HC Deb 15 March 1983 vol 39 cc145-6

I come now to housing and the construction industry. The whole House is anxious to see more activity in this sector. Within the public expenditure plans there is provision for capital expenditure on construction in 1983–84 of over £10 billion, a 10 per cent. increase on this year's expected outturn. We want this money used effectively for the purpose for which it is intended.

One of our highest priorities has always been the extension of home ownership. This Government have done more than any other to encourage this. Since we came to office almost half a million public sector tenants have bought their homes; and the fall in mortgage rates over the past year has made it easier for first-time buyers to meet the costs of a mortgage.

But it is now clear that the £25,000 limit on mortgage interest tax relief is beginning to hinder a growing number of families who want to buy their first home, or to move. I have therefore decided to increase the limit—this figure may reassure the right hon. Member for Norwich, North (Mr. Ennals)—to £30,000. This will cost some £50 million in 1983–84. It will help potential home owners and the construction industry alike. At the same time, I intend to remove an anomaly whereby a borrower may get tax relief in excess of the ceiling for both an ordinary mortgage and an interest-free loan from his employer.

I also propose to extend mortgage interest relief of the kind already enjoyed by many employees, whose duties prevent them from living in their own homes, to self-employed people, like tenant farmers and tenant licensees, who have a contractual requirement to live in accommodation provided for them but who are also buying their own homes. This will be accompanied by a similar extension of the capital gains tax relief applying to a private residence.

We want to help people not only to own their own homes but also to keep them in good repair. Last year I announced a major attack on disrepair by increasing the rates of repairs grants. This has proved very successful. Expenditure in 1982–83 will be twice that in 1981–82 and a further increase is expected next year.

We have already announced that the higher rates are to continue until the end of 1983–84; and local authorities have been told they may spend without limit on all improvement grants next year. To ensure that we get the greatest impact from this initiative, the limits on expenditure eligible for grant will be increased by 20 per cent.

Our main aim, of course, is to help people to help themselves. But there are some areas, particularly in the inner cities, where decay in the private housing stock is so bad that concerted action is needed. We are encouraging local authorities to tackle such areas by the process known as enveloping—where the authority repairs the external fabric of whole terraces or streets of houses on behalf of the owners. This has proved a cost-effective way of improving an area, and we will be allowing local authorities to undertake additional expenditure in 1933–84 on any approved enveloping scheme.

These two measures are likely to lead to additional expenditure of some £60 million in 1983–84. In addition, my right hon. Friend the Secretary of State for the Environment is today announcing further measures to encourage local authorities to make full use of the resources available to them for capital investment.

Today I can announce three further steps to help the construction industry.

First, in 1981 I introduced a scheme to defer development land tax on developments for the owners' own use. The scheme, which is due to end in April 1984, has proved valuable, and I propose to extend it to April 1986, at a cost of £4 million in a full year.

Secondly, stock relief will from today be available for houses accepted by builders in part exchange on the sale of a new house for the personal use of an individual or his family. This will cost £5 million in a full year.

Thirdly, I propose to increase from 10 per cent. to 25 per cent. the proportion of office space in buildings qualifying for the industrial buildings allowance—an allowance which I increased in 1981. The cost will be about £25 million in a full year.