HOUSING (HOME LOANS)

HC Deb 29 April 1965 vol 711 cc645-709

4.10 p.m.

Mr. Edward Heath (Bexley)

At the conclusion of this debate we shall move a reduction in the Vote of the Ministry of Housing and Local Government. I do not do so now, so as not to limit the scope of the debate.

I will tell the right hon. Gentleman exactly why we propose to move a reduction in his Vote. It is because the people of the country, the young married couples and the older families with children, under his administration and the policies being pursued by himself and his right hon. Friend the Chancellor of the Exchequer, are being denied homes which otherwise they would have. They are being denied them because, as a result of Government policies, the stream of finance for housing is drying up. They are being denied them because the mortgage rates of many local authorities, among them the great local authorities, are higher than at any time since 1945.

All this blatantly contradicts every General Election promise which the right hon. Gentleman and his colleagues made. They were promises with which they gained tens of thousands of votes which helped to give them their present narrow majority. Above all, we are condemning the indifference of the right hon. Gentleman who has seen this situation developing, and has done nothing whatever to remedy it.

The Government have constantly been warned of the consequences of their policy. They have shown that they do not understand the workings of the building industry. What is more, they have shown that they do not care about those who want to buy and own their own homes. During the last year of the last Government, 373,676 houses and flats were completed. That was 25,000 above the target, and they were all part of nearly 4 million houses which were built during 13 years of Conservative Government. That was the achievement of those 13 years. We all know that the demand is still very great, and we know the reasons. It is due primarily to the immense improvements which took place in the standard of life of our people over those 13 years.

At the end of 1964, there were 433,922 houses and flats under construction. That was just over 60,000 more than were completed in 1964. All those starts were the result of Conservative administration. That was the legacy of 13 years which we have bequeathed to the Government. There were more than 430,000 houses and flats in the pipeline, and there is no doubt whatever that the target of 400,000 houses for 1965 would have been achieved, and greatly exceeded, under a Conservative Administration.

The right hon. Gentleman and his right hon. Friends have stultified, and are stultifying, this legacy from their predecessors. We all know that the builders of houses are extremely worried about the present situation, and, indeed, are cutting back their housing programmes. Everybody has read the statements by the great construction firms. The chairman of Wimpeys said that his firm had cut back 30 per cent. of its target figure. The MacManus group said that it was cutting back production by about 15 per cent. Wates has cut back the number of houses it is actually releasing on to the market by 20 per cent. and it has laid off 10 per cent. of its labour force. Richard Costain has decided to call a halt on work on 250 semi-finished houses for which no buyers had been found.

That is what is going on at the moment in the building industry, and it can be summed up in the declaration of the meeting of the Federation of Registered Housebuilders, last weekend: It was calculated that in the absence of immediate action"— by the Minister— there was little chance of the target of 400,000 houses in 1965 being reached. The shortfall might well approach 50,000. In other words, only 350,000 houses will be completed in 1965, as against 433,000 houses and flats which were left in the pipeline to the right hon. Gentleman.

It seems that 80,000, or certainly 70,000 fewer houses are likely to be completed this year. Is that the policy which the right hon. Gentleman and his colleagues put before the electorate at the General Election, that they should be returned to power to produce 70,000 fewer houses than the number of starts, or 50,000 houses fewer than the target? It means that nearly 300,000 people who would otherwise have got new modern houses in 1965 will not be able to get them, and that is the responsibility of the right hon. Gentleman. Is that what he and his colleagues told the electorate at the General Election? Not on your life.

Week after week in the year preceding the election the advertisements in the newspapers were quite clear. They said: The new Labour Government plans to provide many many more homes … That is what they told the electorate week after week, and each advertisement was signed "Harold Wilson". The right hon. Gentleman's supporters may say, "But did not our clever and greatly beloved leader leave us some way out of this? Did not that wizard of the weasel word leave us a little outlet?" Of course he did. He did not say more than what! Did he mean many more than they built during their last year of power in 1950–185,000? But that will not wash. The public did not get that impression, and right hon. Gentlemen opposite know full well that their pledges have not been carried out.

This is having a great effect on the builders. What has brought about this cutback? There is today an acute shortage of mortgage funds, particularly at the building societies. Normally, these finance about 75 per cent of private building, and this situation will probably he made worse by the announcement today about the special deposits.

The Times, reporting on building societies on 24th April, said: All are feeling the effects of the squeeze, described by many as the worst since the war. This is having a double effect on builders. First, many large builders have annual quotas for loans with which to carry on their development. They get these from the building societies, and the evidence is that most of these quotas have been halved.

The second effect is that individual buyers cannot get mortgages, so the escalator of buying and home ownership is grinding to a halt. Those who want to buy expensive houses cannot sell the ones they are in at the moment, because those who want to buy less expensive houses cannot get mortgages. That is what is slowing down the whole process of increasing home ownership. Those who want to buy the cheaper houses usually have less security and lower incomes, and less available for deposit. This is the fundamental reason why this process is now slowing down, and, as the houses cannot be sold, the builders are having to cut back heavily on their programmes.

There are still a favoured few who get their mortgages. Another advertisement was shown to me yesterday from Ideal Home for May, 1965, which is just out. It has a drawing of a charming house, with a splendid bubble coming from the top saying, "How can you afford a house like this on your salary?" with the answer, in another bubble, saying, "I arranged the mortgage through the Harold Wilson Organisation". Before anybody jumps up to ask whether I notified the Prime Minister that I was going to attack him in this way I would add that any organisation helping people to get mortgages or houses could not be associated with the Prime Minister.

Let us look in detail at the position of the building societies today. It is true that March quarter lending was considerable; it was £10 million up on the March quarter a year ago. The Chancellor knows the explanation, but in any case I will tell him what it is. First, it is due to the earlier commitments which were undertaken by the building societies before that quarter; secondly, to the money they took in in the preceding months; and, thirdly—and very important—to the running-down of their liquid resources, which was very considerable. In March, 1964, the liquid resources were 16.8 per cent. and in March, 1965 they were 13.1 per cent., or a quarter run down.

That is not very slight, and the building societies do not believe that it is very slight. They believe that it is of great importance, and they may wish to use future deposits to build up their liquid resources again, which means that money will not be available for mortgages for houses. Therefore, the promises which the building societies can give for the next quarter are well down. That is why the escalator of home ownership is slowly grinding down.

What about deposits? Broadly speaking, small depositors are continuing to deposit with building societies. The figure for the first quarter of 1965 was only £1 million down on that of 1964. The problem is caused by the larger deposits being removed. This is a very serious factor in the situation. In the first quarter of 1965. £224 million were withdrawn, compared with the first quarter of 1964, when £158 million were withdrawn. In other words, increased withdrawals amounted to £66 million in that quarter, which is almost a half—certainly two-fifths—of the 1964 figure. That is why there is now an acute shortage of mortgage finance. This is the first time that this situation has arisen since 1945. When, previously, there have been economic difficulties no comparable situation has arisen.

What are the reasons for this? First, it is because of overseas deposits leaving London before Christmas. This has meant that other depositors with the building societies have had to withdraw their deposits to replace those overseas withdrawals. The Chancellor will agree that despite the strength of sterling there is as yet no indication that these deposits are pouring back. I say this because it means that this is not just a temporary situation which will exist for a week or two, but one of which we must take account.

Secondly, the 7 per cent. Bank Rate, the credit squeeze and the depressed stock market, have meant that those who want liquid resources cannot get them easily by selling securities. They cannot get them from the banks, and today's measure will make it more difficult. The easiest thing to do is to withdraw liquid resources from the building societies. This means that the amount of money available for mortgages has decreased. Thirdly, other institutions are offering much higher rates, especially local authorities.

I was interested to see that on 13th April the City editor of the Daily Mirror—which, on the whole, is not considered to be unduly subservient to the Tory Party—said: I never thought I would see the day when a town hall treasurer in Britain would have to borrow cash at 9 per cent. interest to pay the council's bills. Neither did we—and neither did the electorate.

So the conclusions to be drawn are: first, that this is not a temporary situation; and, secondly—and I put this particularly to the Chancellor of the Exchequer—the building societies must use their commercial judgment in setting rates to attract deposits. I ask the right hon. Gentleman to consider exactly how wrong, and indeed, foolish he was in trying to denigrate and condemn the building societies for the change they made in the middle of January in increasing their rates, and how much worse the situation would have been today if they had done what the Chancellor tried to make them do.

The right hon. Gentleman the Minister for Housing and Local Government may say, "If the building societies have not got it, let people go to the local authorities." That is a doctrinaire answer, in general keeping with his outlook. But let us consider the position of the local authorities. On 23rd March, the right hon. Gentleman said that his Department had no information about the number of housing schemes suspended or stopped, nor did he have any information about the rates of interest at which they are being operated. He said exactly that, if he cares to look it up. He could not give the House the information.

Although that situation had developed, he had not even bothered to discover the information. He had all the resources of his Department, but he could not find out. The information that he gave to the House came from the Press.

The Minister of Housing and Local Government (Mr. Richard Crossman) rose—

Mr. Heath

The right hon. Gentleman should wait until he has been given the answer by his P.P.S.

Mr. Crossman

What I said in my reply was that the information was not officially collected by my Department, but that from our Press cuttings we estimated that at least 37 local authorities had suspended their schemes. It is true that up to now our Department, after 13 years of Toryism, does not have this information available, but I have now arranged for the information to be obtained and in future we shall not rely an Press cuttings, as our Tory predecessors did during their 13 years of office.

Mr. Heath

The right hon. Gentleman's Tory predecessors did not have to deal with this situation. We have made it our business, as the right hon. Gentleman could not, to get the best information possible. I will give it to the right hon. Gentleman now.

