Clause 2.—(EXCHEQUER ADVANCES TO BUILDING SOCIETIES.) (Hansard, 5 February 1959)

§ Mr. G. R. Mitchison (Kettering)
When we reported Progress last night I was in process of asking the right hon. Gentleman whether he could give us a little more information as to why he had made this distinction between London and the provinces and whether he had considered the possibility of other levels in other large provincial towns.

§ The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke)
When the Bill was published, which was two months ago now, comment was made on the absence of any differential for London. To the best of my knowledge, there Rio criticism arose about any other part of the country. Of course, on the ground of general principle, it is simpler if one has no differential, because even so well-known a boundary as that of the Metropolitan Police District may have its anomalies.
I do not think, therefore, that hon. Members on either side of the Committee would wish to introduce a differentiation of this kind where there was not a clear and strong case made out for it. It appears that in London there was a substantial case, and I am glad to say that, as a result of the talks which were held after the Second Reading with the building societies, it was accepted on their side that differentiation for the Metropolitan Police District would not be unreasonable.
In the circumstances, I would advise the Committee that we should make this difference, but not complicate the arrangements by creating differences elsewhere, 585 for which there does not seem to be any call. I think that the Bill will work well if we have this single different limit for the Greater London area.

§ Mr. John M. Temple (City of Chester)
Yesterday the Economic Secretary to the Treasury, when we were discussing another matter, drew attention to the difficulty of drawing a line. Yesterday my right hon. Friend, in moving this Amendment, referred to a wise differentiation. Now, it is said that it would be simpler to have no differentiation. Unless it is absolutely necessary—and I am not sure that it is necessary—I cannot see that there should be a differentiation at all.
I know that in the Rent Act there is a differentiation of 33; per cent. between the London area and the provincial area, and here we are visualising a differentiation of 20 per cent. These things seem to me to create precedents which, if we are not careful, will become principles; and it will be a principle that there is a difference in values of a certain degree between London and provincial areas. I should prefer to see one value over the whole country, but I would not go so far as to say that it is necessary in the provinces to have this figure quite as high as £3,000.
However, when one considers the fact that the basis of valuation will be the valuer's valuation of the particular property, and that the Bill is applicable to owner-occupiers, the most important factor is the figure at which the valuer values the property. I believe that, for the sake of uniformity, my right hon. Friend should have a further look at this point between now and Report.
Unless it can be said without any doubt that this differentiation is necessary, it should be omitted. The more we create these precedents the more difficulties we may have in other spheres as between calculations affecting the London area and those affecting the provinces. I very much favour uniformity and I hope that my right hon. Friend will be able to have a further look at this matter with a view to securing uniformity throughout the country.

§ Mr. Jack Jones (Rotherham)
On a point of order. Have the proceedings of the Committee on the Bill been 586 exempted from the provisions of Standing Order No. 1 (Sittings of the House)? Was that Motion moved, Sir Charles?

§ The Chairman
That was carried. The House agreed to that.

§ Mr. Ellis Smith (Stoke-on-Trent, South)
Can we be quite sure, Sir Charles?

§ Mr. Jones
May we be absolutely certain that the Motion was moved from the Government Front Bench?

§ The Chairman
It did not concern me very much, but the Motion came before Orders of the Day.

§ Mr. Jones
I do not want to be awkward—it is the last thing in my nature—but I want to be certain. As one who has sat in the Chamber from the beginning of today's proceedings—in fact, I was at Prayers—it is not within my recollection, or the recollection of some of my hon. Friends, that the Motion was moved.

§ Mr. Brooke
Perhaps, as the senior member of the Government present, I can assist. I can assure the Committee that my right hon. Friend the Prime Minister moved the Motion.

§ Mr. Ede (South Shields)
And it was put from the Chair and carried.

§ The Chairman
Yes, I do not think that there is any question about it at all.

