§ 24. Mr. Frank Allaunasked the Minister of Housing and Local Government and Minister for Welsh Affairs what the total cost is of a council flat costing £2,600 to build, after charging interest payment at the current rate of 6⅛ per cent. for 60 years; what is its economic rent, excluding rates and subsidy: what proportion of this rent is required to pay interest charges; and what steps he is taking to relieve the increase in council rents and building society interest charges which result from these high interest rates.
§ Sir K. JosephMost local authorities, borrowing in the open market, do not raise 60-year loans at the current rate. The total cost of the flat, were they to do so, would be £9,815, and the economic rent, excluding rates and subsidy but including 6s. 0d. a week for maintenance and management costs, would in such circumstances be £3 8s. 11d.; about two-thirds of this would represent interest charges. It is entirely within the power of local authorities however to reduce such rents by pooling their Exchequer subsidies and adopting realistic and fair rent policies. I have no responsibility for rates of interest charged by building societies.
§ Mr. AllaunIs the Minister aware that the Government's high interest policy is continually forcing up council house rents and council rates to such an extent that the local authorities are becoming the victims of tremendous discontent and the scapegoats of the Government? If the Labour Government could keep interest rates down to 2½ per cent. or 3 per cent., why should not the present Government be able to keep them within somewhat similar limits?
§ Sir K. JosephThat is a question for my right hon. Friend the Chancellor of the Exchequer. When the Labour Government were in power they did not have a massive and simultaneous programme of investment on every social and industrial front such as we now have. Secondly, local authorities have it entirely within their power to reduce rents for those who cannot afford them. In fact, in most towns and cities the average rent of local authority property is still just below twice gross value.
§ Mr. M. StewartDoes the Minister realise that, if he means what he says about urging local authorities to do much more slum clearance, they will have to rehouse many people who could not possibly pay rents like the rent he has just described? When he says that that situation is to be met by rebates, does not that simply mean a further burden on the rates for which he has already refused them any help?
§ Sir K. JosephI have acknowledged from the very beginning that, in order that the programmes which lie in front of them may be completed, there may well have to be a review of subsidies for local authorities. What I am saying is that, at the moment and in the foreseeable and immediate future, interest rates do not and will not inhibit local authorities with sensible rent policies.
§ Mr. AllaunIn view of the unsatisfactory nature of the replies, I beg to give notice that I shall raise the matter at the earliest possible opportunity.