HC Deb 02 February 1960 vol 616 cc782-4
25 Mr. Frank Allaun

asked the Chancellor of the Exchequer (1) in view of the recent 1 per cent. increase in the Bank Rate, if he will give an assurance that he will not authorise a further rise in the interest on municipal housing loans;

(2) what steps he will take to ensure that local authorities do not have to bear a further increase in interest charges on housing loans following the rise in the Bank Rate;

(3) if, following the recent rise in the Bank Rate, he will reconsider the need to provide cheap housing loans, and so prevent further increases in council house rents and further cuts in building programmes.

Mr. Amory

As I explained in my Reply on 17th November last to the hon. Member for Bristol, Central (Mr. Awbery), I do not consider that it would be right to take steps to insulate local authorities from the effects of prevailing levels of interest rates.

Mr. Allaun

Is the Chancellor aware that an extra 1 per cent. on the housing loan would add 8s. 6d. a week for sixty years to the interest charges on a typical multi-storey flat costing £2,390, which have already been increased by 21s. 3d. a week since 1951? Does the right hon. Gentleman realise the effect on families and young couples on the housing list, and cannot he see the cut in the housing programme which would certainly result? Will he reconsider the question?

Mr. Amory

To keep this matter in perspective, may I say that the increase in the rate of lending by the Public Works Loan Board, made following the recent increase in the Bank Rate in the section of the longest-term borrowing, which covers most of the borrowing by local authorities, has been not 1 per cent. but ⅓ per cent.

Mr. Mitchison

In view of the difficulties of local authorities in this matter, can the right hon. Gentleman say how the rates of interest charged to them compare with the rates charged to Colvilles, B.M.C. and other people who borrow public funds?

Mr. Amory

What I can say is that in these cases the Government fix the rate of interest as near as they can to the comparable rate of interest current in the market.

Mr. Mitchison

Why cannot the right hon. Gentleman say whether it is higher or lower than the rate charged to Colvilles and B.M.C.?

Mr. Amory

These rates were fixed to be comparable with the rates in the market at the time the loans were made, and that will continue to be the policy. In some cases the rates may be higher and in some cases lower. They were comparable with the current rates in the market at the time the loans were made.

Miss Lee

Is the right hon. Gentleman aware that the combination of these higher rates with a high cost of living has put some local authorities in the position that if they pay current prices for land and loans and other things, it is impossible for them to rent the houses at a price which our people can afford?

Mr. Amory

I am sure that the best service we can render to the constituents of the hon. Lady and of other hon. Members is to do our utmost to make sure that we keep the economy in balance.

Mr. H. Wilson

Since it was officially said that one reason for putting up the Bank Rate was the need to counter speculation on the Stock Exchange, is it because of the failure of the Government to counter that speculation that local authorities have to pay more for their essential borrowing and that rents are rising to a level beyond the ability of some families to pay—as the Minister of Housing knows from cases recently referred to him from my constituency and from other constituencies?

Mr. Amory

I have already given the reasons for the recent increase in the Bank Rate.

Mr. Jay

Will the Chancellor say whether he has made a corresponding increase in the rate at which the Government are lending to building societies, which was lower than that for the Public Works Loan Board?

Mr. Amory

Perhaps the right hon. Gentleman would care to put down a Question on that subject.