§ Mr. W. R. Rees-Davies (Isle of Thanet)
I should like, very shortly, to take up the time of the Committee on the question of whether £2,500 or £3,000 is the right figure in the Clause to apply throughout the country. There is a strong case for the differentiation between London and the rest of the country, made out by the Minister, though I have some sympathy with the arguments which my hon. Friend the Member for the City of Chester (Mr. Temple) has adduced.
There are, particularly in the seaside resorts, a considerable number of owner-occupied houses which are, nevertheless, of a boarding-house type. I speak not merely for my own constituency, but, I think, for all seaside resorts and all that class of property, which, in the main, is late Victorian or Edwardian. The property comes within the ambit of the 587 Bill, but in most cases the valuations are about £2,800 to £3,000. The occupiers are mostly people living on small fixed incomes who have retired and who may well want to take up very substantial mortgages. I ask my right hon. Friend to look at the question closely and consider whether a figure of £3,000 would not be better than one of £2,500.
I had an Amendment on the Notice Paper to that effect and yesterday evening the then occupant of the Chair indicated that it would be a proper one to be discussed in calling the Amendment which is now before the Committee. Therefore, I invite my right hon. Friend, without necessarily giving any detailed reply now, to reconsider the matter between now and Report and particularly, if he would be so good, to make some inquiries from these seaside resort areas, where we are dealing with rather large properties of a value of £3,000 or just under, whether such a provision may not be of substantial assistance to retired persons. Many of them are well-known trade union people from the Midlands and the North who have retired and who want money on mortgage because of shortage of capital, although they intend to work and give other forms of collateral security as may be required.

§ Mr. J. A. Sparks (Acton)
I should be glad if the Minister would explain further a point in connection with the maximum amount which he is now fixing, namely, £3,000 in the Metropolitan area and £2,500 outside that area. It is true, generally speaking, that the pre-1919 houses will have a lower valuation than the more recent and modern ones, and £3,000 seems to me a rather high figure. In some areas of London one can acquire a fairly good modern house at that price.
I wonder whether the right hon. Gentleman is not going beyond the bounds of what we understand to be the intention of the Bill, namely, to allow a normal family to acquire ownership of a pre-1919 house. A sum of £3,000 for a pre-1919 house, which might be sixty, seventy or eighty years old or more, seems to me a rather high figure. Generally speaking, it would be a fairly large house. Are we satisfied that the accommodation would not be more than the applicant and his 588 family would require? Are we quite sure that this public money will not be used for business and commercial purposes?
The hon. Member for the Isle of Thanet (Mr. Rees-Davies) referred to boarding houses. Is it intended that public money should be used to finance boarding houses? It might well be that a house valued at £2,500 in certain parts of the country and £3,000 in London would be so large and the accommodation would be so much more than the applicant required that he would be seeking to secure the advance for a commercial or business proposition. Incidentally, he would not only acquire for himself the ownership of the house, but would proceed to do something more, to enter into a form of business, to use the house for business purposes in the sense of letting and sub-letting.
If that is the intention of the Minister, we ought to know. I do not think that anyone would object to public funds being made available to house families in normal dwellings sufficient for their purpose. I know that the situation is not the same in all parts of the Metropolitan area, nor is it the same in every part of the country. For instance, seaside places vary very much as compared with the inland areas. This figure, however, seems to be high and if the right hon. Gentleman could reaffirm the main intention of the Bill, which is to help the normal family to acquire ownership of their own house, and that public funds are not intended to be used to run a business in such a house, we would be satisfied.
At present, we are not clear where is the line of demarcation between the one and the other. I do not think that the limit of £3,000 inside and £2,500 outside the Metropolitan Police District is that deadline limit as between the one and the other.

§ Mr. Albert Evans (Islington, South-West)
I do not wish to detain the Committee, since this is not a very important part of the Bill, but the Minister is raising the limit for the Metropolitan Police District and the City of London. The hon. Gentleman the Member for the Isle of Thanet (Mr. Rees-Davies) wishes the higher figure to be extended to places on the coast—

§ Mr. Rees-Davies
No, generally.

§ Mr. Evans
I see, he wishes that figure to be applied generally throughout the country.
The same point was made by his hon. Friend the Member for the City of Chester (Mr. Temple). I am doubtful about the upward tendency. We must be careful not to give people the idea that houses are worth more and more every day. We do not wish to encourage extravagantly high prices, particularly for this class of property, so we should be careful about raising the limit, especially in the Metropolitan Police District, because, despite all the claims made by the Minister, the houses in this area have a scarcity value.
There are not enough houses, there is considerable overcrowding, the housing problem is nowhere near solved and, because there is that scarcity value, we must be even more careful not to create the impression in the minds of the public that £3,000 is the current price which should be paid for old property. I am sure that the Minister has got my point, even if he does not agree with all my comments.

