§ (1) In this section the expression "letting advance" means an advance made by a building society or the security of freehold or leasehold property which consists wholly or mainly of dwelling-houses or flats which it is proposed to construct, or which are in course of construction or have recently been constructed, being dwelling-houses or flats which the Chief Registrar is satisfied are or will be made available for renting by tenants and as regards which the conditions stated in the next following subsection are satisfied.
§ (2) (a) The said conditions are—
- (i) that any such dwelling-houses or flats shall be certified buildings; or
- (ii) that any such dwelling-houses or flats have recently been, are being or will be constructed by or for a housing association as defined in section one hundred and eighty-nine of the Housing Act, 1957.
§ (b) subsection (1) of section five of the Building Societies Act, 1939, shall apply for the purposes of this subsection as it applies for the purposes of that section and the expression "certified buildings" shall have a corresponding meaning;
§ (3) (a) A building society shall so conduct its business as to secure that in any financial year beginning after the commencement of this Act letting advances shall constitute at least the appropriate fraction of all advances (including special advances) made by the society during the year;
§ (b) for the purposes of this subsection the appropriate fraction in the first such year shall be one-tenth, in the second such year one-fifth and in the third and subsequent years one quarter or such other fraction as the Chief Registrar may from time to time by an order contained in a statutory instrument prescribe generally or in relation to one or more building societies:
§ Provided that an order of general application shall not be made under this subsection unless a draft of the order has been approved by a resolution of each House of Parliament.
§ (4) The Chief Registrar may make regulations to ensure compliance with the requirements of this section and such regulations may apply subsection (9) of section one of this Act or any lesser penalties than those provided in that subsection to those requirements as that subsection applies to the requirements of the said section one.—[Mr. Mitchison.]
§ Brought up, and read the First time.932
§ Mr. G. R. Mitchison (Kettering)
I beg to move, That the Clause be read a Second time.
We regard this as a new Clause of some importance. The proposed new Clause should be considered in conjunction with the first two Clauses of the Bill which deal with restrictions on certain types of advances and exemptions from restrictions on special advances. The exemptions relate to dwelling houses or flats which have recently been built, are being built, or are to be built and which are to be used for letting. The Chief Registrar has to be satisfied under Clause 2 that they will be so used.
We have adopted the language of the Clause in the Bill. A letting advance means an advance made on the security of houses or flats of that type. There are certain conditions. Not all such dwelling houses or flats are intended to be covered by the Clause. It is intended to bite on dwelling houses or flats of two kinds—first, the certified buildings, relating to their standard of construction which I will deal with later, or, alternatively, to dwelling houses or flats, built for a housing association or built by the housing association itself. When I say that the Clause "bites", I mean that the object of it is to ensure that some parts of any building society advances in a year shall be advances on that type of property—houses to let, limited in the way I have described.
I have mentioned certified buildings—buildings of a certain standard of construction—and there is provision in connection with what are called continuing arrangements in Section 5 of the Building Societies Act, 1939, about certified buildings. Certified buildings means buildings of a standard of construction which conforms with the requirements of some body set up for the purpose of keeping up or improving the standards of buildings and issuing certificates to that end. The body has to be approved by the Minister of Housing and Local Government. I believe that there are two such bodies in existence now. No doubt, the Parliamentary Secretary will tell me if I am wrong in thinking that, but they certainly have existed and I believe they still exist.
That provision is simply to ensure that these advances shall not be made in respect of what I call shoddy buildings. 933 There are still some shoddy buildings going up in the country, as anyone who walks around can see. They are not what I have in mind here. There are also perfectly good buildings going up, and we hope that they are the majority. It is the traditional business of building societies to lend for owner occupation. Therefore, when we seek to see that some of their loans are diverted to this purpose we do not ask for any large fraction to be diverted to that end.
What we have put in subsection (3, b) of the Clause is one-tenth of their advances in the first year, one-fifth in the second, and after that one-quarter or such other fraction—which, of course, means more or less—as the Chief Registrar may prescribe from time to time. The order, if it is of general application other than as regards a particular society, is subject to affirmative procedure, or otherwise to negative procedure. In the new Clause the Chief Registrar is given power to make regulations and to apply some of the machinery, including the penalty machinery, of Clause 1, which is the Clause which restricts special advances.
