MORTGAGE INTEREST PAYMENTS

HC Deb 28 July 1997 vol 299 cc63-82

Mr. Heathcoat-Amory

I beg to move amendment No. 27, in page 10, line 12, leave out '1998–99' and insert '2003–04'.

Mr. Deputy Speaker (Mr. Michael J. Martin)

With this, it will be convenient to discuss amendment No. 28, in page 10, line 14, leave out '1998–99' and insert '2003–04'.

Mr. Heathcoat-Amory

The clause will reduce mortgage interest relief from April next year. It is a tax-raising measure. There are other specious excuses attached to it, but, in essence, it is a way of raising another £900 million in the next financial year—1998–99—rising to £950 million in the following year. The 10.7 million people who have borrowed money to buy their homes will be affected directly and adversely.

There was nothing about that in the Labour manifesto. We knew that the Government were bringing forward an emergency Budget to implement the windfall tax, but there was no hint that they would also raise taxes on petrol and diesel, which we have dealt with, on pension funds, which we shall deal with tomorrow, and on home owners and all those with mortgages.

The tax is being imposed at a time of rising interest rates. We have had three interest rate rises since the election. The Chancellor has given away the power to fix interest rates, but the responsibility for monetary policy rests with him. There is speculation that a fourth rise may be imminent. The cost of higher interest rates so far on the average borrower is £20 a month. That will rise once more if the Bank of England raises interest rates again. On top of that additional burden on borrowers caused by interest rate rises, the cut in mortgage interest relief will add nearly a further £10 a month for someone with a loan of £30,000 or more—which is the majority.

One of the spurious reasons brought forward for this tax increase is that it is said to be a way of dampening down a housing boom. It is true that house prices in the south-east are rising strongly, but that supposed boom has not yet reached my constituency or many parts of the north of England. If the economy is in danger of being destabilised by a housing boom, the Chancellor should cut this interest relief immediately. Instead, it is to take effect from 6 April next year. If that is his aim, it is not very clever to have such a long delay between the identification of the supposed need and the implementation of the policy.

The restriction on mortgage interest relief is also probably regressive. It is commonly supposed that any such restriction hits the better-off disproportionately. That is no longer the case, because the tax rate allowable has already been restricted to 15 per cent. The time is long past when the main benefit was enjoyed by the well-off or those paying higher rates of income tax.

The Institute for Fiscal Studies has observed that, proportionately, the bottom 10 per cent. in income are damaged as much as the richest 10 per cent. That adds to the picture that is already building up that the entire Budget is regressive. That has also been observed by the IFS. Taking into account all the tax changes, particularly all the increases in indirect taxation, the poorest 10 per cent. have suffered the most. We hear about the concern of new Labour for the disadvantaged and the least well-off, but that is not carried through in the Budget, which has the reverse effect.

In the opinion of the IFS, the restriction in mortgage interest relief to 10 per cent. will damage the poorest. That is somewhat of a surprise. The IFS says: Losses at the bottom end of the income distribution are larger than one might first expect, which reflects the low incomes of mortgagers in these poorer groups making their proportionate losses relatively large. These groups are mainly the short-term unemployed, for whom income support does not cover the increase in their mortgage payments. It would be possible to compensate this group by changing the income support rules to cover their mortgage interest payments, as is the case for the longer-term unemployed. We wait to see whether the Government will act to prevent that regressive effect, by bringing forward changes in the income support rules. If they do not, we can conclude only that they do not mind the regressive nature of the measure or of the Budget as a whole.

We conclude that this measure is a tax-raising measure—no more, no less. It is one of 17 tax increases that we have noted in the Budget. Our amendments push the relief restriction to beyond the next general election, so that, if the Labour party were to choose next time to fight on a platform of that further restriction, the electorate would have a chance to vote against it accordingly.

Liz Blackman (Erewash)

On the heralding of the measure in our manifesto, can the right hon. Gentleman tell us whether the previous Government heralded in their 1992 manifesto the subsequent reduction in MIRAS?

Mr. Heathcoat-Amory

The point that I was making, which I notice the hon. Lady did not dispute, was that if the measure has a macro-economic rationale, it is undermined by the fact that the suppression of the alleged housing boom will not take place until the boom is all over. Therefore, by implication, she agrees with me about that.

I do not know whether the hon. Lady attended our earlier debates, but we had some predictably barren exchanges about various tax increases in various Parliaments, during which it was established beyond doubt that, even if one accepted that we put through 22 tax increases—which we dispute—it compares with 17 that her Government have already brought forward in their first few months of office. We noted that if the Government continue at their present rate, there will be well over 100 increases before they face the electorate again. She would therefore be most unwise to get into any competition about who has put through the most tax increases.

The Opposition believe that the measure is unnecessary and does not have a macro-economic justification, and that its effect will be surprisingly regressive. For those reasons and because we do not believe that an extra £1 billion raid on home owners is justified, we shall—I hope—be pressing the amendment to a Division.

6.30 pm

Sir Teddy Taylor (Rochford and Southend, East)

I have always tried to avoid making political points, particularly about Budgets, because I appreciate that Governments have a difficult job in trying to balance the books. Although I am sure that the Labour party and its members have the best of intentions, I hope that the Minister will bear it in mind that their policies—sadly, probably because of one of those strange coincidences—often seem to hit the poorest hardest of all.

In Southend-on-Sea, where I live, house prices have risen for what we could call the up-market houses in the small number of up-market areas. On the other hand, there has hardly been any price increase at all for houses of £50,000 and less—and there are many of them. In some areas, there has actually been a fall in house prices.

The sad fact is that the Government's proposal will have the same impact on a house owner, regardless of whether the house is worth £200,000, £300,000 or only £40,000. It will therefore make no difference to someone who is on a high salary or has lots of money, but have a rather devastating effect on those on low incomes who have a low-priced house.

The second worry is that the measure comes after several increases in interest rates. It worries me hugely that, because of the collapse of confidence in currencies in other EC countries, it seems that the Governor of the Bank of England will be constantly putting up interest rates, causing more difficulty and problems for those on low incomes.

With successive rises in interest rates and the mortgage interest relief proposal, there is a real danger that, once again—I believe in 1998 or 1999—there will be a serious problem of falling house prices and rising unemployment. I hope that the Government will be reminded that that is a real problem. It is not a conspiracy of the Labour party; it has been forced on us—sadly—because of circumstances outwith our control.

I have seen horrific examples of misery among people in my constituency who are dealing with negative equity. If we create negative equity once again, which we shall if we continue to pile burdens on home owners, we shall be making a grave mistake. I hope that the Government will think carefully about whether reducing MIRAS to 10 per cent. is a mistake, especially bearing in mind the interest rate increases, which will continue.

In general, I feel rather depressed about the economic situation. When the previous Government were in office, everyone made the great mistake of being too optimistic and of feeling that, somehow, everything was going okay. There is a real danger concerning the value of the pound, which seems likely to rise further simply because, as the Governor of the Bank of England told the Treasury Committee, there is a lack of confidence in the currencies of countries preparing to join the euro. In addition, although we might find that unemployment figures look better because of the special work force scheme that is being introduced, unemployment could rise again.

