HC Deb 21 March 1985 vol 75 cc967-9
1. Mr. Beith

asked the Chancellor of the Exchequer what assessment he has made of the impact of value added tax on building alterations to village halls and community centres since its imposition in 1984.

The Chief Secretary to the Treasury (Mr. Peter Rees)

Information is not held in a form which would allow such an assessment to be made.

Mr. Beith

Does that mean that the Chief Secretary does not realise that the village halls which are maintained by voluntary local effort, rather than those which are provided by local councils and are VAT exempt, are bearing this burden? As many were built before the war or soon after it and will need building alterations, would it not have been a better Budget if the Chancellor of the Exchequer had announced that he would stop raiding jumble sale proceeds and let village halls use their money to maintain their buildings by voluntary effort?

Mr. Rees

Not only do some village halls benefit from the community programme, but direct grants from central Government to charities — I assume that the hon. Gentleman regards them, properly, as being charities—have increased to £180 million in 1983–84. Counter-Inflation Policy 3. Mr. Robert B. Jones asked the Chancellor of the Exchequer if he will make a statement about counter-inflation policy. The Chancellor of the Exchequer (Mr. Nigel Lawson): Since 1980 inflation has fallen from 20 per cent. to 5 per cent.—the lowest level since the 1960s. In my Budget statement I reaffirmed the Government's commitment to continue the drive against inflation through sound monetary policies.

Mr. Jones

I congratulate my right hon. Friend on restating his commitment not only to maintain his drive against inflation but to reduce and eliminate it entirely. Does he agree that a counter-inflation policy is a counter-unemployment policy, and that there is ample evidence at home and abroad of the destructive effects on jobs of inflation?

Mr. Lawson

My hon. Friend is right. It is a significant fact that successive Governments since the war have presided over higher levels of inflation and higher levels of unemployment at the same time. This Government have succeeded for the first time in getting the level of inflation down. That is a sound basis, coupled with the other measures that we have taken on the supply side, for dealing with the serious problem of unemployment. Dr. Marek: Does the Chancellor of the Exchequer agree that the measure of monetary growth is not the only factor which determines inflation? Does he accept that he should be able to devise a policy to reduce unemployment through a certain amount of capital spending which, incidentally, would have the beneficial effect of ensuring that our infrastructure does not rot to pieces?

Mr. Lawson

I entirely reject the suggestion that our infrastructure is rotting to pieces. We are substantially increasing expenditure on roads, and on the sewers and water industry generally. If reducing unemployment were simply a matter of increasing Government spending, there would be no unemployment anywhere in the world today because there is nothing easier than for a Government to spend other people's money. Mr. Andrew MacKay: Would my right hon. Friend care to speculate on how much inflation would be fuelled if this afternoon the building societies foolishly and shortsightedly increased rates for mortgages?

Mr. Lawson

An increase in mortgage rates—that is obviously entirely a matter for building societies and has nothing to do with the Government—would in the short run cause an increase in the retail prices index. Over the medium term it would not have any effect on inflation.

Mr. Hattersley

Will the Chancellor expand on that answer a little? Will he tell us, because he must know, how much the retail prices index has already been increased by building society increases announced this year? How much will be added to it by the increase which we fear will happen today or tomorrow? Having given those figures, will he confirm that the increase in mortgage repayments endured by most householders this year will more than take up the amount which they might have received in tax reductions through his Budget?

Mr. Lawson

It is an impertinence for the right hon. Gentleman to address the Government about the problem of inflation. While he was in office—he was Secretary of State for Prices and Consumer Protection—inflation never came anywhere near as low as it is at present. It will stay low and get lower.

Mr. Stern

Does my right hon. Friend agree that even after the Government's success in reducing the rate of inflation, the fact remains that at present levels of inflation a person who starts his career today and invests £1 would, on his retirement, receive a capital refund of less than 12½p? Does he therefore agree that bringing down the rate of inflation even further remains a primary aim of the Government?

Mr. Lawson

I agree with my hon. Friend. Ensuring stable prices, or as near stable as we can possibly get, is the greatest social service that any Government can provide.