Having explained the new Clause, I want to make one or two general remarks. I hope that the Government may, even now, see their way to accept the Clause. I say even now "because, although the Clause itself was not moved or discussed in Committee, some rather similar points arose in connection with Amendments and I did not regard the Government's attitude as too encouraging. I do not stand committed by the statement of my hon. Friend the Member for. Widnes (Mr. MacColl) that he will preserve a good temper throughout this morning. If the Government do not accept this proposal, my temper will be horrid.
There is the strongest moral and social case for some provision of this kind. On Monday we had a debate in the House about the use and value of land, and one of the points raised concerned rising prices of land. Another matter which affects this problem is rising rates of interest on advances made by building societies and others. The long and short of it is that the number of people in the community who cannot afford to buy a house, even with the help of a building society or a local authority, is in present 934 circumstances tending to increase. In addition, it is the case, as it has been the case for very many years, that there is a considerable movement of people from one part of the country to another, for employment and private reasons. A man may marry a girl in a place to which he has been. There are all sorts of perfectly good reasons for moving. On that account there is a great deal to be said for not being involved, especially when one is young, in the commitments of buying a house.
We on this side have done a very great deal in the interests of owner-occupiers. I think that we were responsible for the arrangements about improvements in their interest, and so on. We are, and we have always said that we are, anxious that they should have a fair deal and a chance to buy a house, and we have done our best to live up to that. The Bill and other legislation should be directed to that end. But we do not wish to exclude—and I trust that the party opposite does not wish to exclude—people who want to rent houses. I say this with some diffidence. After all, it is not so long since, if one wanted to rent a house, one kind which one could rent was a local authority house. The supply of local authority houses has been getting smaller and smaller. Whatever has happened to the total number of houses, the proportion of council houses has diminished. That has happened for two or three perfectly obvious reasons.
§ Mr. John Barter (Ealing, North)
I wonder whether the hon. and learned Gentleman would amplify his statement that the supply of local authority houses is getting smaller.
§ Mr. Mitchison
If the hon. Gentleman will look at the figures in the Digest of Statistics he will find that that is so and that the number has been falling.
§ Mr. Mitchison
I am talking about building council houses. The supply has been getting smaller and smaller. Fewer have been built. I trust that I have made myself clear.
§ Mr. Barter
The hon. and learned Gentleman is referring to the building of council houses and not the total supply, which is, in fact, increasing.
§ Mr. Mitchison
I hope that I did not mislead the hon. Gentleman. I did not intend to do so. I did not suggest that, even under this Government, the building of council houses had entirely stopped, that some of them were falling into decay and that no more were being built to replace them. What I said, and what I hope the majority of hon. Members understood me to say, was that council house building was decreasing, at any rate until quite recently. I am sure that the Parliamentary Secretary will produce some convincing figures for this year. That always happens. But when we come to the end of the year we find that the figures are down.
The broad point is that council house building has slowed down for two reasons. The first is that councils have to borrow and cannot build without borrowing. Councils are not bodies which have really good deals in land speculation or on the Stock Exchange and can pay for building out of their own pockets. They have to do more and more borrowing. Secondly, the general need housing subsidy has been abolished for some years. The Government, who used to recognise its imperative necessity, no longer think that it is required. These two measures and others have had their effect.
Next, we must consider the position concerning houses being built. I need say no more than this. At present the majority of them are being built for sale, because that is most convenient for many people who are engaged in developing and house building. I do not say that no houses are being built for letting. If that were the case, then a proposal such as the one which we are putting forward would not be very helpful.
Clause 2 as it stands, I am glad to say, recognises that there is an advantage in giving special encouragement to loans on houses to let. Accordingly, it exempts them from the restrictions on the special advances of building societies. We on this side welcome this Clause. We welcomed it on Second Reading, and we still welcome it, as a recognition of two things. First, that the Government realise that, whatever may be said about the merits of a property-owning democracy, if one 936 wants to own property in this democracy one has to pay for it. But there are some people who are not able to pay for it, and they have to rent houses.