If we have such a problem with unemployment at the same time as several rises in interest rates and a hole in the tax arrangements, we could be in danger of making a bad problem worse. That is why the amendments tabled by the official Opposition to delay the reduction are wise and prudent.

I appreciate that there is no great point of principle to advance, as what the Government are proposing is exactly what the previous Government did, but on different figures. There is only an issue of tactics and what is right for people who are finding life very hard.

I hope that the Government will bear it in mind that, because the House of Commons is located in London, there is always a temptation to think of housing in relation to London and parts of the south-east generally. There is no doubt that, in London, there have been huge rises in house prices and things are going well, but, sadly, 30 miles away from London, it is remarkably different. I hope that the Government are preparing for a fall in house prices, when a great deal of unnecessary misery will be created.

Mr. Quentin Davies

Clause 15 raises two issues which, as we go through the Bill, seem to be its hallmarks. The first is coherence and competence and the second is honesty or straightforwardness with the electorate.

One can make an extremely respectable economic argument for abolishing MIRAS altogether. It is a distortion of the market. The tax benefits have applied to loans taken out for one specific purpose only. That is not, however, the argument that the Government are making.

One could make an argument for taking the opportunity of this Budget to reduce the value to the borrower of mortgage interest tax relief, on the grounds that the economy is overheating and that consumption is expanding at an unsustainable rate, which is clearly what the Government believe, judging from their analysis of the economy in the Red Book. The Government would be in some difficulty over advancing such an argument because, if they were to do so, it would be logical for the general burden of the Budget to have a negative impact on consumption spending—whereas, in fact, the Budget is pretty neutral about consumption spending.

The reductions in consumer disposable income that will be caused by the reduction in MIRAS and the increase in certain excise duties will effectively be counterbalanced by the reduction in VAT on domestic fuel and additional welfare spending. The Chancellor himself, when I put the question to him in the Treasury Committee—I had to put it to him half a dozen times to get a straight answer—conceded that the Budget is virtually neutral in its effect on consumption. Some £1 billion net will be taken out of consumption which, as I pointed out to him, is only 0.15 per cent. of gross domestic product and will not have an economically significant impact.

The Budget will, however, have an economically significant effect on savings. When the economy is overheating, a sensible Budget stance would be to favour savings or to bear down on consumption, or a mixture of both. Both those directions would get the economy to the same destination. Instead, the Government have imposed an unprecedented levy on savings, by removing dividend tax credits. Therefore, the Government cannot justify the reduction in MIRAS by either of the two arguments that would give it some degree of intellectual respectability. The Government, once again, have made a proposal without a sound and convincing rationale. In short, the measure looks hasty, ill thought through and inconsistent with the rest of the Budget. It is also inconsistent with the Government's analysis of the state of the economy, and it is incompetent. What else is a Budget with all those characteristics?

The second issue that the measure raises is that of honesty and straightforwardness with the public. The Government have given us a lot of rhetoric about being straight and honest. That sounds appealing and attractive and I applaud them for it, but in practice they fought the election criticising the Conservative Administration for introducing taxes in contradiction of their electoral pledges. However, I do not want to go back over that ground, which has been well trodden in previous debates on tax policy, because I would be out of order.

The Labour party said that it would set new standards of straightforwardness with the electorate, but the opposite is the case. It fought the election without mentioning that it intended to reduce the value of MIRAS, which was highly relevant to everybody with a mortgage. As we know, this country has a high rate of owner-occupation, largely as a result of Conservative Governments since the war and, especially, in the past 18 years. We now have more than two thirds—some 70 per cent.—of the population living in owner-occupied accommodation.

Mr. Geraint Davies

Will the hon. Gentleman give way?

Mr. Quentin Davies

I would be disappointed if the hon. Gentleman did not want to intervene in my speech. I would think that I was doing something uncharacteristically wrong. I am delighted that the tradition we have established is being observed, and I give way with pleasure to the hon. Gentleman.

Mr. Geraint Davies

Did the Conservative party announce in its election pledges the two cuts in MIRAS that it introduced? If it did not—and I can advise him that it did not—is it not sheer hypocrisy that the hon. Gentleman is spouting?

6.45 pm

Mr. Quentin Davies

I am always flattered to be treated in these debates as if I were sitting on the Front Bench. It is a privilege to defend the record of the previous Government, whom I greatly supported in almost everything they did. The cuts to which the hon. Gentleman referred were made some years after the general election. It is one thing, when economic circumstances change considerably—as they did during the previous Parliament—to decide to make a sensible move that is explained at the time, and another to introduce measures within weeks of an election. Indeed, the Labour Government originally intended to have a Budget in the first 10 days of June, so they must have known in May what they proposed to do. They knew perfectly well that they intended to reduce the value of MIRAS, but they withheld that material fact from the electorate during the campaign.

Mr. Shaun Woodward (Witney)

Given that the hon. Member for Croydon, Central (Mr. Davies) has accused my hon. Friend of hypocrisy—

Mr. Deputy Speaker

Order. The hon. Gentleman did not accuse another hon. Member of hypocrisy, because I would have stopped him if he had. He accused a political party of hypocrisy, and that is different.

Mr. Woodward

I am grateful for the correction, Mr. Deputy Speaker. When the Prime Minister was Leader of the Opposition, he mentioned the blows dealt to home owners by cuts to MIRAS in a speech to the Labour housing conference on 5 March 1996. He said: the effect … was to add to insecurity, to destroy confidence in the housing market and to make people much more wary of buying and selling homes. Does my hon. Friend have a view on hypocrisy in the light of that comment, which was made only a year ago?

Mr. Davies

It is disturbing that the Prime Minister could have forgotten about such a speech a few months later when he was framing the Budget. I shall not use the word hypocrisy because I would be ruled out of order, but such behaviour has a sad tendency to undermine the public's confidence in the integrity of the political process. We owe it to ourselves, our constituents and this place to try to make our actions consistent with our announced precepts.

Mr. Geraint Davies

Does the hon. Gentleman agree that the Prime Minister made those remarks in the context of the highest levels of negative equity that we have seen and of more repossessions than the highland clearances? It would have been silly to cut MIRAS then, but we are now in a different situation, with the economy overheating and the housing market fast recovering. Therefore, a marginal touch on the brake is sensible and consistent with that contextual change, and the intervention by the hon. Member for Witney (Mr. Woodward) was wrong.

