HL Deb 15 May 1984 vol 451 cc1278-80

2.59 p.m.

Lord Dean of Beswick

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows: To ask Her Majesty's Government what is the expected financial effect of the Budget proposals on people who have purchased system-built houses from local authorities, and on local authorities who have these types of houses remaining in their stock.

Lord Skelmersdale

My Lords, the Chancellor's Budget speech included the proposal that from 1st June structural alterations to buildings will be liable to value added tax at the standard rate of 15 per cent. Private owners of system-built houses will be affected by the change if they have neither completed, nor paid for, their structural alterations by 1st June. Local authorities with such houses in their stock are able to reclaim VAT on any expenditure they may incur on those houses, and so will not be affected.

Lord Dean of Beswick

My Lords, I am grateful to the noble Lord the Minister for that Answer. Is the noble Lord the Minister not aware however that I have information from Leeds City Council which shows that in the case of people who have purchased Airey houses from Leeds City Council—and of course this follows on a national basis—the imposition of VAT on the structural measures needed to bring those houses to standard will increase the cost of remedial treatment by £2,000 per house? May I ask whether, on that basis, the noble Lord will go back to the senior Government Minister involved in this to ask him to reconsider this matter because of the adverse effect that this will have on the people who have bought these council houses and on the people who live in them?

Lord Skelmersdale

My Lords, the houses which are now in the private sector—some 1,800—to which the noble Lord has referred, are eligible for grant under the Airey scheme. I am able to tell the House that the Government are prepared to consider whether the eligible expense limits under the Airey scheme on which these grants are based should be adjusted in the light of any detailed representations which demonstrate a need for increases to cover the cost of repair to Airey houses.

Lord Taylor of Blackburn

My Lords, would the Minister give the same concession to charities that he is giving to local government?

Lord Skelmersdale

My Lords, what we are doing is considering further action on representations made to us. This is not a matter for local government or for charities. From wherever the representations come, they will be considered.

Lord Graham of Edmonton

My Lords, does not my noble friend's Question reinforce the need for the Government always to have in mind absolute equity between the private sector and the public sector in housing matters? I believe that the noble Lord indicated something there. Can he assure the House that when housing improvement programmes are made there is a built-in allowance to take into account matters like this which come up without prior warning during the current year?

Lord Skelmersdale

My Lords, the noble Lord has taken the opportunity to go rather further than my previous answers indicated. What I have said is that the Government will give careful consideration to fully thought out representations which come to them. I am afraid that I cannot stand at this Dispatch Box this afternoon and guarantee the outcome of that consideration.

Lord Ennals

My Lords, further to the point made by the noble Lord the Minister on the question of the payment of 15 per cent. VAT by charities for services that they give to social service departments and other organisations, is he not aware that ever since this 15 per cent. was introduced, the charities and a very large number of Members of both Houses of Parliament from all parties have been pressing successive Chancel-lors, and that they have been thinking about this constantly but nothing has been done? Can the noble Lord give the House any assurance at all that these charities will not just continue to suffer as a result of the decision taken by the Chancellor of the Exchequer?

Lord Skelmersdale

My Lords, as I understood it, the pressure from the charities which has been taken up both in your Lordships' House and in another place has been on the zero rating of charities, so far as value added tax is concerned, for all purposes. What we are now considering is the added imposition of 15 per cent. VAT on improvements and structural alterations—as oposed to the repair and maintenance which has always attracted VAT. As I have said, if the charities put up a reasoned case, we will consider it.

Lord Dean of Beswick

My Lords, may I press the noble Lord the Minister a little further? Is he aware of the figures given during the debate in another place by the honourable Member for Manchester Central on the Second Reading of the Housing Defects Bill, which showed the appalling sum of money which Manchester would have to find to correct structural defects in its housing stock? I think that it is in excess of £ 10 million. Is the Minister saying that that money, on his statement today, will not be liable to VAT? If that is what he is saying, it will be well accepted; if not, it will be deplored.

Lord Skelmersdale

My Lords, if the structural alterations to which the noble Lord referred are on the local authority's own stock, they will be able to get this refunded through the normal VAT mechanism.

Viscount Whitelaw

My Lords, I feel that it would be in accordance with all your Lordships' wishes if I were to express to one of my distinguished predecessors, the noble Lord, Lord Peart, our very great welcome on his return to the House after the very unhappy experience he has had.

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