Home and Share Ownership

HC Deb 19 March 1996 vol 274 cc278-84

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

10.13 pm

Mr. David Evans (Welwyn Hatfield)

The house-owning and share-owning democracy in which we live has come about through successive Conservative Governments. Before we look at the effect that it has had on our nation and people, we must look back to the chaos of the late 1970s, after five years of Labour Government.

The most embarrassing moment, which made a laughing stock of the whole British people, was when the then Labour Chancellor, Mr. Healey, on his way to Heathrow received a message that the International Monetary Fund was not going to trust him or the Labour Government with any more borrowed money; and that from that moment on the fund would be running the finances of our country. In other words, the country was bankrupt and the receivers had moved in. Britain was broke. The IMF asked the Chancellor to turn his car around since the ticket in his pocket was invalid, as neither he nor the Government could pay for it: "Please return to No. 11 and hand over the keys of the safe." The only thing the Chancellor ever turned around was a 747 going to New York. It certainly was not the economy.

That was just one of the reasons why we needed a Conservative Government—to enable our people to have a stake in their own lives through home and share ownership. I could give 60 other reasons, but I shall list just six.

First, in 1979 there were rats as big as cats running around Leicester square, because the Transport and General Workers Union said that the rubbish was not to be collected. Unfortunately, after five years of a Labour Government, the cats themselves were bedraggled, demotivated and dispirited—rather like the rest of us.

Secondly, we could not bury our loved ones, because the TGWU said that the gravediggers could not dig the graves. Thirdly, all the hospitals were shut to new patients, and urgently needed drugs could not be delivered to other patients because the Confederation of Health Service Employees and the National Union of Public Employees—now parading under the name Unison—would not let anyone cross the picket lines manned by rent-a-mob.

I suppose that nobody will ever forget that lady dying of cancer on the pavement outside Kingston general hospital. This is not new or old Labour: it is Labour.

Fourthly, we had a top rate of income tax not of 40, 50, 60, 70, or 90 per cent. but of 98p in the pound. No wonder nobody bought shares—anyone receiving a dividend would have had to hand it over to the IMF. People say that it will not happen again. They are right—not while we have a Tory Government. But I would not be so sure if that lot over there were ever given power. [HON. MEMBERS: "Where are they?] Not here.

Fifthly, inflation in 1977 was running at 26.9 per cent., and over five years of Labour Government it averaged 15 per cent. No wonder the hon. Member for Dunfermline, East (Mr. Brown) is not prepared to say whether inflation is at the right level, or should be lower or higher. The fact is that, with inflation this low, he is totally bewildered and does not know what to say.

Sixthly, in the 1970s public utilities were losing money alongside the nationalised industries. After privatisation, British Steel leaped from making losses of £1.774 billion in 1979–80 to making profits of £733 million in 1989–90. I could go on and on, but I think that what I have said has set the scene for this debate.

I turn first to Government policies in respect of share ownership. The Labour leader, the right hon. Member for Sedgefield (Mr. Blair), said on 1 November 1987: Public utilities like Telecom and gas and essential industries such as British Airways and Rolls Royce were sold off by the Tories in the closest thing to legalised political corruption. Unlike the right hon. Member for Sedgefield, the Conservative party do not consider selling off those industries the closest thing to legalised political corruption, because it enables employees to share the success of the company they work for.

It is worth noting, too, what the hon. Member for Glasgow, Garscadden (Mr. Dewar), the Labour Chief Whip, said about the privatisation of British Steel. He called it a shoddy measure … totally irrelevant to the real interests of the industry, and it is based on dogma. The Labour party is unequivocally, implacably opposed to it".—[Official Report, 23 February 1988; Vol. 128, c. 238.] The hon. Member also declared that, if British Airways were privatised, it will be the pantomime horse of capitalism if it is anything at all."—[Official Report, 19 November 1979; Vol. 974, c. 125.] It must be the only pantomime horse in history that has proved worth backing. British Airways is now the most successful world leader, with more international scheduled services than any other airline.

Is it not remarkable that the RMT has purchased 7,500 shares in Eastern Electricity, 10,000 shares in Thames Water, and 15,000 shares in British Gas? The hon. Member for Holborn and St. Pancras (Mr. Dobson), in January this year, produced a report on the alleged failure of water privatisation. He declared that his report documented the full extent of the failure, waste and greed of water privatisation. Well, if it was such a failure, why did his union buy 10,000 shares in Thames Water?