Mr. Quentin Davies

There are two answers to that. The first is that the Prime Minister made the remarks to which my hon. Friend the Member for Witney (Mr. Woodward) has rightly drawn the House's attention within a year of the election. It is not plausible to suggest that the context is now so different, unless the hon. Member for Croydon, Central (Mr. Davies) wants to argue that the mere fact that Labour has come to power, and the consequent prospect of irresponsible management, have undermined confidence in the financial markets, so interest rates have to go up. The second point is that it is not open to the hon. Gentleman to argue for the cut on general principles. If it is a general principle to avoid distortions in the economy, that would be true this year, last year, 10 years ago and in 20 years' time. Therefore, by definition, the Prime Minister should have made that point clear when he was Leader of the Opposition. It is in the nature of principles that they are constant, so that point could have been no less a principle in 1996 than it is now.

The public will not be fooled. They will remember all Labour's rhetoric when it said, "The Tories put up taxes, but we will not." The public will know that that was fundamentally false. They will remember all the rhetoric from the Labour party about honesty in public life and they will see the shabby contrast between that rhetoric and the reality. They will not forgive the Labour party, and nor should it be forgiven.

Mr. Woodward

The hon. Member for Croydon, Central is clearly not acquainted with the facts. By 1996, negative equity had changed significantly. Is he aware of the remarks made in 1995 by the then shadow Chief Secretary to the Treasury? He described the Conservative party's changes to MIRAS as two Tory tax increases … These latest tax hikes hit as the Tories continue to argue". I find it odd that the Labour party could describe such measures as tax increases in 1995, but does not acknowledge that the measure that it is now introducing is undoubtedly a tax increase. Moreover, I do not think that it was in the manifesto.

Mr. Davies

My hon. Friend is remarkably well informed about the Labour party's unattractive record on the whole matter. I was about to say "dishonourable", Mr. Deputy Speaker, but you would have ruled me out of order. It is indeed unacceptable to use one form of language to describe a measure introduced by a Conservative Administration, and to use a completely different form of language to describe exactly the same phenomenon when it appears under a Labour Government. The reduction in MIRAS either is or is not an increase in taxation. It is certainly a reduction in the disposable income of mortgage borrowers—there can be no conceivable doubt about that—but, while we understand the use of the phrase "an increase in taxation", those who use it must be consistent, and continue to refer to an increase in taxation when they themselves take such action. I do not think that anyone can quarrel with such logic, and it is sad that the Labour Government are not willing to follow it through.

In other circumstances, the measure could have been defended reasonably and, I think, convincingly. The way in which the Labour Government have introduced it, however, raises serious questions about their competence, about the consistency of their Budget measures and about the appropriateness of the aggregate effect of the Budget—that is, the Budget stance as a whole as it affects the present state of the economy. There is a clear contradiction—to which I have drawn attention in debates on other clauses—between the diagnosis and the proposed prescription.

Mr. Geraint Davies

Does the hon. Gentleman recall that, in 1995, the then Government cut MIRAS twice, during a period in which interest rates were going up and there was a good deal of negative equity, along with a good many repossessions? That continued, albeit to a lesser extent, into 1996, when the present Prime Minister made his comments. In that context, the decision was wrong; but, at a time when the economy is overheating, and when greater consumer buoyancy and confidence are reflected in the markets, is not the change in MIRAS right and consistent?

Mr. Quentin Davies

The hon. Gentleman clearly did not listen to the intervention of my hon. Friend the Member for Witney, who knows a good deal about the subject. He has pointed out that at the relevant time, in 1995—and the same has been the case for some years—negative equity was falling. It has fallen to a remarkable extent, year on year. The hon. Gentleman's argument collapses when confronted with reality, as so many Labour arguments have appeared to do during today's debate.

Let me return to the central principles that underlie so much of this ill-thought-through Budget. As I have said, this issue raises major questions about the Government's competence and the appropriateness of the Budget as a whole. It also poses an enormous question mark—one which should greatly embarrass the Government—over their straightforwardness with the electorate. Is it possible to listen to Labour Ministers' public statements, to take them seriously and to think that they will be reflected in the Labour Government's actions in a few months or, indeed, a few weeks?

The answer, clearly—and sadly for the reputation for integrity of politics in this country—is no. My hon. Friend the Member for Witney has a whole list of quotations from the last few months, which make it plain that the electorate were misled by the Labour party, when it was in opposition, about what the party proposed to do in a number of respects, but specifically about MIRAS. We must all feel sad about that. I hope that members of the Labour party, and specifically its representatives in the House—Front Benchers and Back Benchers alike—feel a degree of embarrassment and sadness, because that is the appropriate response to a measure of this kind.

Before I became a Member of Parliament, I used to earn my living in the City. Serious penalties were imposed on anyone who, for example, engaged in a capital-raising exercise—floating a company, or raising a rights or debt issue—and made misleading statements about his or her long-term intentions with regard to the management of the business, the use of the money to be raised or the factors that were likely to have an impact on the company's profitability or its ability to service the loan. Those were serious matters. Had any statements been made in previous months or years that needed to be corrected, they would have had to be corrected explicitly in the prospectus, so that potential investors reading it were not deceived about the true intentions or views of those who were asking for their money. That principle is taken very seriously in the financial markets, and thank goodness it is.

Mr. Geraint Davies

Will the hon. Gentleman give way?

Mr. Quentin Davies

I hope that the hon. Gentleman will forgive me if I do not. I want to end my speech. I am sure that the hon. Gentleman will have every opportunity to catch your eye, Mr. Deputy Speaker, although the Labour Government have unfortunately left us with far too little time to consider clause 15 or any other clause. I do not think that I can be blamed for that, however much else I may be blamed for.

The discipline to which I have referred—ensuring that responsible people do not deceive those whom they ask for support—does not seem to be observed in the Labour party. The Labour party came to the electorate during the campaign, made a good many criticisms of the Conservative Government—from which certain Labour policy priorities could be inferred—and made a number of commitments. It is clear that its commitments not to raise taxes were not observed, and that the inferences that might reasonably be drawn from its criticisms of the Conservative Government were wrongly drawn by the electorate. All the speeches and comments quoted by my hon. Friend the Member for Witney, which imply that Labour was opposed to Conservative progressive reductions in MIRAS, were fundamentally deceptive. Labour was not opposed to those reductions at all; indeed, it clearly intended to reduce MIRAS as soon as it came to power.

I leave the final question to the Financial Secretary, who I assume will sum up the debate shortly. Do the Labour Government intend to abolish MIRAS altogether? There may be sound reasons for doing so, as long as such action is based on clear principles. If the Financial Secretary has that intention, will she now—belatedly, perhaps—be straightforward enough to tell the House and the country so? Will she say whether this is just the first tranche, and whether the intention is to get rid of MIRAS altogether in a year or two? Then we shall all know where we are, and it will be not only a victory for honesty in the Government but a great advantage for householders. Those who borrow by means of a mortgage, or intend to do so, will know where they stand. They will be able to make their family commitments without the fear that their assumptions will be undercut by yet another unannounced and unexplained U-turn by the Labour Government.

If the Financial Secretary does not make it clear in this debate where she stands on that matter, but, in a year or so, defends the final removal of MIRAS to the House, she will not be able to get away with saying that it can be argued for on the basis of general principles. We shall say that it was disingenuous of her to argue one or two years before for simply a cut to 10 per cent. and not tell us that it was part of her long-term strategy to abolish MIRAS altogether. At least in this debate, may we have a greater measure of frankness than we have had from the Government so far on the issue?