We obtained it in respect of county and non-county boroughs, which are the major organisations concerned, and of which there are 358 altogether. We have managed to get information concerning 283 of them—more than three-quarters of them—of which 242 had home loan schemes. That shows how many such schemes have developed during the 13 years of Tory rule. We discovered that, in the North, 14 major authorities had stopped schemes altogether; in the Midlands and East Anglia, 16 authorities had stopped; in the South, 13 had stopped; and in Wales, three had stopped. This excludes entirely the urban and rural district councils, which were included in the right hon. Gentleman's figures, which he gained from the Press.

The right hon. Gentleman said that there were 1,200 local authorities altogether, and then gave figures from the Press. Many have reduced the percentage of the mortgage. Interest rates have been increased by 165 of those major authorities. On the average, the rates being charged range between 6¾ per cent. and 7¼ per cent., with a few at 7½ per cent. Yet the Chancellor of the Exchequer had the audacity to rebuke the building societies for increasing their rate.

Let us look particularly at the two largest authorities—London and Birmingham, which are both Labour controlled. In mid-January, London put its rate up from 6½ per cent. to 7¼ per cent. One London borough put it up to 7½ per cent. In Birmingham, a very interesting situation arises. In a party political broadcast on 8th May, 1963, the Prime Minister said: We shall also encourage popular schemes such as that in Birmingham, where the Labour Council are building houses for sale, and are giving 100 per cent. mortgages with low interest rates. What is the position now? Since the Government of the right hon. Gentleman came to power, Birmingham's Labour Council has restricted all mortgages to a ceiling of 85 per cent. and has put interest rates up from 6 per cent. to a new peak of 6¾ per cent. That is what has happened in Birmingham. It had to happen because of the present situation. Yet this was cited by the Prime Minister as the one he wanted to copy.

Look at the building materials industry as the third part of the picture. The industry is anxious. It depends to a very large extent on "starts", and these are now diminishing. The Minister of Public Building and Works—I do not see the right hon. Gentleman here today—has urged the brickmaking industry to increase its output of bricks in 1965 by 600 million to 8,400 million, an increase of 8 per cent. He has constantly urged the industry to increase investment in plant and has constantly given the impression that it would be an ever-expanding industry. On 18th February, at a contractors' luncheon club, the right hon. Gentleman said—I thought slightly peevishly— I keep listening to or reading public statements of the leaders of the industry expressing fears about the future and seeking reassurances from the Government. Frankly, I am getting a little bit tired of this. Since then the right hon. Gentleman has not said a word. He now realises the position.

All this is due to the policies of the Government, not to the 15 per cent. surcharge—though we know that has added an increased cost to houses—but to the two Budgets, the Bank Rate and the credit squeeze. The Chancellor of the Exchequer and his right hon. Friend the First Secretary of State said in a White Paper that the surcharge was to deal with the balance of payments problem and that no further action was required. All the rest of this position flowed from the crisis of confidence for which the Prime Minister said his own Government was responsible. There was a crisis of confidence; the Bank Rate and the credit squeeze followed. Yet still confusion reigns.

On 20th January the Minister of Housing and Local Government said: It should be a matter of weeks and not months before we can hope that the 7 per cent. Bank Rate is over. That was over three months ago. Does not his right hon. Friend the Chancellor of the Exchequer tell him what is going on, and the facts of economic life?

Mr. Geoffrey Hirst (Shipley)

He does not know, either.

Mr. Heath

The Prime Minister and the First Secretary of State discussed the question of inflation, and the First Secretary said on 9th December, to the American Chamber of Commerce—we tried to question him afterwards— This is not a new credit squeeze, or a return to stop-go. This is not a reduction in the credit available. Yet a fortnight ago, in New York, the Prime Minister was boasting of every-Ming his Government had done to deal with inflation through the credit squeeze, and the Chancellor has extended this by another £90 million on special deposits. So confusion reigns in the Government about whether they are following an expansionist or a deflationary policy.

Can one wonder that the housing industry, the housing materials industry, let alone the building societies, are completely confused by the policies of the Government? Now we can see the whole horrible picture, the building industry being cut back; half finished houses being left; sites empty and idle; the building materials industry anxious about the future; housing targets unlikely to be reached and those who want Louses unable to get mortgages let alone houses; local authorities abandoning their house ownership schemes; interest rates, in many cases, the highest since 1945. The whole industry is being undermined by uncertainty and the Minister has sat there, doing absolutely nothing.

Just look at their pledges. Look at the Labour election manifesto— Labour will introduce a policy of lower interest rates for housing. … This policy of specially favourable rates will apply both to intending owner-occupiers and to local authorities building houses to let. That was repeated time and time again. It was repeated in every election address. It was repeated by the Prime Minister. There are too many examples to quote. Well, take the Secretary of State for Education and Science. He said: We simply must build more houses. The word "must" is in capital letters, just to add a touch of earnestness to his words. Later, the right hon. Gentleman said: Labour is pledged to lower"— the word "lower" is in capital letters"— interest rates for houses. None of these right hon. Gentlemen or hon. Members said, of course, that, first, all the rates would go up to the highest level and the number of houses would come down, that people would not be able to get mortgages for homes and that they would cost more if they could be obtained. There were just these specious promises, repeated time and again.

On the question of the Bank Rate, the Prime Minister gave comparisons with the last Labour Administration and referred to 4 per cent.—there was of course no commitment, just an implication to the electorate to carry it along in the belief that the figure might be 4 per cent. Then the First Secretary came jumping in, making his famous statement about 3 per cent. That has now been carefully documented in the book, "The Making of the Prime Minister"—or the undoing of the First Secretary.

What about this new scheme? Will it apply only to new house purchases? Will those already with mortgages have to subsidise the others when the right hon. Gentleman does bring in his scheme? What about consultation? The First Secretary, in his famous statement, said that there would be immediate discussions with the building societies, local authorities and other interested bodies. Have those discussions taken place? Not to my knowledge, nor to the knowledge of anybody that I can find. The First Secretary said, "Immediate discussions". They have not been carried out.

The right hon. Gentleman the Minister of Housing and Local Government has himself referred to this. He said this will require legislation; that there will not be time for it in this Session. Later, he had to issue a statement, after his speech in Coventry on 23rd January, saying that he hoped that it might be implemented in the next Session. Who knows how long this Session is going on if the Government are to complete their business? It may not be even in the next Session—the right hon. Gentleman only hopes that it is to be in the next Session.

We are promised that the Land Commission Bill is to come at any moment now. The First Secretary said—actually in my constituency on 28th September, a short distance from my party headquarters— At the same time as we are setting up the Land Commission we shall introduce a policy of lower interest rates for housing. Where is this organisation getting to so far as housing is concerned? Where is the right hon. Gentleman's scheme? Does this scheme exist at all? If so, why have not there been consultations? Or did right hon. Gentlemen opposite enter into office without a scheme, after 13 years in opposition in which to prepare it—13 wasted years of opposition? There they are. All the promises which we have heard about many many houses and lower interest rates for the householders—all of them are just paper promises. There they flutter down, lying like twisted autumn leaves over the empty building sites and half-finished houses.

What now should be done? Will the right hon. Gentleman make a statement today? We do not know. I was rather interested to note that the Labour Party candidate at Birmingham, Hall Green said last night that the right hon. Gentleman is visiting him on Friday and hopes to make a statement about his scheme and his programme. I am sure that the right hon. Gentleman, with his customary courtesy, will tell us about it here today, in the House of Commons, before he tells Hall Green tomorrow.

I should like to make three suggestions. If we can bring about some action by this indifferent Minister as a result of this debate we shall have done some good. The first is that the Government must pursue policies—this particularly affects the Chancellor of the Exchequer—which will encourage savings, because their present policies—the result of their own folly before Christmas—of higher prices and taxation are bound to militate against savings, particularly against savings in the building societies.

Secondly, I would say that the Minister should consider reintroducing the scheme enacted by the previous Government. Under the House Purchase and Housing Act, 1959, we used £98 million out of £100 million for loans on pre–1919 houses. Of course, he could use it in another form for dealing with any particular type of house he wished to choose.

Mr. Reginald Freeson (Willesden, East)

When was it suspended?

Mr. Heath

We suspended it in the autumn of 1961, on a rising market of house building, not a market which is being cut back as it is today by the Minister.

It is a fact that the 1919 houses, these older and cheaper ones are the most difficult in respect of which to get a mortgage today. It would also help to get the escalator moving.

My third suggestion is that consideration should be given to a number of suggestions which have been made from outside the House, many of them, no doubt, to the Minister and the Chancellor, as to whether there ought to be a lender of last resort for the building societies in the same way as the Public Works Loans Board is for the local authorities and the Bank of England for other monetary institutions. Any scheme of this kind can take a variety of forms. I do not propose to go into them in detail. It basically means that there should be some form of refinancing of mortgages comparable to the refinancing for exports. I doubt whether this would require legislation, but it is not for me to say.

It is absolutely right that the necessary financial discipline of the building societies and these organisations should be maintained. I agree with that entirely. I believe that these schemes ought to be carefully examined. They may be able to even out the strains through which the building societies are now passing. Of course, all the schemes for helping and financing home ownership must be accompanied by an increase in building. Otherwise, we shall only get an increase in the prices of houses. This is absolutely fundamental to all the plans put forward for helping greater house ownership.

The final point is that, whatever the Minister and the Chancellor do now, a great deal of harm has already been done and today's measures will probably make things more difficult. It is not for me to enter into this in detail. It may be that the Chancellor wants the special deposits so as to try later to reduce the Bank Rate. This will not greatly help the building societies or those who already have mortgages, nor will it provide more money for those who want to get them. It will take time for the building societies and the building industry to regain their momentum. That is why we are today condemning the Minister and his colleagues for the harm which is already being done. They are keeping families out of new homes. They must take the responsibility both for doing this and for having thoroughly misled the country at the election.

4.42 p.m.