The Government recognised that, in the framework of building societies and their advances, there was a case for giving special encouragement to building societies to make these advances. It is true that most building societies make some advances on leasehold property, but not to a large extent. They grew up traditionally as bodies which assisted people to build their own houses.
The type of temporary building society which was exhausted when the houses contemplated in the original arrangement had been built has, on the whole, disappeared or survives only in Brierley Hill. But the modern building society makes some advances for letting purposes. This is intended to encourage them to leave what has hitherto been their traditional sphere and to operate on the broad social grounds which I have indicated.
I appreciate that one of the Conservative Party shibboleths at present is the owner-occupier. We have done as much for him as the party opposite, but we have not elevated him to a shibboleth. The party opposite has. I hope that hon. Members opposite will not stand by that today and say that there is no need for houses to let. I do not believe that they will. They will probably say, "This is not the right way to do it", or "It is too complicated", or "This presents administrative difficulties", or something of that sort.
I beg the members of the Government who are present to have a little courage and to recognise that, in a country with a population which shifts a great deal and which is likely to shift more as there are developments in the distribution of population and of employment, they must provide more than they are providing at present. In particular, they must make provision for the young who ought not to have the commitments of buying a house forced on them by their being unable to get any other house.
I ask the Government to remember that they are responsible for decontrolling a large number of houses and for 937 allowing the rents of a large number of other houses to be raised. Consequently, it has become more difficult for young people to find houses to let at reasonable prices. I am not going back into all the debates about the Rent Act, but we have seen some of the consequences of it. We know perfectly well that in London and the large towns it is extraordinarily difficult to get a house to rent. In most of the large towns it is beginning to verge on the impossible for anyone to get a house to rent who cannot afford to buy a house or is not receiving a sufficiently big income to allow him to pay fancy prices.
I hope, therefore, that in the interests of young people, in the interests of those who move in the community and to show that the Conservative Party is not always tightly bound by shibboleths, the Government will accept the Clause.
§ Mr. Donald Chapman (Birmingham, Northfield)
The House will be aware that on Second Reading. I made a few remarks about housing standards and the need to improve them. It is for that reason that I rise briefly to support the new Clause of my hon. and learned Friend the Member for Kettering (Mr. Mitchison). My hon. and learned Friend has found a way of trying to jog building societies into taking a definite, positive interest in houses of good standard. Whether it is done by way of the new Clause or by my own exhortation in this Chamber, I hope that somebody will have the effect which we all seek.
I shall not repeat what I said on Second Reading, but I will say this much. From all the correspondence and comment ever since I made those remarks about the need to improve standards, I am convinced that I was justified in making them. I am convinced that, given the housing boom which ought to go on for the next couple of decades—I see no reason why it should not continue so long as we do not have too many credit squeezes en route—unless standards are improved the generation twenty years hence will look back with great regret on much of the housing building of today. As my hon. and learned Friend said, we are using up scarce land on houses which we shall be sorry about in twenty years' time. It is for that reason, trying to take the long view, that my hon. and learned Friend is justified in trying 938 to rope in building societies actively to do something about the problem.
I do not want to be taken as saying that all houses built today are rubbish. As my hon. and learned Friend said, we are talking about a minority of houses. To indicate, however, that we are not voices crying in the wilderness, I want to quote what the President of the National Federation of Building Trades Employers has been saying this week, only two days ago. Speaking at the annual conference of the employers, he said:There has been a noticeable increase in shoddy building.He went on to say:We have seen all the evidence of it in brickwork, plasterwork, painting and joinery…Most of it is perpetrated by firms and organisations which have no real roots in the building industry…They are concerned only with getting by with the lowest admissible standards of workmanship, with doing the job in the minimum time and with making the maximum profit, regardless of the plight in which the client or building owner may subsequently be left.In other words, we on this side of the House are not talking a lot of nonsense. This is a matter which is being looked at actively and with great regard by the building industry itself.
