I am glad that my hon. Friend brings that point up in this debate about the mansion tax. In 1997, we had the same old Tory economics, which we are seeing again because history is repeating itself. There was massive unemployment and that was being paid for by cutting services for the poorest. There was a huge debt that the Labour party paid down. The interest on that debt was excessive. We all remember Black Wednesday. We made the Bank of England independent to keep interest rates low.
The Opposition are serious about keeping interest rates low and having fiscal discipline, but our priority is economic growth. That is what any sensible business would suggest. A business man in Swansea said to me the other day, “If I was running at a loss, the last thing I would do is sack my workers and sell my tools, because I would not have a business. I would tighten up and focus on new product development and sales.” That is the balance that we want. We want a mansion tax and a 10p rate, because if we can recover some money from the richest and redistribute it to make it more worth while for everybody to work, that has to be a good thing.
The right hon. Member for Wokingham (Mr Redwood) brought out his violin and gave the heart-breaking story of the poor people who have a two-bedroom flat in Chelsea worth £2 million. He said, “Isn’t that awful. Surely you wouldn’t do that.” That is in sharp contrast to what Tory Members say about the person in the two-bedroom council flat who will be punished because their children grow up, get on their bike and get a job, as Norman Tebbit said, and vacate their bedroom. They say that there is nothing wrong with the forced evacuation of such people from London to a one-bedroom flat in a lower cost area; but they say that it is wrong that somebody who is living in a £2 million two-bedroom flat should have to rebalance their asset portfolio to generate revenues to pay the mansion tax. If someone has a £2 million Chelsea flat, it is possible for them to rent it out at enormous rents, live somewhere else in the countryside that is many times bigger, pay the mansion tax and make a handsome profit. That is not a heart-rending problem compared with the bedroom tax. However, it appears that Tory Members are more concerned about people who own £2 million properties than people in council flats.
A woman from my neck of the woods in Swansea came to see me two weeks ago and said that she had been on the waiting list for 11 years, asking to be moved from her two-bedroom flat to a one-bedroom flat, but the council does not have any one-bedroom flats. Why is that? It is because the local council has rightly been building for families in need with children. Suddenly we have the bedroom tax, which makes no economic or social sense, but there is no admission of that from the Government.
We have made the sensible suggestion, which has been thought through by the Liberal Democrats, that we should make the council tax more progressive.
We are all aware that house prices have gone up and down in different areas at different rates. In London, there is a skewed situation, because there is very quick house price inflation compared with elsewhere. People are making enormous capital appreciations. In essence, the financial disaster was caused by the bankers and sub-prime debt. That is likely to be repeated as we approach the general election because the Chancellor and his assistant, the Exchequer Secretary, have suggested triggering more sub-prime debt by covering people’s deposits. On the one hand, they are telling the banks to run a tight ship and to have enough capital reserves to cover their lending, because they do not want them to go bust again. On the other hand, they are saying that they will subsidise the purchasing of new houses. That is likely to happen in London, because people know that there is price inflation and will take a punt with a lower deposit and at a lower risk, hoping that they will recover their money through an escalation in house prices.
The very high-value property in London is being gobbled up by foreign speculation. The expensive property is being bought by people who want to get their money out of places such as Russia and by people who have huge accumulations of money from trade or oil surpluses. There are many cases of blocks of flats in London being bought outright. Nobody is living in them because the people who buy them know that they will make so much money through appreciation that they cannot even be bothered to rent them out. It is unbelievable.
We are asking, at a time of difficult choices and austerity, for a percentage of those transactions by multi-millionaires to be redistributed to make life easier
for people who work in communities across Britain, not just in London. I accept that most of these properties are in London. For example, the constituency of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) does not contain a £2 million house.
6.45 pm