§ Mr. H. Brooke
I think that I have taken the point made by the hon. Gentleman the Member for Islington, South-West (Mr. A. Evans). The fact that some of my hon. Friends think that the Government have not gone far enough, and that some hon. Gentlemen opposite fear that the Government have gone too far, suggests that we have probably hit the mark in the middle. If we were to adopt the suggestion that £3,000 was a fair limit for the whole country, I would bet my bottom dollar that somebody would come along on the Report stage and say that if we fix £3,000 for the whole country we ought to establish for London the Rent Act ratio of four-to-three and put it at £4,000 for London.
My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) asked me to think further on this point between now and the Report stage. The Government have thought about this carefully since the Bill was published, and it would be misleading if I were to suggest that the matter might be open for further alterations later. I do not want to lead people to think that there are possibilities which might eventuate when, in fact, they will not. We have considered this carefully and we believe that this is the wisest course to follow and that it is right to have 590 this differentiation between Greater London and the rest of the country.
4.15 p.m.
With regard to the argument that a figure of £3,000 in London is opening the door to commercial and industrial purchases, perhaps the hon. Member for Acton (Mr. Sparks) would be good enough to look at the White Paper. One must bear in mind all the time the agreement reached with the Building Societies Association as to the manner in which this scheme will be worked. The hon. Gentleman will see that at every point there it is stated that the money will be advanced on houses for owner-occupation. There can be no question of houses being bought under this scheme for industrial or commercial purposes.
We should bear in mind that though this Clause is dealing specifically only with the advancing of public money on the pre-1919 houses it is apparent from the White Paper that the building societies are willing to extend 95 per cent. mortgages, subject to certain conditions and as far as their funds will allow, to the houses built between 1919 and 1940. There will not be Government money provided for that purpose, but if the Committee will consider the matter I think hon. Members will realise that this Amendment will have substantial effect and value in that respect in the Greater London area.
In fact, there are not very many houses built between the wars which one could buy in Greater London for less than £2,500, but there are considerable numbers between £2,500 and £3,000, and in that range we shall be giving a considerable advantage as a result of making this Amendment if it is taken in connection with the agreement.

§ Mr. Frederic Harris (Croydon, North-West)
May I ask the Minister a question? Taking the Croydon area as a whole, we would welcome this proposal, because if the limit were not raised to £3,000, a large proportion of our houses would not qualify. I put the point to my right hon. Friend that in confining anything to the Metropolitan Police District we have sometimes run into trouble in Croydon because, although the major part of greater Croydon comes within the 591 Metropolitan Police District, some part of it does not. Is there any additional definition under this Amendment of which house would qualify and which would not?

§ Mr. Brooke
If I say that in the Metropolitan Police District one always runs into trouble, I might be misinterpreted, but I shall be within the recollection of the Committee in saying that the Metropolitan Police District perimeter is not a wholly satisfactory boundary. Building has stretched across it, and the reason for keeping it is that it is extremely difficult to arrive at any other boundary. Whatever alterations one made one would be setting up fresh anomalies.
The Government looked at this point at the time of the Rent Bill. I remember that there was an Amendment moved then by one of my hon. Friends to suggest that in relation to his constituency the boundary might be altered and made apparently more rational. I had to resist it on the ground that it is impossible to draw a boundary round the built-up area of London that would be wholly satisfactory and that could be guaranteed to remain satisfactory.
In those circumstances, as everybody is accustomed to working with the Metropolitan Police District as a basis for various purposes, I suggest that it is better to try to put up with these anomalies rather than to create others.

§ Mr. Ede
I defined the Metropolitan Area in the Police Act, 1946, and I am surprised to hear the hon. Member for Croydon, North-West (Mr. F. Harris) say that greater Croydon, whatever that may be, stretches across the boundary. As far as I know, every parish which touches any part of Croydon is in the Metropolitan Police District.

§ Mr. F. Harris
I can assure the right hon. Gentleman that I was under the impression that this was not so.