The hypocrisy continues. The Labour-controlled local authority pension funds have invested more than £1,000 million in privatised companies. The Leader of the Opposition will be pleased to know that the value of privatised shares held by his local authority, Islington, is more than £24 million. However, that sum pales into insignificance compared with the investment level of South Yorkshire, whose shares are valued at more than £100 million.

Mrs. Teresa Gorman (Billericay)

Good God!

Mr. Evans

As with education reform, Labour party members throughout the country are benefiting from the policies of economic reform and privatisation, but they are resolutely sticking to the Leader of the Opposition's line, which is to say one thing and do another.

I am sure that we would all like to know that the RMT sponsors shadow Cabinet modernisers such as the right hon. and hon. Members for Holborn and St. Pancras, for Kingston upon Hull, East (Mr. Prescott), for Garscadden, and for Livingston (Mr. Cook). Another union, the GMB, has bought shares in Rolls-Royce, British Telecom, British Steel and British Airways. The GMB sponsors shadow Cabinet high fliers such as the hon. Members for Dewsbury (Mrs. Taylor), for Eccles (Miss Lestor), for Monklands, West (Mr. Clarke), for Blackburn (Mr. Straw) and for Hamilton (Mr. Robertson).

It is therefore not surprising that the Prime Minister has welcomed those moves—so do I—by stating: I am delighted to welcome Islington, Lewisham and Southwark to the stockbroker belt, but it strikes me as odd that the Opposition opposed privatisation … and yet they buy shares in privatised companies and enjoy profits from them."—[Official Report, 1 February 1996; Vol. 270, c. 1121.] It is not surprising, however, that Islington has joined the stockbroker belt, since one of its residents is hot-footing it to join the toffs at the Oratory.

As a measure of the success of privatisation, the following facts are of especial interest. One: since privatisation, British Telecom's prices have fallen in real terms by 35 per cent. on average. Two: there is now no waiting list for telephones to be installed. In 1984, there was a waiting list of 250,000. Three: domestic gas prices have fallen by 23 per cent. in real terms since privatisation in 1986. Gas prices in Great Britain are lower than those in Germany, France, Italy, Belgium and the Netherlands, and an additional 1.5 million customers have had their supply connected to the mains since 1986. Four: the average annual household gas bill, including VAT, is down by 20 per cent. since privatisation. Five: the average domestic electricity consumer will pay approximately £2 a week less in real terms in 1996 than in 1994.

The reality is there for all to see. When Labour was thrown out of office in 1979, the nationalised industries were costing the taxpayer £50 million a week in losses—£2,600 million a year. Today, in Conservative Britain, newly privatised industries pay approximately £60 million a week in taxes on the profit they earn in the private sector—£2,000 million a year. Privatised industries, particularly the utilities, gave the public what was for many their first opportunity to be shareholders. Now 12 million people are shareholders.

I am delighted that, in 1984, someone could buy shares in British Telecom for 130p each, and that, 11 years later, in November 1995, those shares could be sold for 414p. People began to believe again that they could have a stake in their country and their future. Had Labour had its way, none of those 12 million people would have had an opportunity to invest in the future. The right hon. Member for Sedgefield talks of a stakeholding nation. I say to him, "Been there, done that, got the T-shirt. Next!"

As for home ownership, we have the lowest mortgage interest rate for 30 years. In February 1979, the minimum lending rate was 14 per cent.; in 1996, most lenders' standard rate is 7.25 per cent. Every 0.25 per cent. reduction in the interest rate, when passed on, means a saving of £6 a month on the average mortgage.

What has home ownership done for this country? Let us start with "An Englishman's home is his castle"—and that undoubtedly goes for the rest of the United Kingdom as well. That is why we do not want Labour to give Britain away to Brussels, as it would. The difference between us and that lot over there is that we stand four square behind the union jack, while they stand four square behind Jacques Santer under the skull and crossbones of Brussels.

Notwithstanding Labour's total opposition to the right to buy, 1.3 million people who were once downtrodden tenants of the feudal barons of local authorities now own their own homes, and many are still applying to buy them—800 a week, according to the 1994 figures, which are the latest available. That is despite the scare stories from Opposition Members.