The Minister of Housing and Local Government (Mr. Richard Crossman)

I should like to start with an apology to back benchers on both sides of the House. I am extremely sorry that, in a short half-day debate, I am taking part in a four-man bout of Front Bench speeches. This was no procedure of our willing. I should have preferred to leave the rôle of the opening speech to one of my colleagues behind me and to have waited until the end in order to reply to the debate, but the Opposition decided to put up two Front Bench spokesmen. They have relegated the shadow Housing Minister the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) to winding up, presumably so that the shadow Chancellor of the Exchequer, the right hon. Member for Bexley (Mr. Heath), can give us another example of that poetic, lyrical knock-about which is his peculiar contribution to Conservative leadership. As I listened to him, I was tempted to reply in kind. If I do not, that is because there are a number of serious things, which, as Minis? ter of Housing, I must say at this Box in order to help the building societies to overcome the crisis of confidence in them which the Tory Press and Opposition spokesmen, whether they mean it or not, have been causing by their attitude during the last three weeks.

If anybody took their allegations seriously, the housing programme would indeed be placed in jeopardy. We have heard allegations this afternoon that 300,000 people will be denied houses in the coming year by the failure of the programme. We have heard about sales of homes grinding to a halt, and last night, though I did not see him on the television, we had the right hon. Gentleman the Leader of the Opposition making one of his classic simplifications: "Under Socialism you cannot even get a mortgage"—[HON. MEMBERS: "Hear, hear."] They say, "Hear, hear". At a time when the building societies have massive mortgage policies, those who say that people cannot even get a mortgage are undermining confidence in the building societies and not in this Government.

I shall try to state the facts which will enable the public to realise what the situation really is behind the propaganda and that what the building societies are facing are temporary difficulties which they can and will overcome in a matter of months. First of all, I shall give the House as sober an account as I can of the precise character of these difficulties. I shall then show how they arose, and, thirdly, I shall show how we intend to meet them. In doing so, I think that I shall be able to answer all the questions which the right hon. Gentleman put to me so truculently this afternoon and to which he obviously expected no reply. I shall be able to satisfy him with those replies. These will be my three main themes.

Before I come to them, there is one topic apparently rated by him of the greatest political importance, largely irrelevant to the debate with which I must deal. Throughout his speech he spent a great deal of time demonstrating that the high mortage rates which owner-occupiers are now paying and the increasing difficulty over the last weeks of obtaining a mortgage provide final proof that we as a Government have broken all our pledges to the owner-occupiers in our election manifesto. I want to be perfectly clear on this question of pledges. It is true that the policy of specially favourable interest rates for the whole housing programme was one of the most prominent planks in the Labour election programme. It is true that it has been a vital element in Government policy ever since we have taken office. I am not in the least disconcerted by the lavish care with which the right hon. Member for Bexley has demonstrated how irrevocably we are committed, and I am committed, to the policy of lower interest rates for home loans.

In this part of his speech, there was no exaggeration. It is the precise truth that we are committed to it. Our reputation would be ruined if we did not do it. This is all true, and it is true that we proclaimed the policy in opposition. It is true that we won a great many votes by showing that we believed in it. It is true that, as a Government, we are deeply committed to it. After describing the difficulties through which we are passing today, I shall say something as to how we shall carry it out, not only for home loans but for interest rates for local authority building as well.

There is one proviso which I want to add about home loans. There will always be a very large number of families who cannot afford to buy a house and for whom the right home will be a rented house or a rented flat. That is why a responsible Housing Minister must never give—as my Tory predecessors always gave—almost exclusive priority to the owner-occupier. A reponsible Minister will allocate money and resources fairly between three claimants—first, private enterprise building houses primarily for sale and owner-occupation; secondly, public enterprise building houses primarily to let and primarily for the lower-paid people in the community; and thirdly the combination of private and public enterprise for renovating, improving and modernising the vast stock of old houses which will otherwise degenerate into slums. These are the three jobs which one has to do, and in our election manifesto we promised a balanced policy of this kind.

I am determined to see that the balance is properly observed. We have to keep our pledge to the young couple who want their instalment burdens eased by lower interest rates, and who are sadly distressed today. We must not do so at the cost of the young couple who want their council rents steadied by interest rates or the old couple who do not want a new house but who passionately want their old home improved by the addition of a bath, a sky-light or an indoor w.c., and who, anyway, are far more interested in the increase of the old-age pension and the abolition of prescription charges than in housing. Our first job was to decide in what order our social commitments should be carried out. We made the decision that the old and the sick must come first, that before we did anything else we must raise the old-age pension and abolish the prescription charges.

I am sure that we were right to do this, even if a number of things which I, as Minister of Housing, naturally wanted had to take second place to these responsibilities. But if old-age pensions and prescription charges are the priority No. 1 of a Socialist Government, housing certainly comes second.

When I surveyed the situation I had inherited from my predecessor, I decided, long before the Milner Holland Report produced the final confirmation, that the most desperate crisis we faced was the shortage of cheap rented accommodation and that this could only be met by a rapid increase in council house building.

I have told the councils to get on with the job of making good the shameful neglect of public sector housing, particularly in our great conurbations, which characterised Tory policy right up to election year. Already this is having its effect. Council house starts were sagging when we took over, and in the first quarter of this year we were still, with 32,000 starts, well behind the three months January—March 1964 figure, with its 37,000. But last month there was a slight but encouraging spurt forward—the first sign of our new drive—11,800 starts in March 1965, compared with 10,600 starts in March 1964—an 11 per cent. increase in public sector building. And I am glad to add that industrialised building has lately been accounting for something like a quarter of all the council housing tenders approved, which is higher than ever before.

We have, therefore, kept our pledge to the old and to the sick. We have begun to keep our pledge to the people in the queue for council houses at the kind of moderate rents they can afford. And simultaneously I have launched a new campaign designed to wake up hundreds of thousands of tenants, landlords and owner-occupiers to the hard cash the Government are prepared to give them for house improvements, because house improvements are a major part of our housing policy.

Mr. Donald Box (Cardiff, North)

Is the right hon. Gentleman aware that, despite the increase of 12s. 6d. in old-age pensions, council house rents in the constituency of his right hon. Friend the Chancellor of the Exchequer are going up by anything between 10s. and 19s. 5d. a week? How does he explain that away?

Mr. Crossman

I will not be diverted into discussing increased rents in individual constituencies. I have been dealing so far with the charge made by the right hon. Member for Bexley that this party has welched on its election pledges. I have shown that we have kept our promise to the old, that we are keeping it to council house tenants and to those who want improvements. I now turn to the question of the owner-occupier.

Colonel Sir Tufton Beamish (Lewes) rose—

Mr. Crossman

I am now going to speak about the owner-occupier.

Sir T. Beamish rose—

Hon. Members

Sit down.

Mr. Crossman

If hon. Members look at the figures, they will see that in the first quarter of this year, when public housing was only just beginning to pick up, the building societies made more advances for home loans than in the first quarter of any previous year. The right hon. Member for Bexley not only said that but took credit for it. Under this Government hon. Gentlemen opposite take credit for whatever is good and everything else they blame on us. It is art old trick, but let us look at the facts. In the first quarter of this year the building societies, under a Labour Government, advanced more in home loans than in the first quarter of any previous year. And the figures for private housing starts in the first quarter are almost as impress- sive—54,000 compared with 52,000 in 1964.

True enough, before this latest trouble started, the house purchaser, like everyone else, was sharing the burden of high interest rates, and I had to tell the young married couple who had been looking forward to our new reduced interest rates for their home loans that they would have to wait some months, probably until this Session is over, before we can pass the necessary legislation—[Interruption.] We are discussing housing policy—

Sir T. Beamish

What about the Steel Bill?

Mr. Crossman

Now we have steel brought into it.

High interest rates are regarded by most young people as very burdensome, but not as a total deterrent to wanting to buy a house. If they have the choice between paying high interest rates and not having a house, a very large number of people are prepared to pay more. One of the most striking facts of the last few months is that high interest rates have acted as no deterrent; that the claimants' demands for houses to own has been as strong in this period as ever before. If the choice is between temporarily paying a bit more on the instalments or permanently giving up the idea of a new house, thousands of people are prepared to take on the extra burden—and I admit that it is a burden—of paying something more.

The trouble the building societies are up against is not a shortage of clients to borrow capital but a shortage of capital due, and I agree with the right hon. Gentleman here, to a transfer of the capital to more profitable spheres. On that point I think we can agree where the difficulty lies. As I say, it lies in the transfer of capital from the building societies to other temporarily profitable spheres of investment, local government loans and so on. [Interruption.] That is a perfectly good example of where investors have been investing.

A number of sensational newspaper stories have created the impression that there is something organically wrong with the building societies. In fact, there is nothing organically wrong with them and nothing could be further from the truth. I am glad to see the right hon. Member for Bexley shaking his head, I hope in agreement. Their advances for the first quarter of 1965 reached a new record. Indeed, part of their trouble is that the demand for home loans has increased faster than their resources. Yet even this shortage of resources is only relative. In the first three months of 1965, for example, new savings invested in the building societies were only £1 million less than in the first quarter of 1964. The bother is not the falling off of new savings but an increase of withdrawals, because depositors have suddenly whiffed more profitable spheres of investment.

Why has this happened and how can it be remedied? After all, very few of those who put their savings into building societies do so out of an altruistic desire to help house building. What attracts them is the sense of safety, the prospect of a good return on their money free of tax and the advantage of a quick withdrawal if they need it. In recent months the big investor, who put the maximum £5,000 into 10 building societies, has realised that there are quite a number of other places, including local government loans, where his money can be just as safe, and can earn more.

The building societies tell me that their difficulties were increased not only by the counter attraction of the local authorities loans but by the direct competition of certain local authorities in the mortgage market. What we have been watching, therefore, is a double process; on the one side a rapid increase of assets and advances resulting in a record number of home loans and new housing starts and, on the other side, a withdrawal of deposits with a corresponding reduction of cash in hand.

It was the interaction of these two forces which persuaded the building societies, beginning last January, to start warning the builders that they would have to be more tight-fisted with their home loans and which forced one or two societies in the last week or two to issue warnings that builders must no longer count on money being available to cover their building programmes after the summer. These warnings caused a sensation, caused the crisis and, no doubt, this censure Motion today.