§ The Chairman
The point does not arise here.

§ Miss Margaret Herbison (Lanarkshire, North)
There are one or two points that 592 I should like the Minister to make clear. Talking about this application being to pre-1919 houses on Second Reading, the right hon. Gentleman said: This was a clearly definable class. It was was also the class, as I explained earlier, in which the applicant at present finds greatest difficulty in getting a mortgage, because the building societies, with their present limited funds, not unnaturally tend to lend more freely on newer houses than on older houses, which may be a more doubtful risk."—[OFFICIAL REPORT, 15th December, 1958; Vol. 597, c. 792.] The Secretary of State for Scotland, when he intervened, pointed out that out of 1,600,000 houses in Scotland only 300,000 were owner-occupied, and he said that he hoped that as a result of the provisions in the Bill we could increase that number. Many of us on this side of the Committee are a little worried about the matter. On the Government Front Bench is the Joint Under-Secretary of State for Scotland, who represents a Glasgow constituency, knows Glasgow very well and also knows the type of house which is vacant in Glasgow at this time, when so many people are desperately in need of houses. When the Bill becomes an Act, will that kind of house be sold with the help of Government funds? We think it wrong that Government funds should be used to help provide mortgages for houses which, we feel, will only be a continuing burden on people.
We were told by the Minister on Second Reading that the building societies would be examining every application on its merits. What is involved in that? Is it merely the creditworthiness of the applicant, or will there be a severe examination of the house, which might ensure that these houses are not helped by public money to pass from landlords who have kept them vacant for a very long time, when people were desperately in need of houses, to become continuing burdens on the people who get them?
On Second Reading, my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) asked the Minister what the effect would be on decontrolled houses. He asked whether, if there was still a tenant in the house and a mortgage was provided and the house changed hands, because the house was decontrolled, the tenant could be evicted. I should like to have some assurance on that subject, because no assurance has yet been given. 593 We were merely told that this was a Bill to help people buy houses. We ought to have some assurance, particularly because the housing position in Scotland is so much worse than in the rest of the United Kingdom.
I want also to refer to a subject which was debated at some length yesterday, the question of the creditworthiness of women and women almost always being asked for a male guarantor. Have we any evidence that this is happening in Scotland? When the Minister of Housing and Local Government made his inquiries, were any inquiries made by the Secretary of State for Scotland?

§ Mr. Graham Page (Crosby)
I wish to return briefly to the question of the interest payable by the building societies on the Treasury loans under the Clause. In subsection (1) it is provided that interest on the loans from the Treasury shall be payable at such rates and at such times, as the Minister may with the approval of the Treasury direct. We are told in the scheme agreed by the Building Societies Association that the rate of interest charged on the Exchequer loans will be related to the rate of interest recommended by the Association for mortgages for private houses for owner-occupation and will be½ per cent. lower than this rate.
I think that to include it in regulations is the right way to do it; it will be flexible and the rate can be adjusted from time to time. The Committee was correct in rejecting an Amendment yesterday which would have fixed the rate in the Act. I would have hoped that the Opposition would have allowed my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) to withdraw the Amendment, so that we might have returned to the subject at a later stage of the Bill, when the Minister might have been able to meet some of the important points raised on this subject.

§ Mr. Mitchison
The Amendment would have allowed the rate to be reduced below that recommended by the Building Societies Association. It would not have fixed it.