We know that Labour fought tooth and nail—Labour-controlled councils, and Labour Members of Parliament—to stop people owning their own homes, although Labour council leaders and Members of Parliament owned their own homes, and, in some cases, had bought their council houses. That is another instance of their saying, "Do as I say, not as I do."

Nothing says that more clearly than the 1983 Labour party manifesto, on which the Leader of the Opposition and his shadow Chancellor were elected to Parliament, which stated that they would End enforced council house sales, empower public landlords to repurchase homes sold under the Tories". Yet, for the umpteenth time, there are U-turns all over the place. The right hon. Member for Sedgefield said, on 5 March 1996: I want to set out a picture of housing in which Labour supports the aspirations of the majority of the people to own their own homes. Do we or the British people believe him? Of course we do not. Why should we? The effect of the Government's policies on home and share ownership has been that we, the people, are once again a proud nation. The Great is back in Britain. We have transformed people's aspirations. They can and do own the houses in which they live. They can and do have a real opportunity to invest in the infrastructure and future of our country. Long may it continue.

Today, people sit in the homes they own, and instead of watching a Labour party broadcast, they turn to the financial page on teletext to see how their shares are doing. They know that, under the Conservative Government, they will continue to prosper and be part of a great United Kingdom.

10.30 pm

The Economic Secretary to the Treasury (Mrs. Angela Knight)

I thank my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) for raising such important issues. Is it not noticeable that no Opposition Member cares or is sufficiently interested in this matter to attend this evening—apart from some of my hon. Friends who have decided that they want to sit on the Opposition Benches, just temporarily, for the debate?

My hon. Friend is correct that the reason why home and share ownership is so important, why we believe that these matters are fundamental for the democracy of this country, is that they are important to all our constituents. He was right to remind us of how it used to be. He gave us six reasons. There are many more. If he will bear with me, I shall give another six.

The first, of course, was inflation, which was running at such a rate that it wiped out my grandfather's pension, and no doubt those of many other people of whom hon. Members know. As a country, we were producing goods that people did not want because the quality was not good enough, and at a price that was rising week by week. Taxation was high not only for individuals but for companies as well.

Direct-grant schools, such as the one that I went to, were abolished. Mine was abolished not because it was a bad school but because it was a school that the Labour party was philosophically against allowing in this country. If someone could afford a holiday, it was, perhaps, a week or 10 days in Spain, and only a few pounds could be taken because the currency was in such a bad state.

My hon. Friend is correct to remind us how it was. It is too easy to forget the reality of life under the Labour party. Indeed, he mentioned, in his opening remarks, British Steel, which, in some respects, is a company dear to my heart, because I was running a company whose customer was British Steel when it was a nationalised company. As a customer, it did not pay its bills. It was a poor customer. As a company, it was one of the biggest loss makers of all time in this country—when it was nationalised. As soon as it came into the private sector, we had a steel company of which we could be proud, which produced products that people wanted—an international competitor of world renown. My hon. Friend is right to remind us that that is what it is all about. That is what we stand for as a party. Those are policies that the country wants.

I was delighted to hear my hon. Friend quote some of the tremendous contradictions in what Labour Members say—indeed, what Labour Front Benchers say on behalf of the Labour party. He quoted the rubbish they speak on so many subjects. He quoted many of their predictions that have proven entirely and utterly wrong. My hon. Friend quoted another even more important feature of Labour Members, which is that they say one thing and do another on whatever subject, whether it be education, law and order or the subject he mentioned—pension funds.

It is correct to point out the tremendous advantages of the privatisation programme. It has enabled ordinary people not just to own shares but to take a personal interest in successful major industries. It has played a key role and has resulted in about 13 per cent. of the population owning shares in the privatised companies. Privatisation has meant that inefficient companies that were formerly propped up by the taxpayer are now contributing to the public purse. Companies that were formerly nationalised and poor have become world players. As my hon. Friend said, they are now serving better the home market and the people, whether they are gas, electricity or telephone customers.