This picture of the trouble, gathered from my discussions with the building societies, I found to be completely confirmed in my talks with the builders. They told me quite simply that now that they are no longer assured that mortgages will automatically be available, as they have been for the last few years, their programmes must automatically be cut back. Estimates of the cutbacks vary a good deal from builder to builder, partly according to their sense of drama and partly according to political prejudice [Interruption.] The trouble, they all agree, is not the shortage of clients willing to pay high interest rates, but a shortage of capital.

To complete an objective picture, before I come to what we are going to do about the situation, I must say a word about local authority home loans, to which the right hon. Gentleman referred. It is important to get these in perspective. The right hon. Gentleman gave the picture of the number of withdrawals. What I heard more about from the building societies was the serious competition of those still in the market.

It is true that nearly one-third of the total is lent by the Greater London Council, which has allocated £80 million, or nearly half of its capital investment, this year for home loans; but local authorities, with frequent 100 per cent. advances, are a vital adjunct to the work of the building society movement. In my view they complement and do not seriously compete with it. How could they, when they form in total under 15 per cent. of the total mortgage loans? It is rather silly to pretend that local authority competition is the main cause of the building societies' difficulties, though there are those outside this House and in the Press who' have.

Well, there is my analysis. This week I have had talks with representatives of the builders, of the building societies and of the Greater London Council—as the biggest local authority in the home loan business. I think I can claim that they would all agree with the general lines of my diagnosis, although on details there are naturally differences of emphasis between different parties.

Let us turn, then, from diagnosis to consideration of what we should do for the complaint—

Mr. John M. Temple (City of Chester)

Did the building societies mention in those talks that the Chancellor of the Exchequer's Capital Gains Tax would make serious inroads into their reserves?

Mr. Crossman

The conversations were strictly private, but I do not think I am committing an indiscretion when I say that this subject was not mentioned in any way.

What do we need to prevent this setback—because that is what it is—developing into a crisis that would retard this year's housing completions and seriously affect those of next year? I will start by dealing with two unacceptable ideas—one of them coming from the right hon. Gentleman. In the first place, the introduction of lower interest rates for home purchasers would not help the building societies out of this position. Their problem, as I have said, is not shortage of clients caused by high interest rates but a crowd of clamouring clients denied mortgages owing to a shortage of capital. In these circumstances, to make mortgages even more popular might actually aggravate the problem in the present circumstances.

What about the proposal made by the right hon. Gentleman that I should reactivate the House Purchase and Housing Act, 1959. This, of course, was an idea which, as Minister of Housing, I very seriously considered, but, quite apart from any disadvantage there may be from a Treasury point of view—and I leave that aspect to my hon. Friend the Chief Secretary—I have turned it down on strictly housing grounds. In the first place, my discussions with the building societies have led me to the conclusion that they are still in an extremely strong position, able to continue financing home loans on a massive scale; and that their difficulties, though awkward enough, do not justify drastic stop-gap medicine of this kind.

Moreover, though many proponents of the scheme seem to be unaware of it, the £100 million allocated to the building societies under that Act were provided solely in order to persuade them to give mortgages on pre–1919 houses, and less than £8 million of the £100 million available under that Act is still in the kitty. So fresh aid of this kind would require new legislation to be rushed through the House. It is my considered view that to do this in a panic mood might well aggravate the disease it is intended to cure.

But this does not mean that the Government reject altogether the idea the right hon. Gentleman spoke of—that home loans via building societies, as well as local authority building, should in certain circumstances receive Exchequer support. The right hon. Gentleman asked about that, and I will answer him in a considered way, because he has obviously been thinking about it a very great deal. It is one thing, of course, to rush a Bill through in an attempt to get the building societies out of temporary difficulty, but it is quite another thing to use Exchequer finance in order to regulate and sustain a carefully-planned overall building policy in which the Government, the building societies, the local authorities and the construction industry are all working together within an agreed annual programme and according to a well-understood common strategy. Such a notion was available during the last 13 years but was never even attempted. It is towards a national housing policy of this kind that I am convinced the country must now move, and my right hon. Friend the Chancellor of the Exchequer and I are now actively considering the rôle of Exchequer finance within this new framework.

I have already said that it is essential to achieve a programme with a proper balance between houses to let, houses for sale, and improvements. It is clear that this balance of housing priorities is quite impossible as long as our housing programme is split into two parts—a public sector, 40 per cent. of the total, publicly financed and adequately controlled and, on the other hand, a private sector, 60 per cent. of the total, regulated only by the interaction of consumer demand, the whim of the investor and the availability of capital.

As long as this division is maintained it will be impossible either to plan the priorities fairly within the housing programme—as between houses to let and houses for sale—or to protect the building societies from the kind of set-back that has hit them this spring, or finally to give the construction industry the confidence it requires for the steady expansion we all desire. Let hon. Members ask any builder, big or small. Let them ask the suppliers of components and materials. They all give the same answer: if they are to expand their output we must at all costs avoid violent ups and downs in the rate of building. We must have a firm programme and keep firmly to it.

Mr. A. P. Costain (Folkestone and Hythe) rose—

Mr. Crossman

In a moment.

Let me say just a word about the construction industry. There has been a lot of wild talk—which I am sure the right hon. Gentleman has not indulged in—about the danger of mass unemployment as a result of the present difficulties. Two figures will put this issue in proportion. In the first place, even the most pessimistic prediction by the most pessimistic builder in his talks with me last week only suggested a reduction of the very big targets for 1965 which the builders were bandying about last January to a little below the level of last year's total completions. That is the worst threat they could possibly foresee—

Sir Harmar Nicholls (Peterborough)

I do not understand that.

Mr. Crossman

Then I repeat it. The most pessimistic prediction which even the most violently pessimistic builder dare make was that there would be a reduction from what I thought at the time was the fantastic total being predicted last January to something rather below the total completion of houses last year. The worst they predicted was a slight reduction in the housing programme. That is not my view, nor is it that of any responsible person, but that is the worst anyone has dared to predict.

Further, right through this spring the construction industry has been overextended—

Mr. Eric Lubbock (Orpington)

A figure of 50,000 has been mentioned.

Mr. Crossman

I have not found any builder who could seriously support that when cross-examined about what he meant by it.

All through this spring the building industry has been suffering—at least in the Midlands and the South—from an acute shortage of skilled labour, and complaining of chronic shortages of some raw materials; most recently, plaster board as well as bricks. In these circumstances, to talk about the present set-back as a major threat to employment in the building industry is absurd. What the construction industry needs just as much as the building societies, and just as much as the hundreds of thousands of people who want to buy homes, is a housing programme fairly agreed by all the interests concerned, with some assurance from the Government that there is a floor below which production shall not fall as well as a ceiling above which new construction must not go. A programme like this would not prevent any recession or setback, but it could enormously reduce its severity, as well as make it possible for the industry to plan its capital programme well ahead.

The Opposition have, quite fairly, seized upon these temporary difficulties of the building societies as an opportunity for a rip-roaring propaganda campaign. Speaking as an old hand at propaganda, I congratulate them on the Press, radio and television build-up to the culmination we have witnessed in this censure debate. It has been a first-class professional job, and that is their right. But I do not view this set-back as an opportunity for clever propaganda. I view it as a warning—and a warning not only to the politicians but to everyone concerned in the building industry—that we cannot permit a completely uncontrolled acceleration of building society advances and we cannot run the construction industry absolutely all out without meeting trouble when the engine overheats. That is a fact, and every sensible person knows that that is the warning and the lesson of the difficulties we are now facing. I am using the opportunity of these difficulties to start talks with the interested parties, and we have started hearing and agreeing the problem. I have explained to them the broad outline of the plan by which I believe the problem can be mastered.

I am glad to say that, although the talks have only just begun, I have found that a welcome readiness to see the great advantage to all concerned of a national housing plan, in the formulation of which all partners must have a say. If this set back highlights the dangers of the unregulated past, it also warns us that the remedies cannot be long delayed. Neither the building societies, nor the builders, nor yet the local authorities, can be expected to carry on for many months without knowing where they are going. I am therefore glad to tell the House that before this summer is out we shall have our plans ready for discussion with the interests concerned. After this discussion they will be published, and we are determined to introduce whatever legislation is necessary in the next Session. I think that answers all the questions which the right hon. Gentleman asked.

That is my reply to the Amendment which the right hon. Member tells us will be moved.

Mr. Costain

I waited to interrupt until the right hon. Gentleman came to the end of the point he was making. His reply to the hon. Member for Orpington (Mr. Lubbock) does not meet the point at all. He said that the building industry does not want to have starts and stops. I agree, but this is one of the biggest stops. It is no good saying that by the end of the summer there will be something, for the building season is between now and the end of the summer.

Mr. Crossman

I appreciate the point, and this is one of the things we have been discussing with the hon. Member's colleagues. We have to use this set back as a starting point for a new advance towards a national housing plan, with which I gathered he agreed on the basic principle but which got such derisory attention from other Members of the Opposition.

I reject their censure. The Opposition had 13 years in charge of housing. We witnessed the advantages and the disadvantages of decontrol and the refusal to plan. Certainly a large number of houses were built, but the "liberation of the people from Socialist controls" and the global housing totals announced each year were won at a very heavy cost. A doctrinaire Rent Act destroyed security of tenure for hundreds of thousands. That was something which the right hon. Member did not mention this afternoon. Those were the people least able to protect themselves. The right hon. Member did not mention how private developers were encouraged to make the shortage of rented accommodation still worse by pulling down huge areas of working class accommodation and replacing them with offices and luxury flats. Meanwhile, local councils which could have relieved the shortage by a pool of cheap rented accommodation were pushed aside by a completely unregulated drive for home ownership. That is the legacy we inherited last October. We have started to deal with it.

