§ Mr. FRANKLIN
I beg to move, in page 7, line 23, after the word "prices" to insert the wordsor for the obtaining of funds at reasonable rates of interest to finance the provision or acquisition of houses.In moving this Amendment, I will say something as to the bearing of the cost of money upon the whole scheme. I will not go into the whole question which was dealt with the other night, and which received sympathetic consideration from the Financial Secretary to the Treasury. The only allusion I would make to the, figures I gave on that occasion is to call attention once more to the fact that every quarter per cent. variation in the rate of money means 6d. per week on the rent of the house. When we take that into consideration I think we shall be able to deal with this question with somewhat better knowledge. In paragraph (a) it will be noticed that if for the reason of there being a shortage in labour and difficulties in regard to materials the local authority holds its hand, it would be within the province of the Minister to withhold the subsidy, that is to say, for the time being to stop the work. What is far more important than labour and materials is the question of finance. On that depends the whole success or non-success of the Bill. At the end of the paragraph there is a general proviso in these wordsor arises from any other cause whatsoever.Those words may be said to cover the financial aspect, but when you have two major reasons given, the question of labour and the question of material, not to insert the question of finance is somewhat unfair to those who are striving, and should be made to strive, to keep down the cost of money. If the local authority finds that the rate for money lushes up as in 1919–20 and that the rents they will be obliged to charge would go up very considerably, that is a reason for the local authority holding their hands.
A further point is this. There will be far more readiness to lend money if the idea does not get abroad that a person 1590 will get a higher rate of interest by waiting to provide the funds necessary to carry out the housing scheme. My Amendment definitely says, first of all, to the investor, "You are not going to get a higher rate of interest than this, because at a certain point we shall be obliged to suspend building." The Amendment would also induce them to stretch a point and to help in the scheme by supplying money at the cheapest possible rate. It is, therefore, a warning to the local authorities not to go beyond a certain point in bidding for money, and it is a notice to those who will have to supply the money that they will not be injured by the constant rise in the rates due to this competition, because beyond a certain point the local authorities cannot pay.
§ Sir JOHN PENNEFATHER
I beg to second this most important Amendment. I would, naturally, have preferred the Amendment which I had put down, but as this Amendment has been selected I cordially support it. Although it may not go quite as far as I would like to go, it goes a considerable way, and as far as it goes I am in thorough agreement with it. The meaning of the two Amendments is very much the same. This Amendment makes it clear that those who lend money, whether it be a few pounds or whether it be hundreds or thousands, to enable houses to be built, are not useless people, but are very essential to the success of this scheme and without their assistance the houses cannot be built any more than they could be built without land, materials and labour. Therefore, it is highly appropriate that this Amendment should appear in the Bill.
Some people may raise objections to the power which is to be placed in the hands of the Minister by this Amendment which gives him the right to say what are reasonable rates of interest. I am not afraid of that, because I do not believe that any of the public bodies or local authorities could float a loan that was unreasonable at the time it was raised, and I am sure that none will attempt to do so. If they did attempt to do so, it would be right that the Minister should have it in his power to say, "No. This is unreasonable. This will unduly raise the cost of the houses and in that way will unduly and unfairly increase the rents. Therefore, I 1591 think the Minister should have this power. The insertion of this Amendment will do much to remove any misapprehensions or misunderstandings which have been created by the somewhat thoughtless and injudicious announcements which have been made either in this House or outside this House in speeches or interviews. I dealt with that matter last Thursday night, and I will not pursue the subject now, because it is well that all that should be buried.
The acceptance of this Amendment will help to create a better borrowing atmosphere for the local authorities and public bodies. One hon. Member opposite laughs when I speak of a better borrowing atmosphere. I mean such an atmosphere that all wise people strive to create when they are going to try to borrow large sums of money at a cheap rate. That is a favourable borrowing atmosphere. The opposite would be a favourable lending atmosphere. It is essential that the people of this country should feel that in lending money for this purpose they are doing something that is meritorious. It is essential that that atmosphere should be created. Unless it is created, people will say, "Why should I lend money for this purpose and run the risk of being pointed at as an unworthy person, when I can lend my money equally well and at perhaps a higher rate of interest on something abroad, and be hailed as a patriot?" The favourable atmosphere foe local authorities which I would like to create is that in which it is agreed on all sides that the local authority is doing right in trying to raise money, and that the people who respond to its appeal are doing right in subscribing to those loans, and that by the united action of the local authority who, borrow and those who lend houses, which are so much wanted in the country to-day, may be provided. It is for the success of the right hon. Gentleman's scheme that. I hope he will accept this Amendment.
§ Mr. WHEATLEY
I propose to accept the Amendment, with the omission of the words "or acquisition," which are not necessary.
