HC Deb 15 June 1961 vol 642 cc616-7
11. Mr. Frank Allaun

asked the Chancellor of the Exchequer what would be the total cost to a local authority of a £2,600 multi-storey flat after interest has been paid for sixty years at the new Public Works Loan Board rate of 6¼ per cent.; and how much per week the interest charge involves.

Mr. Barber

The total costs of borrowing £2,600 repayable by half-yearly annuities over sixty years would amount to £10,000. The average weekly interest charges on such borrowing would amount to £2 7s. 4d.

Mr. Allaun

Are not those staggering figures? Is the Minister aware that if the repayment charge is added, the total loan charge would be £3 4s. per week even without rates and repairs? Does he admit that this intolerable burden, for which the Government's financial policy is responsible, has halved council house building during the last six years and has shocked house buyers too?

Mr. Barber

There is another aspect to this matter. Housing provided in accordance with the Government's housing policy, including the multi-storey flats which are referred to in the Question, attracts a substantial subsidy from my right hon. Friend the Minister of Housing and Local Government. This considerably reduces the amount of rent which a council needs to charge.

Mr. Jay

In view of the general state of our economy and the export figures quoted by the hon. Member for Louth (Sir C. Osborne) on Question No. 6, does the hon. Gentleman think that anything worth while is being achieved by these extraordinarily high interest rates?

Mr. Barber

The Public Works Loan Board interest rates have, since the change was made in October, 1955, followed the ruling rate of interest, and this is because the Government do not feel it right that the local authorities should be shielded from the general trend of interest rates. To do that would, in fact, give them a form of concealed subsidy, and we feel that any assistance given to local authorities should be open and above board.

Mr. H. Wilson

Is not the general trend of interest rates, from which, apparently local authorities must not be shielded, the result of Government policy? How can the hon. Gentleman run away from that responsibility? In view of the many Government pronouncements recently making it quite clear that they are introducing economic regulators because they have now come to accept the Radcliffe Report on these matters, will the hon. Gentleman explain how he justifies these high interest rates when, apart from one or two Members of the Government, practically everyone recognises that they have been a complete failure in regulating the economy?

Mr. Barber

High interest rates are, in the main, the consequence of a shortage of capital.

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