improvement grants available, their capital allocations in 1982–83 will be increased by £100 million over and above the expenditure provided for in the White Paper.

My right hon. Friend the Secretary of State for the Environment has already announced measures for 1982–83 to give priority to inner city projects that offer the greatest degree of participation by the private sector. Building on this, up to £70 million of the provision for the urban programme and for derelict land reclamation in 1983–84 will be earmarked for projects that encourage participation by the private sector.

We have also decided to offer further encouragement to the private sector and nationalised industries to bring derelict land into productive use; we shall increase the grants payable, from 50 per cent. of the cost of reclamation to 80 per cent. in assisted areas and derelict land clearance areas when legislation can be brought forward. The cost will be contained within the existing programme.

In addition, we shall give further encouragement to new private investment in housing for rent. I now propose to introduce capital allowances, at the rate of 75 per cent. for the first year only, for expenditure on the construction of properties wholly for letting as assured tenancies by bodies approved by the Secretary of State. The scheme will run for an experimental period of five years. Allowances may be claimed for expenditure incurred as from today.

In my Budget two years ago I introduced the small industrial workshop scheme, under which industrial building allowance can be claimed on the construction of small workshops at the rate of 100 per cent. The scheme has been a resounding success. Over 5,000 new workshops have been constructed for letting to small businesses, at an estimated Exchequer cost, spread over several years, of £125 million to £150 million.

The scheme has succeeded in increasing the stock of industrial workshops at or near the upper size limit. But there has been relatively little investment at the very small end of the range. I therefore propose to extend the scheme for very small workshops, of not more than 1,250 sq ft for a further two years, until March 1985.

I also propose to bring within the scope of the industrial building allowance certain kinds of servicing, repairing and warehousing activities. This, too, will improve the small workshop scheme.

I wish to deal also with the liability to VAT of certain kinds of building alterations, where there has in the past been serious doubt about what was liable to charge. A recent judgment of the House of Lords would have led, if applied in its entirety, to VAT being charged at the standard rate on a range of non-structural building alterations which had previously been free of charge. Though clarifying the law, this judgment would have imposed an extra £80 million of tax on the industry, which it can ill afford at present.

So I intend to re-establish the clarity needed, but in a way which will relieve the industry of all but £10 million of the extra tax burden. I shall, in due course, lay before the House an order, which will have the effect of continuing to zero-rate three important kinds of alteration which might otherwise be adversely affected by the House of Lords judgment. These are the most commonly recognised forms of double glazing, loft and cavity wall insulation and damp-proof coursing. This useful simplification of the law will cost the Revenue about £70 million a year. The other kinds of non-structural alteration covered by the judgment will become subject to VAT, but, pending the completion of discussions with the industry, no steps will be taken to apply the tax before about the beginning of September.

My final proposal in this area concerns stamp duty on house purchase. I propose to raise the exemption by £5,000, to £25,000, and the other thresholds also by 5,000, at a total cost of £70 million in 1982–83.

This change should be widely welcomed. It will help to improve job mobility and give some encouragement to house construction. Most of all it will help those who have been saving to buy their first homes. By the end of this Parliament nearly three out of every five families will own their own homes. This will represent a significant extension of the property-owning democracy. Taken together, these proposals will mean more work for the construction industry, and more jobs for those who work in it.