§ Mr. JOHNSTON
I should have liked the Mover and Seconder of this Amendment, who have evidently given considerable attention to it, to be able to advise 1592 the Minister as to how something more than a favourable atmosphere could be created. If the Minister could have been informed as to how the cheaper money could be got it would have been of much greater service to the State than merely proposing that there should be a favourable atmosphere. Some of us on these benches have gone further than attempting to secure a favourable atmosphere. We have been able to secure cheaper money, and, by means of municipal banks, we have secured cheaper money for local authorities, and we have always felt, with a few honourable exceptions, such as the late Minister of Health the right hon. Gentleman the Member for Ladywood (Mr. N. Chamberlain), that the great majority of hon. Gentlemen opposite and on the benches below the Gangway have done nothing whatever to facilitate municipal banking, but indeed often opposed it—[HON. MEMBERS: "No!"] I can give a few facts. [HON. MEMBERS: "Oh!"] I am sorry that I was going to be led astray by unworthy interruptions, but cheaper money can be got. The working classes to-day, who put their money in the Post Office or other trustee savings bank, only get 2½ per cent. interest for their money. Allowing ¼ per cent. for working expenses, the State gets the money for 2¾ per cent. All through the War the working class investors never got more than this 2½ per cent., while the rich investors were getting 5 and 6 per cent. To the extent of slightly less than £300,000,000 the State gets the money at 2¾ per cent. If the local authorities were given facilities to start municipal banks, offering 2¾ per cent.—
§ Mr. JOHNSTON
I will not discuss the matter in detail. I merely content myself with suggesting to hon. Members who support this Amendment—and I think it right—with the wish to provide cheap money to facilitate house building in this country, that they could perform no greater service than by assisting Members on these benches to secure for local authorities the wider privilege of starting municipal banks.
§ Major BURNIE
I sympathise with the desire of the Mover and Seconder of this Amendment that we should have cheaper 1593 money for the erection of houses, but I am rather surprised that the Minister has accepted the Amendment so cheerfully, because I have a feeling that this small Amendment will not assist him in the main object of the Bill, which is to obtain houses. The Amendment gives the Minister further powers to declare that he will make no contribution. The operative words areIf the deficiency is due to the absence of adequate arrangements for the necessary increase in the supply of labour,and so on, and with the Amendment you will have the added reason or for the deficiency of adequate arrangementsfor the obtaining of funds at reasonable rates of interest for the provision of houses.The adequate arrangements have to be made by the local authorities or the public utility societies, and this Amendment places very great powers in the hands of the Ministry, because the question of whether the arrangements are adequate or not, to my mind, should be left to the councils concerned. They are the people who have to raise the money and have to build the houses and find the supply of labour and material, and we should not throw further obstacles in their path by creating the feeling that if the arrangements are not satisfactory to the Minister they are liable to have the contributions to these houses stopped by the Minister. By doing this we are throwing further obstacles in the way of providing the houses, which is the main object of the Bill.
The hon. Member for Stirling (Mr. Johnston) asks how cheaper money can he got. The answer is very simple. By good credit. The City of Liverpool, which adjoins my borough, borrows money at the absurd rate of 2½ or 3 per cent. It borrows on six months' bills and renews them. It's credit is good. It is the soundest credit in Great Britain. My only regret is that, although we prefer to be independent of it, we do not share in that credit, and our charge for housing, when we take into account the cost of raising the money, which, of course, is charged, is nearly 7½ per cent. I think that hon. Members are going to defeat the object which they have in view. They are going to create the idea in the mind of the local authorities, who have to raise the money, that they may be refused the contribution by the Minister 1594 towards the housing scheme which they propose to carry out.
§ Lord E. PERCY
I am in favour of this Amendment, not that it makes very much difference as long as we have the wordsor arises horn any other cause whatsoever.But I would point out to the Minister that this is the first time that we have in so many words the statement that if local authorities, by direction of the Minister, do not order the houses before they can get the money more cheaply, then if, as a result of that, the building industry does not deliver the houses, the contributions may be cut off, through no fault of the building industry. Was that the intention of the so-called agreement with the right hon. Gentleman? There is this second point. It was specifically said that the Minister may not shut the scheme down, except for causes which are within the control of the building industry, but now, under paragraph (a) of Sub-section (2), he may shut down the scheme for causes which are outside the control of the building industry. I am left wondering snore and more what will happen to the so-called guarantee and what is left of it.
§ Mr. WHEATLEY
I am sure that the Noble Lord does not require me to enlighten him on that point. He knows perfectly well that from the beginning of the discussion on this Bill, and during the discussions with the building industry, it was made clear that the State would not accept houses unless they could be obtained at a reasonable cost, and he knows also that, if the price of money soars, that more than anything else affects the cost of houses, and he recognises also that this power is merely permissive and could not be carried into effect unless it was felt that it was the proper thing to do so.
§ Amendment made to proposed Amendment: Leave out the words "or acquisition."—[Mr. Wheatley.]
§ Proposed words, as amended, there inserted in the Bill.
§ The ATTORNEY-GENERAL
I beg to move, in page 7, line 41, at the end, to insert the wordsother than a house which is completed not later than eight months after the specified date in respect of which the Minister or 1595 Board is satisfied that the failure to complete the house before the specified date was due to circumstances over which the local authority, person, or body constructing the house had no control.Under Sub-section (3) of Clause 4 the Minister shall not be liable to make contributions in respect of houses which have not been completed before the date specified in the order. It must be obvious that there may be cases in which an order is made and in which the local authorities or the public utility society building the houses could not put them up in time. The only object of the Amendment is, that if it should be established that the failure to complete a house on that specified date is occasioned by conditions which are beyond the control of the local authority or the public utility society, the Minister shall have power to say that he shall still remain responsible to pay.
§ Amendment agreed to.