7 pm

Dr. Vincent Cable (Twickenham)

The Liberal Democrats have supported Conservative amendments to Finance Bills on their technical merits on a good many occasions. There have been many such amendments, but this is not one.

I listened with interest to the hon. Member for Grantham and Stamford (Mr. Davies) who, in his introductory remarks and his conclusion, made a cogent case for the phasing out of mortgage interest tax relief. There has been a broad consensus across all the parties that that should be done on its economic merits. The previous Government introduced the gradual erosion of the benefits of that tax relief, partly by cutting the rate from 25 to 15 per cent. and, more gradually, but equally effectively, by freezing the nominal rate at which interest was allowable. In real terms, with inflation, the benefits were gradually reduced. There were good reasons why that should have happened and why there should have been a consensus in the House that the phasing-out process should continue. The hon. Member for Grantham and Stamford made those points.

MIRAS is a distortion in the market in favour of purchase and against both private and social renting. Moreover, it encourages house purchasers to treat their homes not simply as homes but as speculative assets. We recognise the political difficulties of dealing with the problem suddenly, dramatically and painfully, which is why we have all accepted a gradual phase-out. The Government are continuing that process and they should be encouraged to do so.

The only contrary argument that could hold water is that this is a particularly bad time to phase out the relief. Actually, it is a good time because although interest rates are rising, they are relatively low, certainly in terms of what they were at the peak of the cycle. If there is a good time to do it, this is it.

Moreover, as has been argued, the housing market is becoming overheated. As several hon. Members have said, that is an uneven process. The market is not a general, undifferentiated whole—bits of it are still depressed. As a general trend, however, that has to be dealt with and it is appropriate that it should be dealt with by, for example, the stamp duty measure.

In addition, we are dealing with a broader economic context in that, as we have urged Labour Members to accept, there is a general overheating of the economy. The measure will take some consumer spending out of the economy. In our view, it will not be enough, which is why crucial public services are having to bear so much of the burden. If the measure were not enacted and consumer spending were not reduced in this way, the Bank of England committee that now looks at monetary policy would be forced to raise interest rates by even more than it will probably raise them within the next month or so, inflicting even greater hardship on manufacturing industry. We believe that that should be accommodated within the household sector, not by industry.

The Government are right to do this—they have probably not done anything right enough in that respect. My only caveat is to reflect the spirit of the remarks made by the hon. Member for Rochford and Southend, East (Sir T. Taylor). As we all know, there is hardship in the housing market, which is why the Government should say how they propose to deal with that hardship—with low-income groups and people who still face repossession—when dealing with the amendment.

We are well aware that the Government inherited a set of retrograde housing benefit regulations. The changes two years ago made it much more difficult for people with mortgages who were faced with redundancy to cope with the crisis. We hope that mortgage benefit will be dealt with much more progressively. That, coupled with a continuing phase-out of MIRAS relief, would be an appropriate and timely combination of policies.

Mr. Desmond Swayne (New Forest, West)

This MIRAS—this market-distorting tax relief—was designed precisely to encourage greater home ownership because of the socially responsible attitudes that went with that. In that respect, MIRAS has been remarkably successful. Throughout the period in which the subsidy has been available, home ownership has grown remarkably. So what has changed? Are we no longer willing to support that subsidy? Do we no longer want to encourage people to own their homes?

In Committee, I found it extraordinary that Labour Members suddenly began to announce that they had always favoured the abolition of the relief in its entirety. When they were challenged on whether they had shared their enthusiasm with their electorate in their election addresses, the retort was that there was simply not enough space available in which to do so.

Moving on to all the talk about the housing market, there is no housing market—there are a number of discrete markets that operate quite differently. As we have heard, there is still a severe problem at the bottom end of the market and these measures will most severely affect those living in that end of the market and trying to sell their homes or pay their mortgages. The £10 or so a month that it will cost the average mortgage payer is significant for precisely those people who are struggling and have to meet the extra £20 or so consequent on the increases in interest rates that have already taken place. The Prime Minister, as Leader of the Opposition, was reassuring the people who have such difficulties when he said at the back end of last year: We have no intention of raising taxes at all. They were reassured and they are the people for whom Labour used to speak. It is precisely those people on whom these measures will have the greatest and most adverse effect.

Mr. Howard Flight (Arundel and South Downs)

The crucial point is that, just three months ago, the Labour party presented the electorate with the proposal that the ordinary person would not suffer an increase in taxation. This measure is an increase in taxation of £100 a year and it will particularly affect the ordinary young family. It comes at the wrong time. Interest rates may be low in nominal terms, but they are high in real terms and about to go higher. That £100 a year will become £250 with the rise in interest rates.

The most important argument is this: when the previous Conservative Government reduced MIRAS, the reduction was mainly progressive. As tax allowability came down to 20 per cent., only the better off suffered. For people paying a 20 per cent. rate of tax, the reduction was entirely neutral. As has been pointed out, the reduction becomes acutely regressive as one goes below 20 per cent. I would have preferred us not to cut the relief from 20 to 15 per cent. when we were in government.

Now, the boot is being put in on two fronts—higher interest rates and MIRAS—for less well-off, ordinary young families. Many of those are the very people who suffered negative equity. As my hon. Friends have said, frequently it is at the bottom end of the market that house prices have not recovered. There are huge regional differences. We have heard all this talk of housing boom, but, in general, the housing market has not recovered from the crash of the past eight years.

The Labour Government propose to hit many young families because of the illusion that they are part of some economic machine of a housing boom that does not exist for them because they have only just recovered from negative equity.

My hon. Friend the Member for New Forest, West (Mr. Swayne) asked the equally important question: do we wish to discourage home ownership? Going back the days of more generous interest relief on mortgages, the whole point of doing that was to encourage home ownership and the sense of social responsibility that went with it. What is left of that tax encouragement is pretty small, but it is relevant, not to the better-off, but to the less well-off and their families.

The measure is just a cynical way of raising nearly £1 billion in tax and it comes at the wrong time. To impose it, not two or three years, but only three months, after the Government won an election in which ordinary people were made to believe that their taxes would not go up is wrong. The Labour party will pay at the next election for proceeding with this misguided increase in the taxation of ordinary people.

Mr. Woodward

I find myself at a loss to understand the point of clause 15. I am struck by the inconsistency in the Government's argument throughout much of the Bill; it is encapsulated in the hypocrisy and lack of consistency in clause 15. I and my constituents in Witney want to ask: why introduce this phasing out now and what its real significance? Is it a way of saying to people that the Government are going to phase out MIRAS altogether? If so, why have the Government not had the courage to say so or even to carry it through now?

I find myself wondering about the rationale behind the reduction and I should be grateful if the Financial Secretary explained that rationale to the House. What is the purpose of taking this action now? Is it part of a phasing out of mortgage interest relief at source for home owners throughout the country?