The miseries of decontrol will soon be removed by our new Rent Bill. The massive campaign for improving old buildings has been intensified. The frustration of council house building will soon be ended. What remains is the most difficult task of all—the linking together of the private and the public sectors so that both can go forward together in a single coherent national plan [Laughter]. That, as is emphasised by the laughter of hon. Members opposite, was never even attempted by them. It was laughed to scorn by Members opposite, not because many of them are really decontrollers on principle like the right hon. Member for Wolverhampton, South-West (Mr. Powell)—him I respect—but because they funked a really difficult job. Most of them knew that it was necessary but did not have the courage to tackle it.

I believe the people of this country are ready to see a housing plan of this sort agreed between the Government and their partners in the industry. I believe the building industry and the building societies are also ready. I am encouraged by the beginning of talks to find it is so. All we need is a Government which has the courage to take decisions but who also believe in acting in genuine partnership with all those concerned. It is in this spirit that I ask the House to reject the Motion. [HON. MEMBERS: "Hear, hear."]

5.15 p.m.

Sir Herbert Butcher (Holland with Boston)

The right hon. Gentleman the Minister resumed his seat to a round of cheers from his hon. Friends. He put the best possible gloss on an extremely poor case.

Before proceeding further, in accordance with the custom of the House, I declare my interest as a director of a building society and also a director of a company engaged in building houses for sale, although I believe that that is already fairly common knowledge.

I return to the speech of the right hon. Gentleman. I particularly draw the attention of the House to two remarks he made. One was, "This week I have started talking to the building societies" and a little later he said, "Talks have only just begun." What an approach there must have been in October, November, December and January, when the financial crisis was upon us and the Government did not talk to the building societies and the building industry at that time! Surely the hon. Gentleman should have some forecast, some sense of events to come, and be able to deal with them. Building societies were well aware that there was trouble lying ahead because, as he said, it was in January, despite the rebukes from the Chancellor of the Exchequer, that they indicated they would not be able to loan so much money.

Twice in his speech today the right hon. Gentleman has drawn attention to the fact that the loans by the building societies during the first quarter of this year were higher than in previous years. He ought to know the reason, but apparently he does not, and I feel it my duty to explain it to him. It is the practice that when a developing builder wishes to erect houses for sale he goes to a reputable building society, shows the plan, indicates the price and interests the building society in supporting it. That is done over a period of two or three years, in many cases, and between well-established builders and reputable building societies these arrangements are honoured to the full. It is because of these arrangements that the amount of money loaned by the building societies during the first quarter of the year was so substantial.

A further thing which the right hon. Gentleman ought to know is that there is a period of delay between the issue of an offer by a building society and the completion of the purchase by the solicitors acting on behalf of the purchaser. What does that mean for the period in which we are now engaged, when the money is very short for building societies? Much of their income from the public is already hypothecated. Some promises have been made to old-established connections for building new houses and offers to finance existing houses have been agreed between the society and the respective borrower which will be implemented in the near future.

I noticed that the right hon. Gentleman, despite all his skill, the advantages of a great public school and a great university, had nothing with which to cheer the young couple, the young couple who voted for him in October and who are now married. Soon there will be a baby and soon they will be wanting a bigger house than they will be able to think about if the Government go on at the present rate of progress. The Government have fully disrupted the building industry. The right hon. Gentleman shakes his head, but perhaps he will examine the case by putting these points to builders whom, I understand, he is to meet in the next few months.

The position is this. Building developments move forward stage by stage. The usual thing is that the roads and the sewers are put in and then a gang of men start building foundations. On to these foundations the bricklayer puts his bricks. As the house goes up, other trades come in. Due to the difficulty which purchasers are experiencing in securing finance, builders are stopping this orderly progression and are diverting all the labour to finishing off completed houses, because they believe that there are two places in which a building site can be left—first, at the foundation level, where the risks of vandalism are very slight; and, secondly, at the completed stage where the houses can be properly looked after, a show-house be available, and of which, when the money is available, the purchaser can secure immediate possession. Thus, all the various trades are now getting completely out of step. Despite the Minister's speech and despite the promises, nothing has been done. All the fine talk we heard this afternoon will not help one girl or one fellow to move into the home they want.

Where is the 3 per cent. interest rate which was talked about in Boston and in Spalding by the First Secretary of State and Secretary of State for Economic Affairs? It is more than double that now.

Let us examine what should be done. It is not a question of the building societies enduring a temporary difficulty. The fact is that the people of this country do not believe that the Government intended to keep the promises they made. The Government were out for vote-catching and, as the Minister said, this promise attracted thousands of votes. That is on the record. Thousands of people will curse themselves for believing the promises which were made then.

The Minister talked about orderly planning. The orderly planning we have seen since the Minister took office in October has had these results. It is more difficult for the people to whom he promised a loan at a low rate of interest to get any loan at all, even at a high rate of interest. Despite the promises and the pledges of increased house building, fewer houses will be built. The right hon. Gentleman told us that no one builder whom he asked could give him a figure. Of course no one builder could. Let him ask the officials in his box under the Gallery for advice as to the number they expect. I believe that they will certainly accept a figure of 50,000 to 60,000.

What is needed is this. It is necessary to insert and bring to the help of the people about the same amount of money for about the same number of houses as was available last year. The flood gates should not be opened so that there is any amount of money coming forward, because that would increase prices all the way round. On the other hand, money should not be limited without proper attention being given to the number of advances on which it should be made.

I believe that there are four steps which ought to be considered, and at least one of which it is essential that the Government should take. The first is the point made by my right hon. Friend the Member for Bexley (Mr. Heath), a restarting of the House Purchase and Housing Act. That would help people living in the older houses, on the one hand, to sell their houses and move into something better, if they so desire. It would also help others who have not previously been house owners to start in a modest way with a rate of repayment which they can well afford.

However, if because it was a jolly good Act introduced by the Tories the Minister has political prejudices against revising it, let him bring in one of his own. The doctrine is already instituted as to how it can be worked. Recovery from the Treasury worked perfectly well. Let the Minister bring in a House Purchase (Young Persons) Act, and suggest that it is to be available only on similar terms for young people who have been married since the date of the election. That might help a bit. Why not do it?

If the Minister says that it would mean legislation, I ask him to appreciate that, as a White Paper to be issued tomorrow is to be debated next Thursday, it is possible for business to be arranged with remarkable dispatch. If that can be done by one side of the House of Commons, what can be done by both sides?

Thirdly, if the Minister does not like that, he might introduce a Bill assisting people who have never purchased houses of their own before. I think that this would probably be the least satisfactory of the schemes.

I think that the right thing to do would be to enable the building societies to go to the bank as a bank of last resort and borrow from the bank a sufficient sum of money to enable them to advance the same amount of sterling in 1965 as they advanced in 1964. It would be right, I think, to couple with that a requirement that at least the same number of houses should be financed. My right hon. Friend the Member for Bexley suggested that legislation might be required. He may be right. My own feeling is that the building societies are entitled to borrow from the banks.

Mr. Heath

I said that I doubted whether legislation was required.

Sir H. Butcher

I beg my right hon. Friend's pardon. He and I, as always, are in accord. The answer is that legislation is not required. Therefore, this scheme can be started tomorrow if the legal advisers of the Government accord. If it can be started tomorrow, why is it not being started tomorrow? Why has there been this long delay?

The Minister spoke of the bright and beautiful plans he has for the future. That is not what the Government won their thousands of votes on in October of last year. It was on the specific pledges in which they are in default. When the Prime Minister was in New York, he told the Americans that we were going to kick the hell out of them. It is this Government who have kicked the hell out of the building industry. It is this Government who have kicked the hell out of the building societies. It is this Government who have kicked the hell out of the young people whom they deluded. Judging by the faces behind them, they have kicked the hell out of their own supporters, too.

The Chairman (Dr. Horace King)

I did not interrupt the hon. Member for Holland with Boston (Sir H. Butcher) in the midst of his eloquent speech, but I must remind him and the Committee that it is not in order to call attention to the presence of strangers, unless there is some deliberate motive for doing so.

Sir H. Butcher

I apologise to the Chair.

5.27 p.m.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

This side of the Committee should be greatly indebted to the Opposition for having given my right hon. Friend the Minister the opportunity of putting before the House of Commons and the country his comprehensive and thorough approach to the housing problem. What has bedevilled the housing situation for generations is the way in which the needs of the people of this country for homes of their own have been approached in an attitude of splinter—of differentiation—between one set of people and another, between the owner-occupier, the council tenant and the tenant of a private landlord.

I believe that this problem is much simpler and much less serious than is often supposed. We are still spending not much more than 3 per cent. of our national income on housing. It is absolutely absurd for a talented and prosperous nation like ours to be unable to provide for the simplest and most basic human need, which is a home to live in. We have run into unnecessary difficulties in the past because of the separateness of these approaches. I hope that my right hon. Friend will be very radical in preparing his long-term plans. For instance, I do not see the logic of allowing Income Tax relief on mortgage repayments, which helps the millionaire buying a mansion, whereas the postman who is buying a semi-detached house and who has three or four children and who is, therefore, not in the Income Tax bracket at all is not assisted in any way. I hope that the Government will give attention to this aspect.

If we are to make money at low interest rates available for housing, it is very important that my right hon. Friend should turn his able and agile mind to the possibility of some control of the prices of houses. It would be absolutely useless and would defeat the purpose which we have in mind if we made available to a young married couple or a middle-aged couple a sum of money at a reduced rate of interest and reduced cost of assistance from public funds if the only result was that the price of the house which last year would have been £4,000 went up to £6,000. How is their budget helped if the interest is reduced but the capital sum is increased? It is worth reminding the House that the price of new houses has gone up since 1956 by 55 per cent. I thought that this was an impossibly high figure, but as I am quoting from the Bulletin of the Building Societies' Association I must be correct in passing this figure on to the House.

I know the opinion of many hon. Member opposite that it is scarcity of houses which has led to the increase in their cost, but I do not think that we can let the needs of so many of our people fall a victim to the jungle of supply and demand without any regulation. Nor do I think that this is necessarily true, because I find from the same impeccable source that in 1964 the cost of new housing went up by 8 per cent. compared with 7 per cent. in 1963, although more houses were built in 1964 than were built in 1963. I believe that the people's need for housing is so infinite that it will be generations before any equation between supply and demand could make a real impact on this difficult problem.

