HC Deb 29 October 1957 vol 575 cc19-21
10. Mrs. Mann

asked the Secretary of State for Scotland if he is aware that the increase of loan interest to 7 per cent. will add £126 extra each year to a four-apartment house averaging £1,770 cost; and, as this will make new building impossible to most local authorities, if he will reduce the rate of interest to reasonable proportions.

Mr. J. N. Browne

The figure of £126 given by the hon. Lady as the extra cost is, in fact, the total annual loan charges at 7 per cent. on a house costing £1,774, repaid over 60 years. The increase in the Public Works Loan Board rate of interest is from 5¾ per cent. to 6¾ per cent. This will add approximately £16 9s. a year on a house costing £1,774. My right hon. Friend does not think that this makes new building impossible, and he cannot agree that there should be a special rate of interest for housing loans.

Mrs. Mann

Since the new town subsidy, which the Minister was so keen to give for the building of houses within new towns, will be seriously undermined by this extra interest, will he not agree to continue on the old basis of interest for the time being?

Mr. Browne

No, Sir. The large bulk of local authority houses were built at a time of low costs and low interest rates. If local authorities pool their subsidies, they can spread the benefit of them over all their houses.

Mr. T. Fraser

Does the hon. Gentleman accept that the figures he has just disclosed show that the increases in interest rates since the Government came into office in 1951 have put up the annual cost of a £1,700 house by over £60 a year?

Mr. Browne

They have put up the annual cost, but without notice I should not like to agree or disagree on the amount.

24. Mr. Hoy

asked the Secretary of State for Scotland what the interest charges on a house costing £1,500, and repaid over sixty years, were at October, 1951, August, 1957, and now.

Mr. J. N. Browne

At the long-term Public Works Loan Board rates at the three dates mentioned the annual average interest payments would be £31, £68 and £83, respectively.

Mr. Hoy

Is the Minister aware that that Answer shows that this means increasing the cost of a £1,500 house by £3,000 over sixty years? Surely that is an atrocious record even for this Government. Is the Minister not hoping to do something about attacking these very high interest rates as a possible solution to the problem of rent for these houses?

Mr. Browne

The hon. Member really should get the position more clear. Many of these houses were built at low cost and low interest rates. If local authorities pooled their interest payments for all the houses, they would find that the present rates would have not too significant an effect on their total housing expenditure.

Mr. Hoy

Does the Joint Under-Secretary deny figures that he has already given: that under this Government the interest rate for housing has gone up from 3 per cent. to 6¾ per cent.; and that the cost does reflect that rate? That is the bill that the local authorities have to meet. Instead of blaming local authorities for the high rents, the Government should accept their own responsibilities.

Mr. Browne

I am not denying the figures, but the effect of them on the overall cost of local authority houses.

Mr. Woodburn

Is it not financial nonsense to have to pay more for the interest than for the housing? And is it not nonsense for the Government to complain of waste when they hand out unnecessarily all this money to interest drawers? Could we not have an inquiry into who gets the interest and whether they have been working overtime for it?

Mr. Browne

Money has to be paid for. As I have explained, it is perfectly easy for the local authorities to spread the cost over the other houses, and my belief is that the local authorities are glad to play their part in keeping down the cost of living.