HC Deb 26 April 1955 vol 540 cc756-7
46. Mr. Hamilton

asked the Secretary of State for Scotland to what extent the recent increase in the Bank Rate will affect housebuilding costs and rents in the new towns in Scotland.

Mr. J. N. Browne

The small increase in loan charges involved by the increase in the borrowing rate from 3¾ per cent. to 4 per cent. is more than offset by the general reduction in housebuilding costs in the new towns in the last 12 months. There has been no change in the level of rents.

Mr. Hamilton

Is the Minister now saying that the rents of the new houses which are being built in Glenrothes and East Kilbride will not be increased as a result of the increase in the Bank Rate?

Mr. Browne

If I could foretell the future, I should perhaps be forecasting other matters than the question of future rents at Glenrothes.

47. Mr. Manuel

asked the Secretary of State for Scotland the estimated increased financial burden to local authorities in connection with their building programmes for this year because of the recent increases in the loan charges of the Public Works Loan Board.

Mr. J. N. Browne

The average amount borrowed by Scottish local authorities from the Public Works Loan Board for all purposes over the last three years is about £30 million a year. On this basis the higher interest rates now charged by the Board would involve additional annual charges estimated at £60,000 a year, of which the greater part would relate to the building programmes of the local authorities.

Mr. Manuel

Is the Under-Secretary aware that this increased on-cost, particularly in the case of housebuilding, will fall very hardly on the small local authorities in Scotland and in many cases will mean that not so many houses will be built? Can he inform the House whether it is his intention to recommend an increased subsidy to meet this heavy on-cost to local authorities in connection with interest rates?

Mr. Browne

The present housing subsidy was fixed in 1951 and was based on an interest rate of 4¼ per cent. There has been no reduction in the Scottish subsidy since then, and the interest rate is now 4 per cent. I think that it would be wrong if I held out any hope of an increased subsidy.

Captain Duncan

Will my hon. Friend encourage the larger local authorities to go to the market instead of to the Public Works Loan Board? Is he aware that the best of the small local authorities do not go to the Board at all?

Mr. Browne

Yes, Sir.