The onus is on the Government to own up, because the measure was not contained in their manifesto. In the manifesto, we read lots of wonderful glossy promises accompanied by lots of wonderful glossy pictures, but we see little mention of tax increases, yet the reduction in MIRAS is a tax increase. Labour promised to include in its manifesto all its intended tax increases: this measure was not in the manifesto, yet, within two months of Labour coming to power, in it comes. The reduction in MIRAS is a significant tax increase because it will hit something in the order of 10.5 million home owners. It will also hit many of those who are thinking of buying a home for the first time. About 400,000 people bought a home for the first time in 1995–96 and I remember that, when I bought my first home in 1983, MIRAS was a helpful tool for someone like me, who did not have any money or a financial background to rely on. It was a way of helping people like me to buy their own home.

I firmly agree with my hon. Friends, especially my hon. Friend the Member for New Forest, West, that MIRAS was introduced to encourage home ownership. We have endured a difficult period of negative equity, although I have to correct the hon. Member for Croydon, Central (Mr. Davies) by pointing out that the heights of negative equity were reached in 1992–93 and had dramatically changed by 1995–96.

Mr. Derek Twigg (Halton)

If the hon. Gentleman believes that MIRAS was brought in to encourage home ownership, why did the Conservative Government—his Government—cut it twice?

7.15 pm

Mr. Woodward

My point concerns the inconsistency and hypocrisy of the current Government's case. On another occasion, I should be more than happy to explain at length my views on reducing mortgage interest relief at source within a clear policy. I do not understand the Labour Government's rationale and I am seeking an explanation. In case the hon. Gentleman has not realised, he is now in government—he has to provide the answers for the 10.5 million people up and down the United Kingdom who will be affected by the change. It is terribly important that the Government understand that there is a limited period during which they can simply apportion blame to the Conservatives. The hon. Member for Halton (Mr. Twigg) needs to become accustomed to the idea that Labour Members must now explain why their Government introduce hypocritical measures.

Mr. Clifton-Brown

The thrust of my hon. Friend's speech is that the reduction in the rate of MIRAS will affect those at the bottom end of the housing market, especially first-time buyers. Surely it was right to restrict the relief to basic rate taxpayers, as we did. We took it away from those paying the top rate of tax, but left it for basic rate taxpayers. Does my hon. Friend agree that the reduction of the relief will force younger people to save for a longer period before making their first home purchase?

Mr. Woodward

My hon. Friend makes a series of important points and the hon. Member for Halton would do well to pay attention. The Chancellor said that he intended to dampen the housing boom—he was obviously aware of the boom in the south-east. However, I am conscious of the fact that the housing boom and changes in housing policy are occurring all over the United Kingdom and it is my view—I should be interested in hearing whether Treasury Ministers share that view—that we should know exactly what the impact of the reduction in MIRAS will be on people living outside the south-east. What will the impact be on people living in the north of England or in Scotland? What will the impact be on those living in houses at the bottom end of the market—the poorest people to have made the decision, which I firmly support, to buy their own home?

I am at a loss to reconcile the Government's action with the Chancellor's statement that: I will not allow house prices to get out of control and put at risk the sustainability of the recovery."—[Official Report, 2 July 1997; Vol. 297, c. 313.] If the recovery is indeed at risk, that is not because of changes in the MIRAS rates, but because of what is happening to the value of the pound. The Chancellor will declare that it is not his decision to raise interest rates, but the House will not forget the day the Chancellor gifted operational control of interest rates to the Bank of England, without even so much as a reference to the House until after doing so.

In future years, it will be all very well for the Chancellor to say, "It was not my fault", but it will be his fault, because it was his decision to give away operational control of interest rates and it is the level of interest rates that hurts home owners. As we are about to witness the fourth rise in interest rates in barely more than eight weeks since the Labour Government came to power, home owners will be hurt twice by the measure before us. For those who live in the north of England, Scotland and elsewhere in the United Kingdom, the measure is a cruel one, which will greatly damage those who bought their own home.

Mr. Derek Twigg

On the issue of hurting home owners, would the hon. Gentleman care to comment on the hundreds of thousands of people who suffered negative equity and the hundreds of thousands of people who lost their homes under the previous Government? Whose fault does he think that was?

Mr. Deputy Speaker

Order. We are starting to stray from the amendment, which is about the MIRAS scheme and not about repossession.

Mr. Woodward

I am grateful, Mr. Deputy Speaker.

It is important for members of the Treasury team to sit down and consider whether abrogating responsibility for operational control of interest rates is a good or bad idea at a moment like this. I have already explained the relevance of the clause to the interest rate rises. The truth is that interest rates will continue to rise in the next few months. Of course, this weekend some excellent advice was given by the general secretary of the GMB, whose knowledge of economic practices is exceptional. He advised on GMTV that the pound should be linked to the Italian lira because the markets might then think that the pound is not so strong. That is quite right, but unfortunately it has always been the practice of those on the Conservative Benches to be cautious of taking advice from that gentleman.

The truth is that interest rates are the means by which people in this country can be hurt because, for most, the biggest expenditure of their lives is the purchase of their home. The proposal to cut MIRAS will hurt those people at a time when some are still recovering from a prolonged and difficult recession. The hon. Member for Halton may not have noticed that that recession occurred the world over and hit people in every western economy.

Mr. Derek Twigg

What about black Wednesday?

Mr. Woodward

I will not comment on that, because I suspect that you, Mr. Deputy Speaker, would immediately rule that it was out of order and not relevant to the amendment.

The hon. Gentleman must recognise that people do not understand the rationale behind the Government's decision. They need an explanation of whether the reduction in MIRAS is part of a policy to axe it. Home owners want the answer to that question.

The Financial Secretary has made much in her speeches about the need for certainty and people's need to be able to plan. If one is making the biggest purchase of one's life, which represents the most important commitment that any family will make, one has a right to plan and a right to certainty. I do not understand whether the proposed reduction is part of a plan to abolish MIRAS. We have been offered no clear rationale for the Government's decision.

Today, it has been said that the Government will look at the business of buying and selling houses. A cross-departmental review of house-selling practices will lead to legislation to regulate what has been described by hon. Members as the buoyant housing market. The Government will compile case studies of individual buyers and sellers. I dare say that the Savorets of Islington will provide a useful case study for the Government to examine. When they finish looking at that case, they will appreciate that those people were lucky enough to benefit from being able to buy a house worth £625,000 in Islington. The blunt truth is that the phased reduction of mortgage interest relief will not greatly affect those who are able to afford to spend hundreds of thousands of pounds on a house.

For those trying to buy their first home, costing between £30,000 and £50,000, MIRAS makes the crucial difference—the difference between being able to buy a house or staying in rented accommodation. I am aware that, until quite recently, it was Labour policy to prevent people from buying their own homes. Apparently, that conviction was easily shed so that the Labour party could get into power. Now we search for the Government's new rationale towards home ownership. Is it something that they will encourage or punish people for?