I was specially interested in reading in the Evening News last night about some houses in Brighton the price of which has been reduced by £1,250. The reason for it is a dearth of money available for mortgage. The Evening News said: Ways must be found to make more money available to the young, would-be buyer to enable the housing drive to continue full pelt. To turn slightly aside from my main argument, I do not suppose that the builder who cut his price by £1,250 has come to great harm or suffered serious loss. I should like to know what profit was left to him after that cut.

We distort the whole problem as long as we allow completely uncontrolled profiteering to go on in this important sector. I serve notice on my right hon. Friend that I should be rather grieved if we made public money available without accompanying it by some system of control, otherwise the increased availability of mortgages would force up prices and nobody except the builder would be any better off in the long run.

This question of interest rates which we have to consider, particularly today in relation to the owner-occupier, is tremendously relevant to local authority building and to the private sector because reduction in one sector obviously affects the demand elsewhere. I have found that there are great advantages in using local authorities for making mortgage arrangements. The local authority which I know best is able to put the services of a surveyor, a valuer and solicitors in the town clerk's department to help people to carry out what can be the very expensive process of house-purchase more economically than when they make ordinary arrangements. I would hope that my right hon. Friend would be looking at the whole subject of housing finance in its widest aspect. Obviously the housing subsidies play a part in this and it would be only fair for people who want to buy their own homes to be helped similarly.

I am sure that it would be more helpful to local authorities, as well as to private builders and those who wanted to buy their houses privately, if cheap money were made available even if subsidies as well as Income Tax reliefs on mortgages were abolished. At the moment in the borough which I know best subsidies are working out at less than the interest which the council has to pay to moneylenders. I see from the Report of the Municipal Treasurers that this is the pattern for the whole country. This seems to me to be a piece of most absurd book-keeping which I hope will be reviewed.

I am haunted by a remark made at the 1963 annual conference of the Royal Institute of British Architects by the city architect of Sheffield who set out the economics of a modest three-bedroomed house bought for £2,500 at 6 per cent. interest over 60 years. The result was 53 per cent. for interest payments, 17 per cent. for cost of building, 3 per cent. for land—it must be cheap in Sheffield—15 per cent. for rates and 12 per cent. for maintenance. The Sheffield city architect's comment was: This poor little house is itself answerable for only 17 per cent. of its cost. I submit to my right hon. Friend that while we are basing our housing programme in any centre on this sort of arithmetic we shall not get any sense into the housing drive.

It is very easy to exaggerate the difficulties, but I believe that we can deal with them. I want to see the local authorities used much more fully. It has to be said that if we believe that housing is a social service which has to be supplied to our people over its widest range then obviously separate arrangements must he made for housing finance. Much of the comment in the Press which has referred to the possibility of a reduction in the Bank Rate as a major way of helping is irrelevant. I am not the only one to think this. I come back to the invaluable document from the Building Societies' Association. In February the Association's chairman said: To lead borrowers to expect a reduction in mortgage rates should there be a reduction in Bank rate is both dangerous and false, because there is not the slightest hope that their rates could be reduced on such a change, unless, by chance, it coincided in time with a considerable upsurge in the flow of savings … This is of no comfort to those who are seeking a home of their own. This is why I am confident that my right hon. Friend, by making these special and different arrangements which will take housing finance out of the generality of the money market, will make a fundamental and lasting contribution towards solving what is in itself a simple, basic and elementary question.

5.40 p.m.

Mr. Peter Bessell (Bodmin)

The right hon. Member for Bexley (Mr. Heath) drew attention to part of the Labour Party's 1964 election manifesto. I make no apology for returning to the section which the right hon. Gentleman mentioned. It would not be possible to debate this subject seriously today without reminding the Government of the pledges which they made to the electorate and from which they obtained so many additional votes. In the manifesto, the Labour Party declared unequivocally as follows: Labour will: (i) Introduce a policy of lower interest rates for housing. … This policy of special favourable rates will apply both to intending owner occupiers and to local authorities building houses to let. There is no division between the three parties represented in the House or, I suspect, between Members as individuals, on the desirability of achieving such a worth-while objective. The country at large desires a system which will enable people to obtain new homes easily and at favourable rates. We know that slum clearance is proceeding too slowly. Far too many people are still living in conditions which would have been archaic even at the beginning of the century and which today are a disgrace in a modern civilisation.

Lack of good housing has created a situation in which many bad landlords have been able to flourish, and this has caused grave concern to everyone inside and outside the House. It should not be forgotten that bad housing not only creates bad landlords but creates bad tenants. It is not entirely their fault.

Bad housing and squalid conditions, through their psychological effect, are a ready source of crime and moral decline generally. How can any young couple setting out in life with the problems of bringing up a young family hope to succeed in their marriage if they are asked to live in conditions which are often quite intolerable.

It is not, therefore, untypical of a radical party seeking to form the Government that it should give such priority in its election campaign to the need for building new houses rapidly, enabling local authorities to provide additional homes at reasonable rents and giving the opportunity to young people and others to buy their homes at fair and low rates of mortgage interest.

This policy of Her Majesty's Government, as it was expressed in the election campaign, had for some of us the added merit that it was not doctrinaire Socialism. On the contrary, one of its aims was to encourage the spread of ownership and wealth among individuals. If some of us were a little surprised at this advance, we were none the less pleased to see it.

The election speeches of leaders of the Labour Party, the present Government, led the electorate to believe that, whatever else might take second place in a Labour Government's programme, there could be no danger of housing being put at the bottom of the list. For this reason, perhaps, more than any other, I was bitterly disappointed in the speech of the Minister this afternoon. He did not present us with a dynamic programme which had been carefully evolved, not necessarily in the 13 years while the Government were in Opposition, but in the last six months. There has been ample time to anticipate the present situation and ample time to produce a programme of correction.

I am not suggesting—it would be unreasonable to do so—that the Minister could possibly have solved the problems of financing local authorities or giving assistance to building societies in the short time in which the Government have been in office, but I do suggest that there has been an opportunity for taking precautionary measures to prevent the development of a situation the danger of which has been clear to many people for a long time. My noble Friend Lord Wade, in his maiden speech in another place, pointed out that, for more than nine months, the building societies had been warning both the past Administration and the present Government of the danger of the situation. Clearly, there has been an opportunity to do something, but the opportunity has been lost.

I recognise the sincere and genuine disappointment which must be felt by members of Her Majesty's Government that they have been unable to fulfil their election pledge in this matter and have been unable, so far at least, to indicate when they will be able to do so. I shall not rehash the arguments about responsibility, whether it is because they inherited a financial crisis that they did not expect, because they are no longer relevant. The, financial crisis was known to Her Majesty's Government at least six, if not seven, months ago. Therefore, they have had opportunity to plan within the framework of the conditions which they inherited.

It is disturbing that, far from having improved, the housing situation, in spite of the intentions of the Government as expressed at the time of the election, has deteriorated. This is something which must be answered, and it must be faced fairly and honestly by right hon. and hon. Members opposite. To take one of the existing problems, the building societies are having great difficulty at present in attracting investment. I shall not labour a point which has been made already more than adequately by previous speakers.

It may well be that this is only a temporary state of affairs. I have no lack of confidence in the ability of the building societies to overcome their problems. They form one of the most important financial institutions of this country, and I have complete confidence in them, as I am sure every hon. Member has. But the fact remains that they have a problem which prevents them from making advances at favourable rates to people who wish to become home owners.

It has been suggested, not in this debate but outside the House, that building societies retain far too much money as reserve. I do not accept this. On the contrary, I believe that one of the great pillars of strength of the building societies is that they know that they can always meet a call, however large or however sudden, and one of the reasons why they have been so successful in attracting investment, in spite of the comparatively low rate of interest which is frequently offered, is that people know that it is a good, sound and safe investment. If any inroads were to be made into their reserves, some of that confidence would be lost, and the consequences would be disastrous not only for the building societies themselves but for the economy of the country as a whole.

The Government could, and I believe should, give immediate assistance to the building societies. One or two suggestions have been put forward from this side of the Committee. One that the Minister should at least consider is whether it would not be possible for the Public Works Loans Board to allow access to funds by the building societies, even as a temporary measure to assist them over the present situation.

I think it is also very important that the Chancellor of the Exchequer should look again at the Corporation Tax and the Capital Gains Tax as they affect the building societies because, quite clearly, there is an important issue at stake and one which will affect the house building programme to which the Government are so clearly pledged and action upon which is expected throughout the country.

The Government could do worse than initiate discussions between the building societies and some of the major insurance houses to see whether sums could not be made available to them from that source. It might well be that, if a temporary tax incentive were granted to insurance houses, some of the very considerable capital reserves for which investment is sought by many of the insurance companies could be made available to building societies to assist them over the present situation.

Another matter to which the Minister should draw the Chancellor's attention is the question of what will be the effect of the new 5 per cent. Post Office savings account programme on investment in building societies. My right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) put that question specifically to the Chancellor but received no satisfactory answer.

I believe that a far more serious situation exists for the local authorities. Many have been compelled to cease making loans for house purchase because of the rate which they have had to pay to borrow the money. One model borough in my constituency, Saltash, has just resumed making loans for private house purchase and is charging at the rate of 7¼ per cent. for a 25–year loan and 7⅛ per cent. for a 30–year loan.

Saltash makes no secret of the fact that it is not anxious to encourage young people to tie this kind of millstone around their necks, but I believe that Saltash and other local authorities making these loans are abundantly right to take this line. Yet, what a disappointment it is, what a bitter blow it represents, to the young couples who after the last election genuinely believed that the Government would be in a position to offer them homes at lower rates of interest. Whatever the Minister may say, the fact is that today those young couples are compelled to pay a very much higher rate than previously.