§ Mr. Page
It would have bound the Treasury to a certain rate in the Measure rather than leaving it flexible under regulations. I remember the hon. and 594 learned Member for Kettering (Mr. Mitchison) saying yesterday that the Opposition intended to vote on the question of principle. If he had been serious over that he might have allowed my hon. Friend to withdraw the Amendment, so that the principle could be considered at a later stage of the Bill.
Nevertheless, I hope that the Minister will have more comforting words to say to us on this subject today, because there is very real concern about the interest payable under mortgages to owner-occupiers. Over the past year or so the interest rates have been fluctuating and the attention of people has been drawn to the rate of interest charged and considerable concern has been shown by borrowers who have had higher rates of interest imposed on them. The building societies have had to charge the higher rates of interest in order to get money into the "kitty."
However, with the greatest respect to the Building Societies Association, if a society finds that it can lend at a lower interest rate than that recommended by the Association it should not for that reason be excluded from this scheme, as it would be under the agreement with the Association as it now stands; and I presume that the regulations to be made under the Clause will be in accordance with the agreement.
4.30 p.m.
A minimum would have to be fixed. One could not allow a society to lend to borrowers at 1 per cent. and then demand that the Treasury lend it money at½ per cent. However, I should have thought that some sort of minimum could have been fixed by some provision that the amount loaned to buyers of pre-1919 houses should be at a rate of interest not less than that chargeable to other borrowers, so as to prevent a building society charging a low rate of interest on pre-1919 houses and then claiming from the Treasury a loan at½ per cent, less than that low rate.
I should have thought that some provision could be made to meet—and we can use the Halifax Building Society as an example—building societies which find themselves able to lend at lower rates of interest than the Building Societies Association recommends and which want to come into the scheme. I hope that they will not be prevented from coming 595 into the scheme because of their being efficient building societies and able to lend at low rates of interest. I trust that my right hon. Friend will be able to say something about that matter.

§ Mr. Maurice Macmillan (Halifax)
I apologise for taking up even more time on the subject of rates of interest, but I do so because I share the view of my hon. Friend the Member for Crosby (Mr. Page) about the importance of the principle involved.
We all accept the practical difficulties of altering arrangements set out in the White Paper, since this is an agreed scheme. I am not very sorry that the Clause must go forward without reference to interest rates in the Bill itself, but I accept with great reluctance that it should do so with so little assurance from the Minister. I must ask him again whether he cannot, at his leisure, consider with the building societies, even after adequate experience of working the scheme, whether a method could not be discovered not only of not discouraging societies from lowering their mortgage rates, but even encouraging them to do so.
Appendix I of the White Paper says that all building societies participating in the scheme will be charged the same rates. Since it is an agreed scheme, it will be appreciated that it will take some time and some new evidence to enable the Building Societies Association to change its mind and agree to another plan. However, in the White Paper there is ample provision far the mechanics of amending the scheme.
I hope that my right hon. Friend will not entirely preclude a system of different rates of interest to different societies when he applies subsection (1). Although the societies are competing with each other, they are not competing in any way which is affected by rates of interest. If the average costs are 12s. per cent. and they are getting 10s. per cent., whatever rates of interest are provided, the differential remains the same and they are operating this part of the scheme at a loss, any benefit drawn from the scheme lying in the release of other funds for other business. The extent to which other funds are released is limited by subsection (2) and the amount so released is not affected by rates of interest.
It is true that that might lead to unequal benefit for mortgagees, but I 596 do not see why that is to be so greatly deplored. It gives potential home-buyers a greater freedom of choice, a freedom of choice where they now have very little. It is an active encouragement to building societies to lower their interest rates. However distant the reconsideration of the method of applying the Clause, I hope that my right hon. Friend will not entirely close his mind to that reconsideration.

§ Mr. Mitchison
We did not divide on the Second Reading of the Bill, and I shall not advise my hon. Friends to divide on this Question. On Second Reading, I said something about the position of local authorities in relation to building societies. I still adhere to the opinions I then expressed. I regret that in the one case local authorities are dependent on the rates of interest charged by the Government and, in loans under the Housing Acts, on matters approved by the Minister, while the dictating power in this case appears to be the Council of the Building Societies Association.
I said on Second Reading that the difference of ½ per cent. between the rate charged by the Government to the building societies and the rate at which the building societies undertake advances is a large margin in relation to the amount allowed to local authorities. It may well be that local authorities should be allowed a little more instead of the building societies being permitted a little less, but I shall not deal with that now.
It is a fair comment on the Clause as a whole that these arrangements represent certain advantages to the building societies which are not open to local authorities when they try do exactly the same thing. That is especially true of smaller local authorities, who very often have some difficulty and encounter obstacles in raising the money they wish to use for this purpose. That is one of the reasons why not so much use has been made of the Small Dwellings Acquisition Acts and, to a lesser extent, similar provisions under the Housing Acts, as some of us would have wished.
I am rather at a loss to know the guiding principle of two hon. Members opposite, the hon. Member for Halifax (Mr. Maurice Macmillan) and the hon. Member for Crosby (Mr. Page). Is it the principle which led the former to move an Amendment, or the principle which led him to ask leave to withdraw 597 it? That is an interesting philosophical speculation which might be left to another occasion, but hon. Members on this side regard building societies rates and the rates which are necessarily charged on advances on houses, even by local authorities, as unduly high. We regard that as one of the unfortunate consequences of the credit squeeze period of the Government's financial policy, and we have not got out of the credit squeeze yet. Many people suffered by having to borrow at very high rates during that period.
I do not know what is happening to the Bank Rate today, or what will happen next Thursday, or the Thursday after that, and it is not my business to know or to speculate about it. I simply say that from the point of view of the person desiring to borrow from a building society or local authority, one nigger in the woodpile is the question of the deposit, with which we are not now concerned, and another is the rate of interest which he has to pay. The Government's financial policy is directly responsible for rates being as high as they are. They were much lower when we were in power.

