§ The Chancellor of the Exchequer (Mr. Norman Lamont)
The latest estimate from the Halifax building society is that average house prices fell by 7.7 per cent. in the year to January 1993. However, recent signs of rising activity are consistent with the view that I expressed in my autumn statement that house prices could start to rise this year.
§ Mr. Orme
Does the Chancellor recognise that housing is at the centre of some of our economic problems? Repossessions are proceeding apace; in no sense can they be said to be halting. What action will the Government take to help people in the housing market—not only those who face repossessions, but those who want to buy, as some of my constituents do?
§ Mr. Lamont
I should have thought that the lowest mortgage rates for 25 years were quite a good beginning.
I agree with the right hon. Gentleman that housing has been at the centre of the country's economic problems, but 460 I hope that he is not advocating a return to house-price inflation and inflation generally. That is not what we want. The right hon. Gentleman will have noticed the encouraging signs of increased activity in the housing market: the Nationwide house price index rose by some 1.2 per cent. last month. He will also have observed that the number of contracts completed, particulars delivered, in December was up by over 20 per cent.
The right hon. Gentleman asks what the Government are doing about repossessions. The Government struck a deal with the building societies, which has had a significant effect. Repossessions were down in the second half of the year compared with the first—and, for those in arrears, the sharp, deep cuts in interest rates will be a significant help.
§ Mrs. Angela Knight
Does my right hon. Friend agree that the reduction in interest rates and the cost of mortgages has proved a real benefit to home buyers, and has brought stability to the housing market? Has he read the report in last week's Derby Evening Telegraph in which Derbyshire business men predict an economic upturn? There is a real improvement in confidence, not just in the high street but in the housing market.
§ Mr. Lamont
I have to tell my hon. Friend that although I read the Grimsby Evening Telegraph I do not read the Derby Evening Telegraph, but I certainly shall in the future. In confirmation of what my hon. Friend says, she is absolutely right about the effect of mortgage rates, a point I made in answer to the right hon. Member for Salford, East (Mr. Orme). It is indeed cheaper for first-time buyers to buy a house now than it has been for several years.
The National House Building Council's index of ability to buy is at an all-time high, indicating that houses are extremely affordable. The housing market package that I announced in the autumn statement is well on course. I fully expect that some 17,000 houses will be taken off the market in England alone before the end of March. That is a direct result of the actions that the Government have taken to help the housing market. It is why confidence is rising in the housing market and also why, as my hon. Friend says, confidence is rising generally, not only in Derby but in the country as a whole.
§ Mr. Gordon Brown
Will not the Chancellor's personal legacy when he goes be that more people have lost their homes, more people have homes that are worth less than they paid for them and more people are in mortgage arrears than at any point in our history? Does the Chancellor not understand that his answer to the cause of that, which is rising unemployment since he became Chancellor, has been to cut work and training places for the unemployed by 100,000? Is it the unemployed who have failed to work for the Government or is it the Government who have failed to create work for the unemployed?
§ Mr. Lamont
I see that the hon. Gentleman has had to work hard to get his supplementary to that question. Usually he asks me outside the Chamber which question I am answering in order that he can put his supplementary to the appropriate question. [HON. MEMBERS: "Oh."] There is nothing more difficult than having to think of a supplementary on your feet, is there?
The hon. Gentleman should recognise that the thing that will most help the housing market and the 461 employment market is the reduction in interest rates and the relaxation in monetary policy which we have made. That, combined with the measures that we have announced on the housing market, has reduced repossessions in the second half of the year compared with the first.
The hon. Gentleman asked about the Government's credibility. I just note his credibility. I notice what his hon. Friend the Member for Dagenham (Mr. Gould) said about the hon. Gentleman's budget for jobs. He said that it had sunkwithout trace as virtually all of Labour's economic policies have sunk without trace in recent years".When asked why, the hon. Member for Dagenham said that no one believed that their policies could ever work. That is what hon. Gentlemen think about the hon. Member for Dunfermline, East (Mr. Brown).
§ Sir John Hannam
Will my right hon. Friend confirm that, having secured the lowest level of inflation for more than six years, he will not allow that excellent progress to be jeopardised in any way?
§ Mr. Lamont
My hon. Friend is absolutely right. I have made it consistently clear that the interest rate policy that the Government will follow is one of achieving low inflation combined with a sustained recovery. That is the objective of monetary policy. The reduction in interest rates that we made a week ago was consistent with low inflation, based on the advice that we had from the Bank of England and is consistent with sustained recovery. However, my hon. Friend is absolutely right to remind the House that inflation must be at the centre of our objectives. Having done so well to get inflation down, not only below the average of the European Community but below the average of the G7 group of countries, we cannot throw it away.