This matter has been taken up in my own area of Birmingham. I noticed that a lady wrote to the local Press to say that within twelve months of buying a house, the tiles fell off the bathroom wall. She asked what would be done about it. This is a problem which I shall not elaborate. All I say is that the Birmingham newspapers then took it up and said that the question of structural standards, which my hon. and learned Friend is covering by his new Clause, and value for money are of growing importance and that if the building industry as a whole cannot give better guarantees, there will have to be Government action. That is the local Conservative Birmingham Mail saying to the Government exactly what we say in the Clause—that at some point, unless there is consistent improvement in these matters, there should be Government action to help them along.
The Press finally points out that whereas a young couple paid one-seventh or one-eighth of their income for house room ten or twenty years ago, they 939 now pay one-fifth of their income and that in these circumstances they need the utmost protection against jerrybuilders. That is what we are saying in the Clause.
The time has come to deal with what is, admittedly, only a minority of builders in any way we can in order to encourage a rise in building standards, so that in a couple of decades' time we shall not be ashamed of what we have built in 1960 and not be ashamed that we have used up scarce land on this kind of building. That is what my hon. and learned Friend is trying to cover in his now Clause. For that reason, I support it heartily.
§ Mr. Charles Royle (Salford, West)
I am in complete agreement with the powerful arguments put forward by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) concerning standards of building, but I support the new Clause of my hon. and learned Friend the Member for Kettering (Mr. Mitchison) from a rather different angle: that is, from my great anxiety that there should be more houses available for rent.
Obviously, these questions arise from one's experience in a constituency such as my own, where the local authority is very limited in the extent to which it can build houses and flats because of the Government's subsidy and financial policy, which results in such high rates of interest. The outcome is that in the City of Salford the council can build nothing except for slum clearance, because it cannot afford to approach the task in any other way.
As a result, the people who, because of sickness or overcrowding or reasons of that kind, are in need of rehousing cannot possibly get a house. When, for example, people come to my "surgery" and complain that they have been on the housing list so long, I suggest to them that their wages might be higher than they used to be and I ask whether they could not possibly undertake the responsibility of buying a house through a building society. Invariably, the answer is that the responsibility is too great for them to undertake. Their great desperation is for a house that they can rent.
What my hon. and learned Friend's new Clause tries to do is to make it possible for organisations like housing associations to have money made available to them from building societies 940 so that they can enter into this kind of work alongside, for example, the local authority. It is because of my knowledge, extending over fifteen years, of the problems of the masses of the people in my constituency in regard to housing that I enthusiastically support my hon. and learned Friend's new Clause, because it would be a gesture and a contribution in dealing with the problem. I hope that my hon. and learned Friend will press the new Clause.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)
Apart from the few political comments made by the hon. and learned Member for Kettering (Mr. Mitchison), I do not disagree with a single word he said or with the support given by his hon. Friends. Of course, the Government want more houses to rent. That is the very object, as the hon. and learned Member himself said, of Clause 2 of the Bill and the discretion given in that Clause to the Chief Registrar. It may be said that we cannot have too much of a good thing. Indeed, we would like to see a lot more houses to rent.
The reason I am not able to advise the House to accept the Clause, however, is simply because the hon. and learned Gentleman is seeking to require building societies to lend a proportion of their money for this purpose. As he himself said—I noted his words—and as his hon. Friend said, what we want to do is to encourage building societies to do this. We quite agree. It is proper for the Government to exhort, to encourage, even to induce, as we have done by the House Purchase and Housing Act, building societies to lend money on older property; but it is a quite different thing to require them, even for small people, to lend a proportion of their money for any particular purpose.
§ Mr. C. Royle
I wonder how the hon. Gentleman would suggest that the encouragement should take place otherwise than along the lines of the new Clause?
§ Sir K. Joseph
I think that this publicity is quite good encouragement. I mentioned, for example, a previous Bill by which the Government made available to selected building societies, or, rather, qualified building societies, facility to make advances on older. 941 sound property. This is the form of encouragement which has been used before. It is not the one used here. The one used here is to extend the letting advances at the discretion of the Chief Registrar.