§ Mr. Sparks
The only suggestion that the right hon. Gentleman has made in respect of the rate of interest for public money is that it should be½ per cent. below what the Building Societies Association decides from time to time. Why has he fixed that rate? It looks very much as though the Treasury will make a profit on the transaction. From where is it to raise this public money? It will raise it from the market. The Government do not pay 5½per cent. for the money it requires; at the moment, the Bank Rate is 4 per cent. I cannot be precise about the rate of interest at which the Government borrow the money they require, but it is certainly not 5½ per cent.; it is much nearer 4 per cent. The Treasury will borrow this money, on the one hand, at a rate of about 4 per cent. and lend it to the building societies at a rate of 5½per cent.
That ought not to be the policy of the Government. Surely this is a social problem. It ought not to be regarded as a financial transaction, and as a means of making a profit. The Government could well have made this money available to the building societies at a very small 598 fraction of 1 per cent. above the cost of their acquiring it. That would have enabled the public money to have been advanced to the building societies at a rate much lower than 5½ per cent.
That would have been some incentive to the Building Societies Association to reduce the minimum rate of interest to be charged on moneys advanced for house purchase, because it would have been receiving the advantage of an investment income of about £100 million, at a rate of interest of 4¼ per cent. or 4½ per cent., and that could have been offset against the higher rate that it would have had to pay on other forms of investment. There would be no reason why the Association should not fix its rate of interest to borrowers upon the basis of the difference between the rate of interest it had to pay to the Government and to other investors, and to have given the borrowers the advantage of Government assistance.
There is no advantage to the house purchaser in this proposal. The right hon. Gentleman has not explained what profit the Treasury will make out of the advances made to the building societies. I am sure that it will make a profit, by charging the building societies a higher rate of interest than what it has to pay in the money market. Therefore, we cannot be very proud of this Clause.
Hon. Members on this side of the Committee have always regarded housing as a social problem, and the problem with which we are now dealing is a housing problem. Most of those who live in pre-1919 and older houses are not wealthy people but those in the lower income groups, simply because the older houses are usually let at lower rents and their values are lower. They ought to receive the advantage of as low a rate of interest as possible on money advanced to them to buy their own houses.
I cannot see that there is a great deal in the Clause for the right hon. Gentleman to praise, because it is purely and simply a financial transaction which will bring a profit to the Treasury. If that is not so, I hope that the right hon. Gentleman will tell us. Perhaps he will tell us at what rate the Government will borrow this money from the market to advance it to the building societies. This is a valid point. If the Treasury is to make a profit out of the transaction the main purposes of the Bill will not be achieved.

§ The Joint Under-Secretary of State for Scotland (Mr. J. Nixon Browne)
I hope that the hon. and learned Member for Kettering (Mr. Mitchison) will excuse me if I do not go further into the question of local authorities versus building societies, or discuss the merits of the credit squeeze policy in terms of the value of sterling.
The hon. Member for Acton (Mr. Sparks) asked me a question. Since the Government are lending for twenty years they should match that by twenty years' borrowing, and if they go into the market for twenty years they will be borrowing at about 5½ per cent. The hon. Member's talk of a rate of 4 per cent. would refer to only relatively short-term loans.

§ Mr. Sparks
It is not usual for money to be raised by the Treasury on the basis of a 20-year loan.