Privatisation has resulted in companies becoming net substantial contributors to the public purse, rather than blotting paper that soaked up public money. It has resulted in a real share-owning democracy. British Telecom, British Gas and British Airways are but part of a long list of companies that not only provide a better service but from which, as my hon. Friend rightly said, people have made money for themselves and their families out of owning shares. Customers, companies and constituents all over Britain have prospered as a consequence.

There has been tremendous progress in wider share ownership over the past 17 years. The number of shareholders in the United Kingdom has risen dramatically. In 1979, there were about 3 million, but today there are more than 10 million. More than one in four adults own shares. In 1993, the last year for which there is comprehensive data, almost half of all those shareholders held shares in two or more companies. These were not one-off shareholders, because they had seen the benefits of shareholding and bought shares in more and more companies. That is important, because it encourages savings, investment and enterprise. It helps people to help themselves.

We saw the need to encourage ownership and commitment in society, and there is true participation in a variety of ways. That is a long way from the so-called stakeholding that was explained by the Leader of the Opposition. [Interruption.] Where is he? If shareholding and a property-owning democracy were important to Labour Members, at least one of them would be here, but there is no one on the Opposition Benches to listen to this important debate.

The Leader of the Opposition tripped around the country talking about stakeholding. We can be quite sure that the only stake in which he is interested is the big stake that his party wants in everybody's pocket. Those who want to know who will benefit from that stake in everybody's pocket should ask the unions and the single-issue pressure groups, the bizarre ones. But do not ask the great majority of the people, because they know that, while they will get nothing from so-called stakeholding, they will get everything from a shareholding and property-owning democracy under the policies that have been pursued by our party for so many years.

We have given people the freedom to invest in personal pensions and to take out occupational pensions and other pension plans. That enables them to provide for their independence and their future.

My hon. Friend the Member for Welwyn Hatfield rightly spoke about that other most basic desire that is near to so many hearts—owning one's own home. If he will forgive me, I should like to quote a few statistics. In 1979, there were 11.5 million home owners. In 1985, there were 13.5 million. In 1996, there are more than 16 million—a 40 per cent. increase since 1979.

Every opinion poll on home ownership shows that the vast majority of people still want to own their own home, so we are helping home owners by cutting tax, leaving them with more money to spend as they choose, by reducing unemployment, and by keeping interest rates, and thus mortgage costs, as low as possible. One of the ways in which we are ensuring that more people can, if they wish, own their own home is by reducing unemployment month after month after month.

My hon. Friend is right to introduce the subject of Europe in that context. How true it is that the additional costs that so many Governments place on companies in Europe are resulting in unemployment rising, although it is falling in this country. It is no to minimum wages and to the social chapter, because it is yes to employment, to jobs, to low taxes, to interest rates as low as possible, to home ownership and to those policies that we stand for and that other parties in this country do not. Other countries in Europe have shown the way not to go.

Since the Budget, we have had three reductions in interest rates. Mortgage costs have fallen. The average outstanding mortgage costs about £160 a month. Repayments are at their lowest levels in relation to incomes for more than a decade. Interestingly, a 0.5 per cent. reduction in mortgage rates has a greater effect on the average mortgage than a 5 per cent. increase in mortgage interest relief at source. That is an interesting connection, because it shows just how important it is that we keep interest rates as low as possible.

National average house prices are starting to rise. They have risen for seven months in succession. The housing market is starting to turn around in all our constituencies. Mortgage rates are at their lowest levels since I was 15 years old, and inflation has not been so low since before I was born. I might not be a spring chicken, but I am not an old hen either. If I put those two figures in that context, it shows that we have an economy and we have achieved a position of which we can be proud.

A total of 1.6 million people have bought their own homes through the right-to-buy scheme. We believe in the right to buy. The Opposition parties want to own people's homes, not let people own their own homes. Those parties believe that, if they own a home, they own the soul. We believe that people should have independence.

In the past 17 years, we have taken significant steps to help to create a society based not on soundbites, but on sound policies of ownership, commitment and participation. Our policies on home and share ownership, savings, investment and enterprise have given millions of ordinary people what they wanted for themselves and their families in the United Kingdom in the 20th and 21st centuries. We will continue to do that for many years to come. I thank my hon. Friend for raising this important subject on the Adjournment.

Question put and agreed to.

Adjourned accordingly at seventeen minutes to Eleven o'clock.