In the interests of clarity and honesty, I would greatly welcome hearing from the Financial Secretary whether the MIRAS reduction is a one-off or part of a policy to phase it out at source. When can the 10.5 million home owners expect that policy to be effected and completed?

Dawn Primarolo

The Conservative Government cut mortgage interest relief six times—on a number of occasions when interest rates were rising. I do not recall hearing Conservative Members voice their concern for those who then found themselves in negative equity or who lost their homes because of the housing boom. I remind those hon. Members that, even with the recent increases in interest rates and allowing for the reduction in mortgage interest relief, payments on a typical mortgage of £50,000 are still £250 a month less than they were when the Conservative Government presided over the boom and peak in interest rates.

Every hon. Member knows that those who own their own homes, or aspire to do so, are haunted by the prospect of a housing boom and the negative equity and the repossessions that go with that. The Government's measures on mortgage interest relief have been welcomed by the Council of Mortgage Lenders, which described the Budget package as prudent, and by the Halifax building society, which said that the measures would allow steady growth in the housing market. The difference is that, according to the Halifax index, house prices in the three months to June were up 2.1 per cent. on the previous three months and up 6.8 per cent. on a year earlier. Most commentators expect that there will be similar rises in the next year. Although those rises will be uneven, they will be spread across all the regions.

The measures proposed by the Government on mortgage interest relief and stamp duty will apply a gentle brake on the housing market. They are also designed to provide it with some stability to avoid the boom over which the Conservative Government presided, with all the misery that went with it.

Mr. Clifton-Brown

The hon. Lady says that her Government have the monopoly on the care of those in negative equity. Surely every interest rate rise makes it all the more difficult for those in negative equity to earn their way out of it. The combined effect of the four interest rate rises since the election and the proposed reduction in MIRAS will make it even more difficult for those in negative equity to get out of it.

Dawn Primarolo

I would not suggest for a moment that Labour Members are the only ones with a monopoly on care for those on low incomes. I was pointing out that, in government, Conservative Members were less vocal and their actions did not follow the prescriptions that they are now recommending to the Government. I am sure that the hon. Gentleman would agree that it is necessary to act on the housing market before matters get out of hand instead of waiting until they are completely out of control and then standing by, wringing our hands and saying how sorry we are.

I accept that the impact of the MIRAS reduction will hit low-income families, but their mortgages tend to be low, so the impact will not be as great for them. It is essential for those families to have the security of the knowledge that there will not be a runaway housing market because the Government are taking prudent measures to ensure that that does not happen.

Mr. Woodward

The hon. Lady has yet again made much of security and certainty. Would she care to explain to hon. Members how tax changes, in particular the four increases in interest rates in three months, will add to people's sense of security and certainty?

Dawn Primarolo

The increases in interest rates are a result of the mess that the previous Government left us to clear up. The previous Government did not take the advice that they were given before the general election, so it is necessary to act now. The electorate can rest assured in the knowledge that the Labour Government will take the difficult decisions to ensure economic stability.

Amendment No. 27, which would delay implementation of the MIRAS cut, is ridiculous. As we have said, it is necessary to try to dampen down the housing market to protect those in the market and to ensure that those who aspire to home ownership can do so on terms that they can afford, in the knowledge that the market is slowing down.

7.30 pm

Conservative Members make their proposals from the security of the Opposition Benches, not the reality of dealing with the economic circumstances. The Government will not shrink from taking the difficult decisions to protect stability, especially in housing. I recommend that the House votes against the amendments and supports the Government in their strategy.

Mr. Heathcoat-Amory

These debates are settling into a familiar pattern: we ask the questions and the Financial Secretary cannot or will not answer them. However, it is not an entirely fruitless exercise because, from her silence and her failure to answer our points, we have established beyond dispute some important facts.

First, clause 15 is a major breach of the tax pledges that Labour made at the time of the general election. Secondly, we have established that the measure is regressive. It hits the poorest 10 per cent. of people in the country more than the richest 10 per cent. Thirdly, the measure fails to deal with the supposed housing boom—if that was the intention—because it does not come into effect until 6 April 1998. Fourthly, it is simply a crude, tax-raising measure. It will net the Treasury nearly £1 billion a year extra and it will do so at a time when interest rates are and will be rising strongly.

So borrowers, all 10 million of them, will be hit twice—by the increase in their mortgage contributions and by the withdrawal of, or further limitation of, tax relief. Above all—

Mr. Quentin Davies

Does my right hon. Friend agree that one of the most significant questions that the Financial Secretary was unable or unwilling to answer was whether the reduction in MIRAS should be regarded as one tranche in the process of the elimination of MIRAS or as a one-off exercise which would not be repeated?

Mr. Heathcoat-Amory

Yes, my hon. Friend is right. I remember his specifically asking the Financial Secretary that question and she specifically refused to answer. I agree that her silence and her evasion on that subject are eloquent. We fear the worst. The Labour Government are breaking all their tax promises in their first Budget and are likely to continue to do so. That is the implication of what my hon. Friend asked.

Above all, the measure is yet another imposition—a damaging and continuing one—on the ordinary people of this country, the borrowers, the people who try to think long, who borrowed money to build an asset of their own. They have been clobbered in the first Budget, in defiance of all those promises that were repeated not only by the Chancellor of the Exchequer, but by the Prime Minister, in the weeks before the general election. I shall therefore invite my hon. Friends to press the amendment to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 128, Noes 363.

Division No. 69]	[7.33 pm
AYES
Ainsworth, Peter (E Surrey)	Gill, Christopher
Amess, David	Gillan, Mrs Cheryl
Ancram, Rt Hon Michael	Goodlad, Rt Hon Alastair
Arbuthnot, James	Gorman, Mrs Teresa
Atkinson, David (Bour'mth E)	Gray, James
Atkinson, Peter (Hexham)	Green, Damian
Baldry, Tony	Greenway, John
Bercow, John	Grieve, Dominic
Blunt, Crispin	Gummer, Rt Hon John
Body, Sir Richard	Hague, Rt Hon William
Boswell, Tim	Hammond, Philip
Bottomley, Peter (Worthing W)	Hawkins, Nick
Bottomley, Rt Hon Mrs Virginia	Heald, Oliver
Brady, Graham	Heathcoat-Amory, Rt Hon David
Brazier, Julian	Horam, John
Brooke, Rt Hon Peter	Howard, Rt Hon Michael
Browning, Mrs Angela	Howarth, Gerald (Aldershot)
Bruce, Ian (S Dorset)	Jack, Rt Hon Michael
Burns, Simon	Jackson, Robert (Wantage)
Cash, William	Johnson Smith, Rt Hon Sir Geoffrey
Chapman, Sir Sydney (Chipping Barnet)
	Key, Robert
Clappison, James	King, Rt Hon Tom (Bridgwater)
Clark, Dr Michael (Rayleigh)	Kirkbride, Miss Julie
Clifton-Brown, Geoffrey	Laing, Mrs Eleanor
Cormack, Sir Patrick	Leigh, Edward
Davis, Rt Hon David (Haltemprice)	Letwin, Oliver
Davies, Quentin (Grantham)	Lewis, Dr Julian (New Forest E)
Day, Stephen	Lidington, David
Dorrell, Rt Hon Stephen	Lloyd, Rt Hon Sir Peter (Fareham)
Duncan, Alan	Loughton, Tim
Duncan Smith, Iain	Luff, Peter
Emery, Rt Hon Sir Peter	Lyell, Rt Hon Sir Nicholas
Evans, Nigel	MacGregor, Rt Hon John
Faber, David	McIntosh, Miss Anne
Fabricant, Michael	MacKay, Andrew
Fallon, Michael	McLoughlin, Patrick
Flight, Howard	Malins, Humfrey
Forth, Rt Hon Eric	Mates, Michael
Fox, Dr Liam	Maude, Rt Hon Francis
Garnier, Edward	May, Mrs Theresa
Gibb, Nick	Merchant, Piers