§ Mr. Browne
I do not think that there is a "yes" or "no" answer, but I can assure the hon. Member that the taxpayer will make little or no profit. Even so, I cannot see anything wrong in the taxpayer making a profit out of a transaction.
My hon. Friend the Member for Crosby (Mr. Page) also asked me a question. He will find the answer in the White Paper, at the bottom of Page 5, in Appendix I, which says: Provision will be made for the scheme to be reviewed at three months' notice at the request of either the Minister or the Building Societies Association… My hon. Friend asked my right hon. Friend to say some comforting words. I have consulted my right hon. Friend, and he tells me that he regrets that he has nothing to add to the comforting words which he has already uttered. My hon. Friend also raised the question of the societies lending at lower rates than those of the Association. He must be mistaken, because they are not excluded from the scheme because they choose to lend at lower rates.

§ Mr. Page
I said that they were being excluded in effect.

§ Mr. Browne
This is a question of commercial wisdom and competition. It is for each society to decide what its policy shall be.
My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) spoke on the same point, and suggested that it might be a good idea not to have the 600 same Treasury rates in all cases. This is a most important principle, and one on which the Government simply could not give way. If the taxpayer gave more favourable help to one society than another he would be placed in an absolutely impossible position. We can disagree as to what the rates should be, but I am convinced that we have found the best method of fixing the rate.

§ Mr. A. Evans
The hon. Member has said that the Treasury could not give more favourable rates to one society than to another, but that would not be the position, because the society would have to lend money with ½ per cent. added to the Treasury rate. Will he explain to the Committee the practical administrative difficulties of varying the rate charged to different societies according to the rates that they charge the borrowers?

§ Mr. Browne
We could not possibly do that. We do not want taxpayer assistance in a competitive market such as this. I am convinced that the Government's policy provides the only possible way.
The hon. Lady the Member for Lanarkshire, North (Miss Herbison) asked three questions. She asked, first, about vacant houses. The hon. Lady was worried about what would happen about the sort of house which she and I know exists in Scotland. This is simply a commercial proposition from the point of view of the building societies and I do not think we can visualise the really bad type of house, which we know exists in Scotland, being the subject of a loan from a building society. Building societies must bear in mind the quality of the building upon which a loan is raised as well as the security represented by the borrower. I am sure that we should not find building societies allowing people to purchase that type of house; or, indeed, people who can afford to go to building societies attempting to buy that type of house.
There are many properties, which may properly be referred to as tenement properties, which are in quite good condition and the Bill will help many people to purchase perfectly good houses

§ Miss Herbison
The Minister says that this will be a commercial transaction. But because the position in Glasgow is so 601 serious, may I ask whether the Government have any power to step in when public money is being used to purchase the kind of house with which he and I are familiar?

§ Mr. Browne
The answer is that under the Bill the Government have no power. But, of course, the scheme may be looked at from time to time, as I said earlier. We must wait to see what happens.
The hon. Lady asked whether assistance could be given under the Bill in the case of a house in which there was a tenant. The building society scheme is restricted to owner-occupiers, so the answer is, "No". Thirdly, the hon. Lady asked about the making of loans to ladies, or asking ladies to get loans guaranteed. We have had no complaints about this matter from Scotland and we have made no investigations.

§ Miss Herbison
The Minister has said that help under the Bill is for owner-occupiers. I am aware of that. I put a different question to the hon. Gentleman. A person may own a number of these pre-1919 houses and wish to sell one or more. There is already a tenant in a house which the owner proposes to sell. The new owner of the house may wish to become the owner-occupier and, the house being decontrolled, the person already in occupation as a tenant may find himself out in the street. Is there any protection provided against that sort of thing?

§ Mr. Browne
I do not wish to give a direct answer to that question now. I should like to examine the matter. The intention is that the scheme shall apply only to owner-occupiers. I should like notice of the hon. Lady's question.

§ Miss Herbison
But the Government have had notice since 5th December, when my hon. Friend the hon. Member for Dunbartonshire, East (Mr. Bence) raised this question. It is more than a month ago.

§ Mr. Browne
If the hon. Lady is asking whether a tenant can buy a house, the answer is that a tenant can buy.

