Below is the text of Mr Major’s written Parliamentary Answer on Taxation on 15th February 1990.
Mr. Denzil Davies To ask the Chancellor of the Exchequer whether he has any plans to introduce a substantial increase in investment tax allowances for manufacturing industry.
Mr. Major I cannot anticipate my Budget statement.
Below is the text of Mr Major’s written Parliamentary Answer on Crown Estates on 15th February 1990.
Mr. Kennedy To ask the Chancellor of the Exchequer when he last met the First Crown Estates Commissioner; and what matters were discussed.
Mr. Major My predecessor met the First Crown Estates Commissioner on 12 July 1989. Their discussion covered chiefly the Crown Estate Office’s performance in 1988–89 and the forward programme.
Below is the text of Mr Major’s written Parliamentary Answer on the European Monetary System on 15th February 1990.
Sir David Steel To ask the Chancellor of the Exchequer what is the average inflation rate of countries participating in the exchange rate mechanism of the European monetary system.
Mr. Major Using data which exclude estimates of owner-occupier housing costs to provide figures on a more comparable basis, the average inflation rate of countries in the exchange rate mechanism of the EMS was 4.2 per cent. in November 1989.
Below is the text of Mr Major’s written Parliamentary Answer on the Child Poverty Action Group on 15th February 1990.
Mr. Benn To ask the Chancellor of the Exchequer when he last met representatives of the Child Poverty Action Group to discuss taxation.
Mr. Major I refer the right hon. Member to the reply that I gave earlier today to the hon. Member for Clwyd, South-West (Mr. Jones).
Below is the text of Mr Major’s response on mortgage arrears made on 15th February 1990 in the House of Commons.
Mr. Harry Barnes To ask the Chancellor of the Exchequer what is his latest estimate of the number of home-owners with mortgage arrears.
Mr. Major Around 70,000 mortgages are more than six months in arrears, less than half of 1 per cent. of total home-owners.
Mr. Barnes I am sure that all hon. Members are meeting more and more constituents whose debts have reached crisis point. Many have become homeless, and the position has been worsened by the increase in mortgage rates. The plight of those people is desperate: they also face increases in transport and heating costs, and the poll tax, which is yet to be imposed in England and Wales. Are not we moving from crisis to catastrophe, and should not those who reside at No. 10 and No. 11 Downing Street be evicted, rather than our constituents?
Mr. Major I share the hon. Gentleman’s concern for those who are in difficulties. However, the level of arrears, although a little higher than it was a while ago, is still very low. A vast number of repossessions are predominantly the result of marriage break-up rather than high interest rates.
Mr. Tim Smith Will my right hon. Friend confirm that the figures that he just gave for mortgage arrears account for 0.73 of 1 per cent. of all mortgage holders, and that that proportion is lower than it was at the end of 1985? If that number is in arrears, by definition 99.27 per cent. of people are not.
Mr. Major I confirm those figures. Of course arrears are difficult and painful for every individual home owner, but it is equally true that they are not running at the critical level implied by the hon. Member for Derbyshire, North-East (Mr. Barnes) in his supplementary question.
Mr. Benn Is the Chancellor aware that – quite apart from the tragedy of repossession – many people who had thought that they were home owners have discovered that they are home buyers? There is a big difference between the two. The Government have no interest in home buyers; they try to persuade home buyers that they are home owners, which they are now discovering that they are not.
Mr. Major The right hon. Gentleman is clearly unaware that the number of properties repossessed in 1989 – which, I think, underlies his concern – was less than one fifth of 1 per cent. of the number of building society loans. The problem has been there for a long time, and it certainly existed when the right hon. Gentleman was a Minister.
Mr. Dunn Is my right hon. Friend aware that more than 2 million more families now own their homes than in 1979? Is not there a strong case for raising the mortgage tax relief threshold from £30,000 to at least £60,000 – [Interruption].
Mr. Speaker Order. The hon. Gentleman has an absolute right to say what he wants to say.
Mr. Dunn – to take account of the huge increase in the value of homes, especially in the south-east, and in north-west Kent in particular?
Mr. Major I note my hon. Friend’s representations on that matter. He should bear it in mind that owner-occupation has risen from 55 to 65 per cent. in the past decade and that there is still a substantial demand for home ownership to continue, as I believe and expect it will.
Mr. John Smith Does the Chancellor recollect that in the Conservative party’s 1979 manifesto the then level of interest rates and mortgage repayments were said to result from what was called “Government financial mismanagement”? After 11 years of Conservative Government, with people are suffering the highest mortgage repayments in our history, is that still true? Is it caused by Government financial mismanagement and, if not, what is the reason for all this misery?
