§ 38. Mr. Frank Allaun
asked the Chancellor of the Exchequer what effect the raising of the Bank Rate will have on the interest rates on future council house building loans and programmes.
39. Mrs. Butler
asked the Chancellor of the Exchequer what is his estimate of the effect of his new financial policy, in particular the raising of the Bank Rate, on interest rates on loans to local authorities for the house building programmes.
It is not possible to estimate the effect of the recent increases in Bank Rate on future council house building loans or programmes since Bank Rate has no direct link with the rate at which local authorities raise capital for housing purposes either in the market or from the Public Works Loan Board.
My hon. Friend the Economic Secretary gave the House on Friday, 15th July, details of the changes which have been made in the lending rates of the Public Works Loan Board to take account of changes in market rates.
§ Mr. Allaun
Is the Chancellor of the Exchequer aware that this latest increase in housing interest rates, very quietly disclosed in that Written Answer, is bound to reduce still further the council house building programme, which since 1954 has already been cut by half, and therefore condemn to hopelessness the young married couples, the overcrowded and others on the tragic housing list? Can we be assured that, even without a 1289 further Bank Rate increase, there will not be an additional increase in housing interest rates before we resume in October?
The hon. Member knows that the rates charged by the Public Works Loan Board are comparable with tie rates charged in the market at the tine that any change is made. The most recent increase on these housing loans, which are generally of fifteen years or more, was ⅛per cent.
Does not the Chancellor appreciate that for local authorities with an appalling housing problem, and already faced with a steeply rising cost of land, the further increase in interest rates will mean that many will have to give up house building altogether unless they hive more assistance with their financial burden? Will he discuss with the Minister of Housing and Local Government the ways in which they can he helped. possibly by an increase in the expensive site subsidy, so that they can carry on building for those most in need?
The basic fact is that the demand for capital for many excellent projects greatly exceeds the resources available. That fact has to be taken into account.
Mr. H. Wilson
is the right hon. Gentleman aware that while we disagree fundamentally with his policy on this matter and with the analysis which he has just given, we also feel that it is a little late to try to convert him to a more humane point of view? Arising out of that—I hope that you, Mr. Speaker, will feel that this part of the supplementary question follows directly on the Question on the Order Paper—and since this is almost certainly the last Question which the right hon. Gentleman will answer as Chancellor of the Exchequer, may I ask him whether he is aware that he will take to whatever work he may now go, or to retirement, the very best wishes from all on this side of the House?
I am very grateful for the right hon. Gentleman's kind remarks, which I appreciate deeply.
Will the right hon. Gentleman and his right hon. Friend try to realise that this question of the increased interest rates on housing is a Very real burden and a very real problem to many thousands of people in this 1290 country? Even at this late stage, in spite of the apparent lack of interest of the Opposition, cannot the Chancellor at least persuade his right hon. Friend the Prime Minister—[Interruption.]—we do not regard this as a laughing matter—that there are people in this country who are condemned to live in appalling conditions because of the policy of the Prime Minister?
There is one economic disaster which would be still worse than those which the hon. Lady has mentioned and which would mean more hardship to a greater number of people than anything else—and that is a return of inflation.