§ Miss Herbison
It seems that the Minister is having difficulty in understanding me. I have tried to put the matter as simply as I can. Perhaps the hon. Gentleman had better listen, so that he will know what I am asking him about.
602 Suppose there is a house occupied by a tenant and not by an owner-occupier. Under previous Acts passed by this Government, the house has become decontrolled and the owner wishes to sell it. It is bought by someone who wishes to be the owner-occupier, and, because the house is decontrolled, he can evict the person who is living in it. Is there any protection at all for the tenant who is evicted?

§ Mr. Browne
That would depend entirely on the lease which the occupier has.

§ Mr. Sparks
The hon. Gentleman did not answer the point put to him about the rate at which the Government borrow money. He tried to infer that if the Government borrowed in the open market, they would have to pay the same for the money as they are now to charge the building societies. Will the hon. Gentleman explain why it is that the Government are inviting money from investors in National Savings Certificates and receiving quite a substantial amount each year? Over the whole period of seven years the Government paid, on average, interest at 4½ per cent. If that money is used for this purpose at a rate of 5½ per cent., the Treasury is making a profit of 1¼ per cent.

§ Mr. H. Brooke
Since an hon. Member representing an English constituency has raised this matter, may I say that the purpose of the Government, broadly speaking, is that the Exchequer shall neither gain nor lose. It is true that Savings certificates are issued at an apparent rate of, let us say, 4½ per cent. But they are free of Income Tax, and, grossed up, the figure would be about 7¼ per cent.
The only fair comparison is between the rate at which the Exchequer will be lending in present circumstances and the rate at which the Exchequer would be borrowing for a similar period, which is twenty years. With the recommended rate of the Building Societies Association at 6 per cent., the Exchequer would be lending at 5½ per cent. If the hon. Member will refer to his copy of the Financial Times, he will see that Government loans for a 20-year maturity are bought on a 5½ per cent. basis at present.

§ Mr. G. W. Reynolds (Islington, North)
The Minister said that this is an imaginative Bill which would enable a number 603 of people to purchase houses of this kind. In this Clause we are dealing with £100 million which, as I see it, will probably provide mortgages for between 60,000 and 70,000 houses. So that all we are discussing is how to help with mortgages for 60,000 to 70,000 houses. There are between 6 million and 7 million houses which were built before 1919, so we are discussing a very small proportion of the total.
We have also been told that the building societies are at present advancing about £40 million to £50 million on this type of property each year. If they continue advances at the same level, and take all the money from the Exchequer, we are, in the Bill, providing the money for the same number of purchases per year to continue for the short period of two or three years. If the Minister hopes that this will enable more people to find accommodation, it should be remembered that we are providing money for the scheme for only fifteen or sixteen months. That is the magnitude of what is being provided under the provisions of the Bill. It amounts to assistance for 60,000 to 70,000 house purchasers over a period of about fifteen months. Yet to do that we have to go through all this rigmarole of trustee status and the rest.

§ Mr. H. Brooke
The hon. Member could hardly be more wrong. He has fallen into the opposite error to that into which one of his hon. Friends fell yesterday. I think that it was the hon. Member for Acton (Mr. Sparks) who spoke as though the £100 million was to be spent per annum and compared it directly with the £400 million of advances now made by the building societies.
The hon. Member for Islington, North (Mr. Reynolds) has spoken as if the £100 million was an all-time limit. I made clear earlier that the Government thought there ought to be a financial ceiling set in the Bill—not with the idea that it should be a permanent ceiling for all time, but because this Bill is a novel Measure. It seemed desirable to the Government that, before the £100 million was used up, they should come back to Parliament to ask for the ceiling to be raised. This would provide an opportunity for a review of the working of the Bill after eighteen months, or whatever the period might be.
604 5.0 p.m.
I can say, in the name of the Government, that there is no thought in their minds of cutting this off after the £100 million is spent, unless Parliament at that time decides—

§ Mr. Mitchison
The right hon. Gentleman will not be in that position.

§ Mr. Brooke
I may not be in the same Ministerial position, but I shall certainly be on this side of the House. I speak for the Government of the day, which will also be the Government of that day, when I say that the £100 million is in the Bill solely to ensure that Parliament keeps control of public money.