Of course, I realise that the hon. and learned Gentleman has not established the proportion to be lent under this scheme for the purposes of houses to rent. He is setting out the proportions he would like to see and leaving it to the discretion of the Chief Registrar, subject to the approval of this House; and to that extent he is himself giving the Chief Registrar a discretion, but he is giving it where the Registrar already has power to allow special advances for this purpose.
The hon. and learned Gentleman very correctly in Committee stressed that he wants building societies to borrow money from small men and lend it to small men. I want to point out to the House that if the hon. and learned Gentleman's proportions were to be followed and if building societies were to be obliged to lend 25 per cent. of advances for the purpose of housing to let, desirable as that might be, it would not be to a man of small means. We are dealing with very large figures. It would be something like £125 million worth of advances a year, and I doubt if that number of small men are engaged in building houses to let. It would go to companies, and large companies. We are three companies to go in for building to let. There is no difference between the two sides of the House on this. What we Are unwilling to do is to put an obligation on building societies that they must pay advances even for suitable applicants for this purpose and lend a set amount.
I hope, therefore, that I have satisfied the House that on the main purpose of housing to let there is nothing between the two sides. The one quarrel we have is that an obligation is to be imposed on building societies. It would not be right of me to neglect the extremely important point made about the standards of housing. Here again, there is no difference between us. We want to see design and construction standards at the best possible level, but to undertake an increase of control for this purpose in a Bill of this kind dedicated to other objects is really going too far. We already have inspection and examination 942 by byelaws, and planning controls for both design and construction, and obviously building societies take some interest to see whether it will at least survive and be a good security. I am, of course, aware of the remarks of Mr. Woodbine Parish quoted by the hon. Gentleman the Member for Birmingham, Northfield (Mr. Chapman), and if he has correspondence on the subject of standdards I should be glad to have it from him to study it, but I would suggest to the House that it would be unwise to make a major change in the control of standards of design of building in a bill which is dedicated to a quite different purpose.
§ Mr. Mitchison
The Parliamentary Secretary, if he will allow me to say so, is a conciliatory, able and honest person. I cannot say the same for his arguments. Let us begin with Mr. Woodbine Parish. Why should the chairman or president, or whatever he is, of a collection of building employers say that there is a great deal of shoddy building going on if there is not? We all have eyes in our heads and have some idea of the difference between a shoddy house and a well-built one, even if we are not professional builders or surveyors. We know perfectly well that shoddy building is going on, and this is one of the points in the encouragements which we seek to give.
Substantially, the Parliamentary Secretary's argument is, "We are as anxious as you to encourage the building of houses to let. We recognise the need for more houses to let," but what do the Government do about it? Their answer is their usual answer, "We do absolutely nothing. We did something about our great baths and wash basins Bill which we all remember when arrangements were made to tinker with old houses." But if the Government are to find money for that, I should like them to come forward in this Bill and say that this is a social necessity but as they cannot ask building societies to do it they will do it themselves. The difficulty is that the Government in their actual dealings with the provision of houses to let, which are mainly council houses, instead of encouraging, they have discouraged it heavily. The result is that we are not getting as many as are required.
I want to take the matter a little more broadly. I am quite aware that in the 943 eyes of every hon. Member opposite private enterprise has a sanctity which we on this side of the House do not altogether attribute to it. Therefore, we are told, we must not interfere with the discretion of building societies. But this is a Bill not merely to safeguard investors but to bring up to date building society legislation. These Bills are brought in from time to time, at intervals usually of twenty years, but sometimes longer, and they are not merely intended to safeguard the investors but to tidy up procedures and regulations and special advances and all the rest. They are also intended to see that building societies function in the community and perform the social purposes for which they were originally formed, and those purposes are adapted and enlarged according to the present needs of the community. There ought to be a positive sense of direction even in this Bill. When special advances are restricted, that is a restriction on the activities of building societies.