Moss, Malcolm	Syms, Robert
Nicholls, Patrick	Tapsell, Sir Peter
Ottaway, Richard	Taylor, Ian (Esher & Walton)
Page, Richard	Taylor, John M (Solihull)
Paice, James	Taylor, Sir Teddy
Pickles, Eric	Temple-Morris, Peter
Prior, David	Tredinnick, David
Redwood, Rt Hon John	Trend, Michael
Robertson, Laurence (Tewk'b'ry)	Tyrie, Andrew
Roe, Mrs Marion (Broxbourne)	Viggers, Peter
Rowe, Andrew (Faversham)	Walter, Robert
Ruffley, David	Wardle, Charles
St Aubyn, Nick	Waterson, Nigel
Sayeed, Jonathan	Wells, Bowen
Shephard, Rt Hon Mrs Gillian	Whitney, Sir Raymond
Shepherd, Richard (Aldridge)	Whittingdale, John
Simpson, Keith (Mid-Norfolk)	Widdecombe, Rt Hon Miss Ann
Soames, Nicholas	Winterton, Nicholas (Macclesfield)
Spelman, Mrs Caroline	Woodward, Shaun
Spicer, Sir Michael	Yeo, Tim
Spring, Richard	Young, Rt Hon Sir George
Stanley, Rt Hon Sir John
Steen, Anthony	Tellers for the Ayes:
Streeter, Gary	Sir David Madel and
Swayne, Desmond	Mr. James Cran.

NOES
Abbott, Ms Diane	Campbell-Savours, Dale
Ainger, Nick	Canavan, Dennis
Ainsworth, Robert (Cov'try NE)	Caplin, Ivor
Allan, Richard (Shef'ld Hallam)	Casale, Roger
Allen, Graham (Nottingham N)	Caton, Martin
Anderson, Donald (Swansea E)	Cawsey, Ian
Anderson, Janet (Rossendale)	Chapman, Ben (Wirral S)
Armstrong, Ms Hilary	Chisholm, Malcolm
Ashton, Joe	Church, Ms Judith
Atherton, Ms Candy	Clapham, Michael
Atkins, Charlotte	Clark, Rt Hon Dr David (S Shields)
Baker, Norman	Clark, Dr Lynda (Edinburgh Pentlands)
Ballard, Mrs Jackie
Banks, Tony	Clarke, Charles (Norwich S)
Barnes, Harry	Clarke, Eric (Midlothian)
Barron, Kevin	Clarke, Rt Hon Tom (Coatbridge)
Battle, John	Clarke, Tony (Northampton S)
Bayley, Hugh	Clelland, David
Beard, Nigel	Coaker, Vernon
Beckett, Rt Hon Mrs Margaret	Coffey, Ms Ann
Begg, Miss Anne (Aberd'n S)	Coleman, Iain (Hammersmith)
Beith, Rt Hon A J	Cook, Frank (Stockton N)
Bell, Martin (Tatton)	Cooper, Yvette
Bennett, Andrew F	Corston, Ms Jean
Benton, Joe	Cotter, Brian
Berry, Roger	Cousins, Jim
Best, Harold	Cox, Tom
Betts, Clive	Cranston, Ross
Blackman, Liz	Crausby, David
Blears, Ms Hazel	Cryer, Mrs Ann (Keighley)
Blizzard, Bob	Cryer, John (Hornchurch)
Blunkett, Rt Hon David	Cummings, John
Boateng, Paul	Cunliffe, Lawrence
Borrow, David	Cunningham, Jim (Cov'try S)
Bradley, Keith (Withington)	Cunningham, Rt Hon Dr John (Copeland)
Bradley, Peter (The Wrekin)
Bradshaw, Ben	Curtis-Thomas, Mrs Claire
Brake, Thomas	Dalyell, Tam
Brand, Dr Peter	Darling, Rt Hon Alistair
Brinton, Mrs Helen	Darvill, Keith
Brown, Rt Hon Nick (Newcastle E)	Davey, Valerie (Bristol W)
Bruce, Malcolm (Gordon)	Davies, Rt Hon Denzil (Llanelli)
Buck, Ms Karen	Davies, Geraint (Croydon C)
Burden, Richard	Davis, Terry (B'ham Hodge H)
Cable, Dr Vincent	Dawson, Hilton
Caborn, Richard	Dean, Mrs Janet
Campbell, Mrs Anne (C'bridge)	Denham, John
Campbell, Menzies (NE Fife)	Dismore, Andrew
Campbell, Ronnie (Blyth V)	Dobbin, Jim

