Mortgage Interest (Tax Relief) (Hansard, 16 January 1986)

§ 5. Mr. Jessel
asked the Chancellor of the Exchequer what recent representations he has received on tax relief on mortgage interest.

§ Mr. MacGregor
My right hon. Friend has received a number of representations on the subject.

§ Mr. Jessel
Do the Government accept that mortgage interest relief, especially to young home buyers, is vital and must continue? Is not the £30,000 mortgage limit now rather on the low side in areas where an ordinary family house now costs £50,000 to £80,000?

§ Mr. MacGregor
The £30,000 limit is a matter for decision in each Finance Bill. My hon. Friend would not expect me to make a statement about that today. The Government have made it clear on many occasions that they have no intention of abolishing mortgage interest relief, for the very reason given by my hon. Friend. We are still awaiting similar clear and categorical assurances from the Opposition.

§ Dr. Bray
Is the Chief Secretary aware that if Government policy to preserve broadly the present level of exchange rate remains, the prospect in the medium term is of increasing, not falling, interest rates?

§ Mr. MacGregor
I shall not make any comments about interest rates. The hon. Gentleman will have noticed that the question is about tax relief.

§ Mr. Gow
Will my right hon. Friend remind the House what the level for tax relief on mortgage interest would be if the initial figure of £25,000 were to be updated to take account both of inflation and of the increase in house prices?

§ Mr. MacGregor
Off the cuff, I cannot recall the answer to that question, although I used to take a close interest in the matter. I shall write to my hon. Friend.

§ Mr. Hattersley
On the rhetorical question which the Chief Secretary so carefully prepared, may I offer him a spontaneous but categorical answer? There is no question of the next Labour Government, whom he clearly anticipates, abolishing mortgage interest tax relief. May I ask the Chief Secretary, on the subject of the question rather than on the subject of his slightly inappropriate question to me, how many representations he has received from owner-occupiers about the hardship they are now suffering through having to endure the highest real mortgage interest rate in the history of this country?

§ Mr. MacGregor
We have received no such representations. It is interesting to note that over the period of this Government the number of people who have moved into home-ownership has expanded enormously. That trend is continuing, and there remains a high demand for mortgage funds and owner-occupied housing.

§ Mr. Penhaligon
I am sure that there will be general pleasure at hearing that mortgage interest relief will be retained, regardless of the colour of the Government. However, whatever the logic of the current situation, can the Minister explain why, if somebody succeeds in increasing his income, while he is in possession of a mortgage, from £10,000 to £100,000 a year, that great increase in his personal income should be accommodated by a double subsidy from the Government towards his interest payments?

§ Mr. MacGregor
I did not fully catch the hon. Gentleman's question, but if he is referring to the range of income and mortgage interest relief he will know that the fact that mortgage interest relief applies to the tax rates reflects the fact that some people are paying much higher rates of tax.