§ 15. Mr. Jayasked the Chancellor of the Exchequer why local authorities are charged a higher rate of interest than building societies for 20-year loans of public money for house purchase.
Mr. AmoryI would refer the right hon. Member to my reply of 2nd December to the hon. Lady the Member for Liverpool. Exchange (Mrs. Braddock).
§ Mr. JayIs the right hon. Gentleman aware that he told me in an Answer on 20th November that, through the Public Works Loan Board, he charges a rate of 5⅞ per cent. for 20 years on a loan for house purchase to local authorities, and that in the White Paper he proposes to charge only 5½ per cent. for the same purpose to building societies? How does the right hon. Gentleman justify that difference?
Mr. AmoryIt is difficult to compare loans which are raised on fixed interest terms and loans where the interest rate is variable. It is difficult to say how this proposed scheme would work out over the years. We do not know the current rates that will be charged under the Public Works Loan Board system, nor the current rates to be charged in respect of building societies.
§ Mr. JayDoes that justify this discrimination? Will the right hon. Gentleman look at the matter again and see whether he can get the two rates into line?
§ Mr. OsborneCan my right hon. Friend hold out reasonable hopes that both rates will come down in the near future?
Mr. AmoryMy hon. Friend knows that the Public Works Loan Board rate is linked with the current rate in the market for local authority borrowing and 191 so is dependent upon the current rate in the market.
Mr. H. WilsonIs the implication of the Chancellor's argument about fixed rates and variable rates that the prospect over the years is of rates even higher than these? Is that what he is looking to?