Dobson, Rt Hon Frank	Johnson, Alan (Hull W & Hessle)
Donohoe, Brian H	Johnson, Miss Melanie (Welwyn Hatfield)
Doran, Frank
Dowd, Jim	Jones, Helen (Warrington N)
Drown, Ms Julia	Jones, Ms Jenny (Wolverh'ton SW)
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)	Jones, Jon Owen (Cardiff C)
Edwards, Huw	Jones, Dr Lynne (Selly Oak)
Efford, Clive	Jones, Martyn (Clwyd S)
Ennis, Jeff	Jowell, Ms Tessa
Etherington, Bill	Kaufman, Rt Hon Gerald
Ewing, Mrs Margaret	Keen, Alan (Feltham & Heston)
Fearn, Ronnie	Keen, Mrs Ann (Brentford)
Field, Rt Hon Frank	Keetch, Paul
Fisher, Mark	Kennedy, Charles (Ross Skye)
Fitzpatrick, Jim	Kennedy, Jane (Wavertree)
Fitzsimons, Lorna	Khabra, Piara S
Flint, Caroline	King, Andy (Rugby & Kenilworth)
Flynn, Paul	King, Ms Oona (Bethnal Green)
Follett, Barbara	Kingham, Mrs Tess
Foster, Rt Hon Derek	Kirkwood, Archy
Foster, Michael Jabez (Hastings)	Kumar, Dr Ashok
Foster, Michael John (Worcester)	Ladyman, Dr Stephen
Fyfe, Maria	Lawrence, Ms Jackie
Galbraith, Sam	Laxton, Bob
Gapes, Mike	Lepper, David
George, Andrew (St Ives)	Leslie, Christopher
George, Bruce (Walsall S)	Levitt, Tom
Gerrard, Neil	Lewis, Ivan (Bury S)
Gibson, Dr Ian	Lewis, Terry (Worsley)
Gilroy, Mrs Linda	Liddell, Mrs Helen
Godman, Dr Norman A	Linton, Martin
Godsiff, Roger	Livingstone, Ken
Golding, Mrs Llin	Lloyd, Tony (Manchester C)
Gordon, Mrs Eileen	Lock, David
Graham, Thomas	Love, Andrew
Grant, Bernie	McAllion, John
Griffiths, Jane (Reading E)	McAvoy, Thomas
Griffiths, Nigel (Edinburgh S)	McCabe, Stephen
Griffiths, Win (Bridgend)	McCafferty, Ms Chris
Grocott, Bruce	McCartney, Ian (Makerfield)
Grogan, John	McDonagh, Siobhain
Gunnell, John	Macdonald, Calum
Hall, Patrick (Bedford)	McDonnell, John
Hamilton, Fabian (Leeds NE)	McGuire, Mrs Anne
Hanson, David	McIsaac, Shona
Harman, Rt Hon Ms Harriet	McKenna, Ms Rosemary
Harris, Dr Evan	Mackinlay, Andrew
Heal, Mrs Sylvia	Maclennan, Robert
Healey, John	McNulty, Tony
Heath, David (Somerton & Frome)	MacShane, Denis
Henderson, Ivan (Harwich)	McWalter, Tony
Hepburn, Stephen	Mahon, Mrs Alice
Heppell, John	Mallaber, Judy
Hesford, Stephen	Marsden, Gordon (Blackpool S)
Hill, Keith	Marsden, Paul (Shrewsbury)
Hinchliffe, David	Marshall, Jim (Leicester S)
Hodge, Ms Margaret	Martlew, Eric
Hoon, Geoffrey	Maxton, John
Hope, Phil	Meacher, Rt Hon Michael
Hopkins, Kelvin	Meale, Alan
Howarth, Alan (Newport E)	Merron, Gillian
Howarth, George (Knowsley N)	Michael, Alun
Howells, Dr Kim	Michie, Bill (Shef'ld Heeley)
Hoyle, Lindsay	Michie, Mrs Ray (Argyll & Bute)
Hughes, Ms Beverley (Stretford)	Milburn, Alan
Hughes, Kevin (Doncaster N)	Miller, Andrew
Humble, Mrs Joan	Mitchell, Austin
Hurst, Alan	Moffatt, Laura
Hutton, John	Moonie, Dr Lewis
Iddon, Dr Brian	Moore, Michael
Illsley, Eric	Moran, Ms Margaret
Jackson, Ms Glenda (Hampstead)	Morgan, Alasdair (Galloway)
Jackson, Helen (Hillsborough)	Morgan, Rhodri (Cardiff W)
Jamieson, David	Morley, Elliot
Jenkins, Brian (Tamworth)	Morris, Ms Estelle (B'ham Yardley)

Morris, Rt Hon John (Aberavon)	Smith, Miss Geraldine (Morecambe & Lunesdale)
Mountford, Kali
Mudie, George	Smith, Jacqui (Redditch)
Mullin, Chris	Smith, John (Glamorgan)
Murphy, Denis (Wansbeck)	Smith, Llew (Blaenau Gwent)
Naysmith, Dr Doug	Snape, Peter
O'Brien, Bill (Normanton)	Soley, Clive
O'Brien, Mike (N Warks)	Southworth, Ms Helen
O'Hara, Edward	Spellar, John
Olner, Bill	Squire, Ms Rachel
Öpik, Lembit	Starkey, Dr Phyllis
Organ, Mrs Diana	Stevenson, George
	Stewart, Ian (Eccles)
Pearson, Ian	Stinchcombe, Paul
Pendry, Tom	Stoate, Dr Howard
Perham, Ms Linda	Strang, Rt Hon Dr Gavin
Pickthall, Colin	Straw, Rt Hon Jack
Pike, Peter L	Stringer, Graham
Plaskitt, James	Stuart, Ms Gisela (Edgbaston)
Pond, Chris	Stunell, Andrew
Pope, Greg	Sutcliffe, Gerry
Pound, Stephen	Swinney, John
Powell, Sir Raymond	Taylor, Rt Hon Mrs Ann (Dewsbury)
Prentice, Gordon (Pendle)
Primarolo, Dawn	Taylor, Ms Dari (Stockton S)
Prosser, Gwyn	Taylor, David (NW Leics)
Quin, Ms Joyce	Taylor, Matthew (Truro)
Quinn, Lawrie (Scarborough)	Thomas, Gareth (Clwyd W)
Rammell, Bill	Thomas, Gareth R (Harrow W)
Rapson, Syd	Timms, Stephen
Raynsford, Nick	Tipping, Paddy
Reed, Andrew (Loughborough)	Todd, Mark
Reid, Dr John (Hamilton N)	Touhig, Don
Rendel, David	Trickett, Jon
Robertson, Rt Hon George (Hamilton S)	Truswell, Paul
	Turner, Dennis (Wolverh'ton SE)
Robinson, Geoffrey (Cov'try NW)	Turner, Desmond (Kemptown)
Roche, Mrs Barbara	Twigg, Derek (Halton)
Rooker, Jeff	Twigg, Stephen (Enfield)
Rooney, Terry	Tyler, Paul
Ross, Ernie (Dundee W)	Vaz, Keith
Rowlands, Ted	Vis, Dr Rudi
Ruane, Chris	Wallace, James
Ruddock, Ms Joan	Ward, Ms Claire
Russell, Bob (Colchester)	Watts, David
Russell, Ms Christine (Chester)	Webb, Professor Steve
Ryan, Ms Joan	White, Brian
Salter, Martin	Whitehead, Dr Alan
Sanders, Adrian	Wicks, Malcolm
Savidge, Malcolm	Williams, Rt Hon Alan (Swansea W)
Sawford, Phil
Sedgemore, Brian	Willis, Phil
Shaw, Jonathan	Winterton, Ms Rosie (Doncaster C)
Sheerman, Barry	Wood, Mike
	Woolas, Phil
Sheldon, Rt Hon Robert	Wray, James
Short, Rt Hon Clare	Wright, Dr Tony (Cannock)
Simpson, Alan (Nottingham S)	Wright, Tony D (Gt Yarmouth)
Singh, Marsha	Wyatt, Derek
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)	Tellers for the Noes:
Smith, Angela (Basildon)	Mr. John McFall and
Smith, Rt Hon Chris (Islington S)	Ms Bridget Prentice.

Question accordingly negatived.