I am not out of sympathy with the Government in this situation. I do not attempt to disguise that I recognise their problem, but they must have a programme to meet it, and it is that which we demand should be presented to the Committee. I believe that the problem facing the Government is threefold.

First, they must provide money for the continuation of the present rate of house building and purchase. Secondly, they must provide money for the necessary expansion. Finally, they have to provide the money to maintain their election pledge to reduce mortgage rates to local authority and private purchasers. It is not sufficient to blame the last Administration for shortsightedness or absence of planning. A properly phased programme without extravagant promises must be offered now. We have a national plan for education and a national plan for roads. Why cannot we have a national plan for house building, which is what we expected from a Government who have always maintained their faith in planning?

If money is the main factor the Government should face up to one question squarely. If the Government are to spend a sum which might be as large as £600 million in compensating the shareholders in the steel industry in order to nationalise that industry, that will bring small comfort to those who are living together in houses in overcrowded conditions. Moreover, if after taking office again after a break of 13 years they decide that instead of giving priority to their pledge to produce more homes at better rates of interest, they give priority to the nationalisation of steel, then I say that, like the Bourbon kings of France after their restoration, they will be found to have learnt nothing and to have forgotten nothing and they will go to the country unforgiven.

5.56 p.m.

Mr. W. T. Williams (Warrington)

Save for some of his digressions, I do not really disagree with very much that was said by the hon. Member for Bodmin (Mr. Bessell), nor do I think that we should consider only the long-term answers. But the hon. Gentleman did not, of course, tell us what is of some interest—whether or not he is for us or against us on this Motion. [HON. MEMBERS: "He is against the Government."] The hon. Gentleman has many hon. Friends answering for him, but no doubt when the Division comes he will answer for himself.

Mr. Bessell

I thought that I had made the position of my party and of myself quite clear. If I did not, let me assure the hon. and learned Member for Warrington (Mr. W. T. Williams) that we shall vote against the Government tonight.

Mr. Williams

It is good to know where the Liberals stand on at least one occasion. There can be little real dispute that the present situation of housing and housing loans is one that must demand and obtain from the Government an attempt at long-term radical solution. But, since the Opposition wished to raise the debate in this form, I am puzzled because the right hon. Member for Bexley (Mr. Heath) did little more than pose again the problems with which the Government are faced. He did not attempt to make any real answer.

The right hon. Gentleman told us that the Government had stultified the Conservative legacy of 43,000 houses in the pipeline which, he said, the Government were now cutting back. This is an example of the lack of clarity and of the woolliness with which the Conservatives approach every problem and certainly of the way in which they have approached every attack that they have made on the Government. What is important at this stage, when considering a long-term solution, is that the reality of the situation with which we are immediately faced should be seen. I agree that the problem is not fundamentally difficult. It is difficult of solution, but the problem itself is clear.

We are faced with two quite separate difficulties demanding different answers, and they must be kept separate. There is the difficulty of what one might call the capital failure, of which the building societies in particular are complaining and the result of which, we have been told unceasingly in the newspapers of late, is that building is to be substantially cut back. Figures amounting to 50,000 and even 75,000 fewer houses to be built have been mentioned. There is also the quite separate and distinct difficulty of high interest rates.

The hon. Member for Bodmin and the hon. Member for Holland with Boston (Sir H. Butcher) spoke of their unwillingness at this stage to attempt any longer to excuse the Government for high interest rates on the basis that they knew when they came to power that they were faced with a d difficult economic situation.

Mr. Bassell

I did not say that. What I said was that I could not forgive the Government for failing to produce a plan to overcome this.

Mr. Williams

I do not think that there is any real difference between us. What the hon. Gentleman is now saying is that, faced with the difficulty of the present interest situation, the Government should have dealt with that in order to meet the housing mortgage crisis.

This is a grossly unfair charge to make against the Government. My object is not so much to convert the Opposition, for that is impossible, but to allow the country to see the problem through my spectacles. It is a grossly unfair accusation to make against the Government, for the fact is that no Government coming into power in the economic situation with which the Government were faced would have been able to solve all the differing claimant demands from people who for many years had had their rightful dues denied them by an indifferent Government. Since we have been in power, we have been faced with the problem of trying to put right things like pensions and the Health Service, all making unceasing demands on us and forcing us to face a system of priorities which would not necessarily have been of our own choosing.

In that situation, this is not a problem which can be solved in isolation, and the country ought readily to recognise that, even though the problem cannot immedi- ately be solved, a party which has kept its other promises is not to be condemned for failing to keep this promise and is to be believed when it says that it is its intention in the near future to keep this promise also.

Even this is not the most serious aspect of the problem now facing the Government, for although it is true that interest rates are high, and although I agree with my hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) that the Government at some time must be prepared to offer some kind of solution if high interest rates continue, even in the near future, a solution along the lines suggested by Professor Merrett and Alan Sykes—that people who do not pay Income Tax should still be allowed a rebate as though they paid Income Tax, for even if the interest figure were 7 per cent. the effective rate for those paying Income Tax would be about 4–3 per cent.—there is a much more urgent and difficult problem about which there appears to be a great deal of misunderstanding, and that is the so-called capital failure.

It is appalling that the building industry should lend itself, as it has, to the suggestion that the cut-back as a result of the capital failure might mean a reduction of about 50,000 to 75,000 houses. This is not true and since the building industry has been meeting the Minister it has admitted that it is not true. In these circumstances, it is utterly false to make use of this kind of propaganda and to create the sort of panic against which even the building societies themselves are now registering their protests.

I was puzzled by the speech of the hon. Member for Holland with Boston. Although he did not tell us—perhaps he should have done—he is a director of a building society.

Sir H. Butcher

I opened my speech by at once indicating that I was a director of a building society and also of a company engaged in houses for sale.

Mr. Williams

I apologise. My attention must have been drawn away. I was not making any serious criticism of the hon. Member, but I apologise. He is the director of a building society. I have not had the opportunity of knowing what the building societies have told the Minister, but what building societies other than the hon. Gentleman's have said publicly is that the last thing they want in the present situation is to have a momentary and temporary difficulty of theirs elevated into a panic.

The building societies themselves are not beyond criticism for the way in which they have been led into their present situation. I think that it was The Economist which in January said that what the building societies were suffering from was not a shortage of finance but a shortage of nerve. What they have failed to do is to attempt to create for themselve a situation in which they cease to be as vulnerable as they have continued to be against every change in the monetary climate. The problem of the building societies is that for all their experience they have not yet learned whether to borrow short or long term. Every adjustment in the Bank Rate, certainly since I have been a Member of Parliament—and in that time there have been many—has always caught the building societies short, and invariably, certainly in recent years, they have altered their terms to meet changes in the Bank Rate.

Sir Erie Errington (Aldershot)

I follow what the hon. Gentleman is arguing and what he is saying about the building societies, but surely the real issue is the Government's promise at the election that they would lower interest rates and put them on an entirely lower basis. It is possible for the hon. Gentleman to criticise the building societies, although I do not agree with that, but during the election campaign the Labour Party said that it would reduce interest rates and give specially favourable terms to borrowers.

Mr. Williams

The hon. Member has not sat throughout the debate.

Sir E. Errington

I have.

Mr. Williams

What I began by saying was that I thought that there were two quite separate problems and that the Government's undertaking was to be accepted and that in the long-term they would yet fulfil this promise as they had fulfilled others. The hon. Gentleman may dispute it, but that was my original thesis.

There is certainly a need for the building societies to put their own house in order in relation to their short-term and long-term borrowing and lending. They need to reorganise their borrowing procedures so that they may achieve greater harmony between their borrowing and lending. I was going to suggest many ways in which it might have been done. They are not unknown to the building societies because nothing that I am saying is original. There are other sources from which they can get their information. If that had been done, this problem would not have arisen.

The fact is that the building societies financially are still enormously strong. But they are in a difficult situation because they have too much liquidity. If, faced with difficulties, they had maintained the situation and continued lending they would have been in a better position to come to the Government and ask for help. [Interruption.] Faced with a temporary difficult situation, one must meet it with extraordinary measures. [Laughter.] Hon. Members may laugh, but laughter is never a substitute for argument. What I am seeking to do is to put forward what I believe is a possible solution to an immediate difficulty.

Mr. Bessell rose—

Mr. Williams

I cannot give way again.

Although I have not said half of what I wanted to say, I must be content with this. This situation has long-term consequences of very great significance about which my right hon. Friend has spoken and of which I believe the Government will take notice and look, as I hope, not to the building societies for as much assistance as they have provided in the past but rather to local authorities. Whatever the long-term solutions may be, the main gravamen of the thesis on this other aspect of the two matters with which I have attempted to deal is this. Bearing in mind the difficulties and problems in many respects with which the Government have been faced, it is, in my view, a gross abuse of the duties of Parliament at this stage to make an attack, remembering that during this debate a good deal of the attack has been blunted. Many admissions have been made that the situation is not what it has been cracked up to be.

The case which the Government have put forward has been amply justified, and the Opposition's censure on the Government is utterly unjustified.

6.14 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames)

I am sorry that the hon. and learned Member for Warrington (Mr. W. T. Williams) saw fit to indulge in an attack on the building societies, which I thought was unfair. I was the more sorry because, in many ways, I preferred his speech to that of the Minister. The hon. and learned Gentleman at least recognised that there was an urgent and difficult situation. In all honesty, I do not think that the Minister did.

In the last week or two I have been wondering how a situation which it was plain to those of us with no official responsibilities was developing and of which my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) gave warning a week or two ago, had been allowed to develop without any action being taken by the Government or by the responsible Minister. When I listened to the right hon. Gentleman, the matter became only too plain. The smug satisfaction in which he indulged and his complete refusal to recognise awkward and embarrassing facts gave the clue to how what is undoubtedly a serious situation had been allowed to develop in complete breach, as the Committee has been reminded more than once, of the Government's pledges and without a finger being raised to check it. The whole attitude of the right hon. Gentleman made that only too plain.