Mr. Major What was said in 1979 was entirely correct – [Interruption] – because for a long time when the Labour party was in Government there were negative interest rates which robbed savers, pushed up inflation and wrecked the economy.
Mrs. Currie Does my right hon. Friend agree that the building societies, which have been lending young people three and four times their income to buy overvalued properties, must take some of the blame? Does he also accept that what is worrying people in my constituency is not just the mortgage rate but a combination of the mortgage rate and the potentially astronomical community charge? Will he take cognisance of that and invite my right hon. Friend the Secretary of State for the Environment to cap Derbyshire county council?
Mr. Major I shall certainly pass on my hon. Friend’s latter remark to the Secretary of State. I agree that people should be prudent in the borrowing that they take on.
Below is the text of Mr Major’s response on interest rates made on 15th February 1990 in the House of Commons.
Mr. Anthony Beaumont-Dark To ask the Chancellor of the Exchequer what recent representations he has received about interest rates and their effect on the economy.
Mr. Major I have received a number of such representations.
Mr. Beaumont-Dark Does my right hon. Friend accept that many people in the House and outside it admire the way in which he has tackled his job in the few short weeks that he has been Chancellor of the Exchequer? Does he further accept that many of us hope that the belief that the pound and interest rates ought to be tied to the deutschmark has been buried? Because of the Germans’ headlong and precipitant flight to a new fatherland, their inflation is likely to be very high. If Germany’s interest rates increase 1 per cent., may we have an assurance that our interest rates need not follow, because British industry could not sustain such a rise or compete with it?
Mr. Major I am grateful to my hon. Friend for the first part of his question. As to the second part, I shall continue to judge interest rate levels against what I think is right for the country’s counter-inflation policy.
Mr. Beith Does the Chancellor realise that yesterday’s announcement by one building society of increased mortgage rates spells personal tragedy for many people as well as great pressure on wage negotiations in the coming year? Can the Chancellor give the other building societies any hope of a reduction in interest rates while he refuses to make a clear commitment to Britain’s early entry into the exchange rate mechanism, or should all building societies increase their interest rates in anticipation that base rates will remain high?
Mr. Major It would be very attractive to be able to stand here and say that I foresee an early reduction in interest rates. However, I must tell the hon. Gentleman and the House that it would be unwise to make such a commitment until I am certain both that it would be right in terms of beating inflation and that once we bring interest rates down, we can safely keep them down.
Mr. Ian Stewart I thank my right hon. Friend for that answer, and I am sure that he will have strong support from Conservative Members in making sure that the campaign against inflation is maintained for as long as it need be. Will my right hon. Friend emphasise that an increase in mortgage rates is not the same as an increase in the rate of inflation? In that respect in particular, the retail prices index is a very unsatisfactory measure of inflationary conditions. When the RPI falls below the real rate of inflation, as it will over the next two years with falling interest rates, will my right hon. Friend take the opportunity to introduce a more realistic official inflation indicator and be prepared to adjust the annual uprating of benefits accordingly?
Mr. Major My right hon. Friend is right to say that the retail prices index as presently constituted is an inaccurate measure of the underlying rate of inflation in the British economy. He will be aware that few countries in the world include mortgage repayments in their retail prices index, as we do. I take note of my right hon. Friend’s other comments.
Mr. Robert Sheldon The Government have said frequently that if their economic policy is not hurting, it is not working. Is not the real problem that the Government’s policy is hurting manufacturing industry, investment and home owners? When will the Government open their eyes to the possibility of an alternative approach, such as credit control – which, although not perfect, can be of some help?
Mr. Major The most damaging thing for industry and for the economy as a whole is inflation. Our monetary policy is there specifically to bear down on inflation. If we had not used monetary policy successfully in recent years, I doubt whether there would have been the dramatic reduction in unemployment which all right hon. and hon. Members welcome, and which today’s announcement shows is continuing.
Sir Anthony Grant Does my right hon. Friend agree that although the battle against inflation must take priority, the burden of it is being borne excessively by small businesses and home owners? [HON. MEMBERS: “No.”] Yes it is. While I accept that my right hon. Friend cannot anticipate his Budget, will he, with his usual sensitivity, take that into consideration? After all, the need for the battle was not the fault of small businesses and home owners, but that of the Government.
Mr. Major I understand the concern felt by my hon. Friend, who is a powerful and consistent proponent of lower interest rates. I entirely sympathise with the difficulties that many home owners in particular face at present. I have to bear in mind as an overriding objective the necessity to ensure that we have the right economic conditions for bringing down inflation and for ensuring that it is kept down. I must keep that in the forefront of my mind and policy, and I propose to do so.