I fail to see the philosophical difference between saying, "You must have complete liberty to do this, that and the other, but we shall restrict it in certain respects" and putting the matter in the more positive form of this new Clause. We could say that-not more than 95 per cent. of the advances of building societies shall be made to owner-occupiers and that the remainder can be made in respect of houses to let. The form would have been a great deal clumsier, but the effect would have been the same. The negative and positive restrictions are both restrictions in the interests of society as a whole, and restrictions of what otherwise would be the absolute freedom of building societies.
I am disappointed that the Government have felt unable to do something themselves. There would be a good deal to be said for their doing something about this, if they showed signs of doing it beyond saying that it is a lovely
§ idea for somebody else to carry out. That is not good enough. We are entitiled to say to building societies, "You must do this to a reasonable extent." We have taken a very small fraction and we have allowed for it to be reduced further after a time, as the Parliamentary Secretary has pointed out. There is no risk whatever in it. These will be advances on what will be good houses. What is the risk? The Government's answer is that building societies do a little of this kind of thing already, and when they say that these will not be advances to small men I say that that is a procedural quibble. These advances will be for the benefit of small men. They will enable them to get good houses to rent which otherwise they would not obtain. The money ultimately will filter through to that end.
§ I see no moral point whatever to it. I regret sincerely that the Government, if they do not like this way, feel unable to do something else. We on this side of the House cannot move to spend public funds. Indeed, I am not sure that that is necessary, but we say that building societies, as I believe they themselves have recognised, have a moral and social function in the community.
§ The Clause does no more than oblige building societies to carry out some part of that function to a very small, limited, and carefully controlled extent. They have no right to continue as owner-occupier dodos. They are bound to come up to the needs of the times and the present needs of those who live in our large cities, who cannot afford to buy a house and who cannot find a house to live in unless they are given some help from the legislative activities of the House. I hope, therefore, that my hon. Friends will take the Clause to a Division.
§ Question put, That the Clause be read a Second time:—
§ The House divided: Ayes 26, Noes 71.945
|Division No. 145.]
|Hall, Rt. Hon. Glenvil (Colne Valley)
|Bacon, Miss Alice
|Hilton, A. V.
|Brown, Rt. Hon. George (Belper)
|Hunter, A. E.
|Royle, Charles (Salford, West)
|Castle, Mrs. Barbara
|Hynd, H. (Accrington)
|Taylor, John (West Lothian)
|Johnson, Carol (Lewisham, S.)
|Ede, Rt. Hon. Chuter
|TELLERS FOR THE AYES:
|Edwards, Robert (Bilston)
|Mitchison, G. R.
|Mr. Sidney Irving and Mr. Redhead.
|Gordon Walker, Rt. Hon. P. C.
|Aitken, W. T.
|Pearson, Frank (Clitheroe)
|Gresham Cooke, R.
|Pickthorn, Sir Kenneth
|Alport, Rt. Hon. C. J. M.
|Grimston, Sir Robert
|Powell, J. Enoch
|Ashton, Sir Hubert
|Harris, Reader (Heston)
|Redmayne, Rt. Hon. Martin
|Harvie Anderson, Miss
|Robertson, Sir David
|Hornby, R. P.
|Hughes Hallett, Vice-Admiral John
|Smith, Dudley (Br'ntf'rd & Chiswick)
|Bingham, R. M.
|Black, Sir Cyril
|Iremonger, T. L.
|Sumner, Donald (Orpington)
|Boyle, Sir Edward
|Talbot, John E.
|Jenkins, Robert (Dulwich)
|Thatcher, Mrs. Margaret
|Channon, H. P. G.
|Johnson, Eric (Blackley)
|Thompson, Richard (Croydon, S.)
|Joseph, Sir Keith
|Thorneycroft, Rt. Hon. Peter
|Clark, Henry (Antrim, N.)
|Kerans, Cdr. J. S.
|Coulson. J. M.
|Wells, John (Maidstone)
|Craddook, Sir Beresford
|Litchfield, Capt. John
|Williams, Dudley (Exeter)
|McMaster, Stanley R.
|Manningham-Buller, Rt. Hn. Sir R.
|TELLERS FOR THE NOES:
|Mr. Chichester-Clark and Mr. Peel.