HC Deb 15 June 1995 vol 261 cc882-3
8. Mr. Corbett

To ask the Chancellor of the Exchequer if he will make a statement on the financial implications of the state of the housing market. [27039]

The Paymaster General (Mr. David Heathcoat-Amory)

For the average mortgage holder, housing costs are £1,600 per annum lower than in 1990.

Mr. Corbett

The Minister's complacency about the housing crisis will appal millions of people. With cuts in tax relief on mortgages costing £20 a month and, from October, another £20 a month for people on income support, why is it that the Government keep on hurting home owners rather than helping them?

Mr. Heathcoat-Amory

I am not the slightest bit complacent about people who find themselves with negative equity, but I am entitled to point out that, as a result of lower inflation and lower interest rates, since 1990 the average mortgage holder is £130 a month better off. The best long-term policy to help those existing householders and people who wish to own their houses is sustainable growth, with its consequence of rising earnings, combined with low inflation, which is what we are delivering.

Mr. Rowe

Did my hon. Friend experience, as I did at the height of the housing boom, large numbers of constituents saying how extremely worried they were about the prospects of their children being able to get on the housing ladder? Do not steady and reduced house prices make it much easier for young people to get started?

Mr. Heathcoat-Amory

My hon. Friend is right. The conditions of the housing boom—such as those that we experienced—are not the friend of householders, especially young people who wish to own their houses. Although there is a problem of negative equity at present, its extent has reduced. Indeed, we should remember that last year almost 500,000 people became house owners for the first time.

Ms Primarolo

Did the Paymaster General hear the unfortunate comments by the Chancellor on the "Today" programme this morning when he ruled out any special measures to help home owners? Will he confirm that that complacent view will continue and that there is to be no assistance for home owners in the present housing crisis?

Mr. Heathcoat-Amory

My right hon. and learned Friend is not the least bit complacent about this issue, but he is right to point out that the best long-term help that we can deliver to households, as to others sectors of the economy, is sustainable growth with low inflation, which is exactly what we are delivering.

Dr. Spink

What would be the impact on the housing market and interest rates if my hon. Friend were to follow the Labour party's policy on inflation—or does he not know?

Mr. Heathcoat-Amory

My hon. Friend is right. High inflation, with the consequence of high interest rates, would crucify householders with outstanding mortgages. We must never allow the Labour party to be given a chance.