Below is the text of Mr Major’s response on Personal Savings made on 15th February 1990 in the House of Commons.
Mr. French To ask the Chancellor of the Exchequer what action he is taking to promote personal savings and investment.
Mr. Major There have been a range of measures to encourage savings and investment in recent years.
Mr. French Has my right hon. Friend been able to assess the popularity of personal equity plans following the improvements made to that scheme by his distinguished predecessor? Notwithstanding present high mortgage commitments, are not more and more people investing in PEPs?
Mr. Major My hon. Friend has taken a great interest in the personal equity plan schemes. He will be delighted to know that the number of plans taken up and the amount invested are now running at higher levels than at any time.
Dr. Marek As so often, the right hon. Gentleman talks about savings for those who are basically rich enough to afford advice on how to save. What does he intend to do for the ordinary saver, the person who is being crucified by the present high mortgage rates?
Mr. Major The hon. Gentleman may conceivably not have noticed it or remembered it, but independent taxation comes into force from 1 April this year, which will be of considerable help to the married woman saver.
Below is the text of Mr Major’s response on the Child Poverty Action Group made on 15th February 1990 in the House of Commons.
Mr. Marten Jones To ask the Chancellor of the Exchequer when he last met representatives of the Child Poverty Action Group to discuss taxation.
The Chancellor of the Exchequer (Mr. John Major) I have not met them as a Treasury Minister.
Mr. Jones When the Chancellor meets representatives of the group, I hope that he will have some good news for them on child benefit which, as he knows, is the best way to give support to families on low incomes. I hope that he will raise child benefit in line with inflation because, as he knows, it has been eroded since 1987 when his Government’s manifesto commitment was to “pay it as now”. Surely that should not mean to pay it as it was paid in monetary terms, but that it should be uprated in line with inflation. I hope that the Chancellor will take that point on board in his next Budget and put that right.
Mr. Major I am grateful to the hon. Gentleman for his views. As he knows, we have a statutory obligation to review child benefit every year before the public expenditure round, and that has occurred. On the point about the freeze on child benefit in the past two years, the hon. Gentleman knows that there has been a compensating increase in income support and family credit, precisely to meet the point about low pay to which he referred.
Dame Elaine Kellett-Bowman When considering the answer that he has just given, will my right hon. Friend bear it in mind that quite a number of his colleagues, let alone Opposition Members, feel strongly that child benefit is the only income of some women, who appreciate its being uprated whenever possible?
Mr. Major I am grateful to my hon. Friend for that reminder. As she knows, child benefit was introduced by the present Government and at present costs £4.5 billion, all of which is paid to the wife.
Mrs. Beckett Surely all that the Chancellor needs to say when he meets the Child Poverty Action Group is that, as the social security Minister who gave the pledge in the manifesto about child benefit, he feels morally bound to uprate it in line with inflation?
Mr. Major It is always a pleasure to have advice from the hon. Lady, although it may be that I do not get quite as much advice from her as her right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Nevertheless, I am pleased with the advice that she has given and shall certainly bear it in mind if I meet Miss Fran Bennett and her colleagues.
Below is the text of Mr Major’s written Parliamentary Answer on Local Government Finance on 14th February 1990.
Sir Peter Emery To ask the Chancellor of the Exchequer if he will make a statement on the implications for economic policy of a 15 per cent. increase in local authority spending in 1990–91.
Mr. Major The Government’s firm control of public expenditure, and the reduction in general Government expenditure as a share of gross domestic product, have played a major part in the successful conduct of economic policy. The Government are determined that this should continue. There is no doubt that an increase of that order in local authority spending would be unhelpful, and would impose a heavy burden on community charge payers, for which the responsible local council would be accountable.
Below is the text of Mr Major’s written Parliamentary Answer on Pension Schemes on 13th February 1990.
Mr. Alfred Morris To ask the Chancellor of the Exchequer whether the general conditions of approval of occupational and personal pension schemes by the Inland Revenue are such as to permit the provision of payments out of such a scheme of an amount related to a person’s accrued or prospective retirement pension under the scheme, such payments to be made throughout any period in which that person is entitled to the payment of an invalidity pension from the national insurance fund and to cease at the end of that period.
Mr. Major [holding answer 12 February 1990]: The main purpose of occupational and personal pension schemes is to provide an income in retirement. The tax approval conditions for such schemes allow benefits to be paid before retirement age if a person is incapable of continuing in employment. There is no requirement on schemes to provide a pension before retirement age. Decisions on whether an incapacity pension is payable are matters for the scheme trustees and their criteria might differ from entitlements to invalidity pensions. Incapacity pensions are normally payable for life.