What is the remedy which the Minister offers us? We are faced with a situation of real seriousness. I hope that no one denies that. The hon. and learned Member did not deny it. If anyone denies it, I invite his attention to the Pre3s statement formally put out by the Federation of Registered House Builders, after its meeting in London on the 23rd of this month. It referred to a survey which the Federation had undertaken through its widely spread membership and said: This information, although not covering the whole country, clearly shows that even at this stage at least one prospective purchaser out of four will not be able to get a house this year and that the situation is bound to get worse unless immediate steps are taken to make it easier for purchasers to borrow the money they need". In comments afterwards, the President of the National Federation of Building Trades Employers said:

Bearing in mind that private builders put up and sell nearly 225,000 houses a year, if this process continues the effect on the nation's housing programme could well be disastrous. The question is: does the Government really want to deny home ownership to people and thereby force them into rented accommodation which is already severely limited? I think that hon. Members will repeat that question with more pointedness after hearing the Minister's speech.

Faced by a situation described not by political opponents of his but by the responsible business body concerned, what does the Minister offer us? He said that he was glad to tell hon. Members that by the summer he would have some plans which he would be able to discuss with the outside bodies concerned with a view to introducing legislation next Session. Then he added that he is to have—he has not, apparently, had—talks with the Chancellor of the Exchequer about the rôle which Exchequer finance could play in a national housing plan. That is all we had. In view of the situation about which evidence has been given by people completely independent of political allegiance, it is clear that the housing programme is faced with a most serious situation this year.

That was a very remarkable attitude for the responsible Minister to adopt. [HON. MEMBERS: "Where is he?"] I do not know that we need complain about his absence. His presence made no contribution to the debate. However, the right hon. Gentleman—and I am sorry that he is not present, for this reason—made some extraordinary statements about the building societies He referred with complete detachment to a setback to the building societies. There was no suggestion that this was a setback to the Government's housing programme or to the Labour Party's pledges. Then he made a most remarkable observation which reduced even his own hon. Friends to expressions of surprise. He said that he had to help the building societies to overcome the lack of confidence in them caused by Tory speeches.

It is not Tories who have criticised the building societies. It was the Chancellor of the Exchequer who attacked them when they took a step which, as my right hon. Friend the Member for Bexley (Mr. Heath) reminded us, if they had not taken would have caused an even greater shortage of funds than there is now. Let the Chief Secretary to the Treasury speak for his right hon. Friend the Chancellor if he needs to protect the building societies.

The right hon. Gentleman made another observation—I do not know whether the Chief Secretary will be able to explain it, even with his considerable powers of exposition; he has a good deal to explain as it is—that there could not be permitted a completely uncontrolled increase in building society advances. What does that mean? In the circumstances in which they are being cut back, it has a certain brutal irony about it.

Does that mean that if, as a result of their efforts—because they will not get any help, apparently, from the Government for a long time—the building societies can restore the situation, the Government will interfere with their advances? If it does not mean that, why did the Minister say it? What was the purpose of that? The Minister gave an indication that in his great building plan for the future, private enterprise building would not go unchecked. Was that a threat of building licensing? Was it a hint of that? If not, again, why was it said?

I am glad that the Minister has returned in time to answer perhaps one of my questions. He made a virtue of the fact that he had seen the building societies. It was this week, was it not, after this debate had been announced? Would he have seen them at all if my right hon. and hon. Friends had not given notice that we would raise this subject? When the Minister saw them, did he put before them a plan for assisting on the rates of interest? If the right hon. Gentleman does not answer this, the Committee will draw its own conclusions. The right hon. Gentleman summoned them because of this debate and he put no considered proposals before them, even though he has been six months in office, with all the pledges of his party behind him.

The situation is one for which the Government are responsible. Indeed, they have achieved—I must pay tribute to them—what had previously been thought by all economists to be impossible: a shortage of funds for building and very high rates of interest. They have succeeded in achieving them both at the same time. As my right hon. Friend the Member for Bexley said, it is the result of their policies—high taxation, high rates of interest, the shortage and drawing off and diversion of funds in other directions, grinding taxation and adverse effects on savings. The Committee knows this. People outside know it.

It is not for the right hon. Gentleman—as I have said this in his absence, I say it now to his face—to refer with an air of airy detachment to this setback to the building societies when what is happening is that, as a direct result of Government policy, matters to which he and his hon. Friends are pledged are going by default. It is their fault.

Had the Minister seen the faces of his hon. Friends behind him as he was speaking this afternoon, he would have noted it. It is a sad and sorry and, I would say, dishonourable thing that after six months in office, faced by this situation, all that the right hon. Gentleman can offer is plans to be discussed with the outside bodies in the summer and legislation next Session. Why next Session?

The right hon. Gentleman himself, in an earlier Parliamentary Answer, said that there was not time for the legislation. Is that really true? Is such legislation ready? If it is not ready, the right hon. Gentleman's remark about parliamentary time was irrelevant and misleading. If it is ready, it is a rather curious example of the Government's priorities that they can find room for the Steel Bill, a Measure which is hardly likely to pass "on the nod". They can find time for a Measure to permit trade union officials with impunity to victimise individuals and drive them out of their jobs, but they cannot find time for a Measure designed to carry out their own election pledges.

On the rate of interest, which is one of those pledges, I take the point made by the right hon. Gentleman that it can be argued that it is unreasonable to expect a Government, even a Government poised for resolute action, full of the new thinking and all that, to carry out all their election pledges at once. What we can criticise the Government for is, having promised and pledged themselves up to the hilt to secure lower interest rates, not doing something about it when, under their rule, those interest rates actually rise, and rise to the highest level since the war. The pledges are absolutely clear: implicitly that funds shall be available; explicitly that they shall be available at cheap rates.

We know the facts. We know, as I have said, that building society rates are the highest since the war, and the building societies are criticised by the Chancellor of the Exchequer for doing that in a situation which he has created. We know what the local authority rates are when local authorities are able to lend at all. We know that many of them have given up lending. Among those who are lending, as compared with the 6¾ per cent. of the building societies we have the Greater London Council at 7¼ or 7⅛ per cent. according to the length of loan and a great many others over 7 per cent., imposing a heavy burden on just those young married couples to whom the right hon. Gentleman and his colleagues made those emotional appeals at the General Election.

What is so extraordinary is that right hon. Gentlemen opposite have not seen this coming. Warned again and again in the Press, warned by the Federation of Registered House Builders, warned of the consequences, they did absolutely nothing. The most startling thing of all was the statement of the Chancellor of the Exchequer himself, when he was rebuking the building societies for raising their rates of interest. On 19th January, he said in the House: I believe that many of the building societies are being unduly pessimistic about their capacity to raise money in present circumstances."—[OFFICIAL REPORT, 19th January, 1965 Vol. 705, c. 23.] It is, indeed, fortunate for those who want to buy a home that the building societies had wiser financial judgment than the Chancellor of the Exchequer. His record in this is astonishing. On 23rd November—this is quoted at the head of a leading article in The Times today—the right hon. Gentleman said: We are urgently considering whether some means can be found of mitigating the severity of the increase in Bank Rate on the housing programme. Six months ago, the Chancellor said that he was "urgently considering" it. If he had been only actively considering it, I suppose it would have been a year. What is so startling is the way that the Government have ignored all these warnings on something which a sense of honour, if nothing else, should have caused them to take action.

We have the Minister of Housing and Local Government pointing out, with naïve surprise, that there are still plenty of people actually wishing to borrow. Of course there are. But what, despite the high rate of interest, they cannot do, is to get the funds. It is a little brutal of the right hon. Gentleman to make a virtue of the fact that many people are seeking the possibility of getting a home when his Government have denied it them.

Let us be clear what the Government are pledged to do. Take their election manifesto. Page 15 states:

At the same time, we shall go ahead with a sustained programme to provide more homes at prices that ordinary people can afford. Labour will:

(i) Introduce a policy of lower interest rates for housing. Then there is another document entitled "When Labour Wins". This document is adorned with a picture of the Prime Minister, which was probably taken some years ago. It is a picture, in every sense of the term, of a promising young man, but when Labour wins this is what happens. The promise was to bring down interest rates for both intending owner-occupiers and local authorities building houses to let.

The election address of the right hon. Gentleman the First Secretary of State, decorated again with Brown and Belper, said: Special low interest rates for house purchase by intending owner-occupiers—or local authorities—will halt the soaring cost of homes. We had pledge after pledge from the party opposite. The Prime Minister's election address said: 100 per cent. mortgages, lower interest rates and cheaper legal charges will help those who wish to buy. That sort of pledge was made speech after speech, and in broadcast after broadcast. Indeed, the Minister of Housing and Local Government, in one of those bursts of frankness which are so attractive on his part, said with truth that this pledge had won for the party opposite the votes of thousands of young married couples, and, I would add, of thousands more young people who want to be young married couples, but cannot be until they get a home in which to live. This is the result. The right hon. Gentleman says, "There will be discussions, producing a plan which I can show to the outside bodies in the summer, with a view to legislation next summer".

Does the right hon. Gentleman think for a moment that if those who voted for him, as he said on the strength of this pledge, had known that after six months of Labour Government the building societies' lending rate would be 6¾ per cent., and that the local authority loan rate would be 7¼ per cent., and that even at those rates many people would be turned away, he would be sitting there at all today? The Treasury Bench is so littered with pledges on this subject that it looks like a pawn shop. All that we are offered is no action at all, an attack on building societies, and an attack on those who provide housing by private enterprise. We are given a vague promise of a national housing plan some time next year. That is all that the people outside are offered.

I sometimes wonder, and I am wondering even more now, whether the Government really care about home ownership. We do. Under the Conservative Government, the percentage of homes owned by the people who lived in them rose from 29 per cent. in 1951 to 44 per cent. last year, a tremendous social development. We care about this. Do right hon. Gentlemen opposite care? I though that I detected in the right hon. Gentleman's speech a preference for the council estate, for its arbitrary bureaucracy, with every door and window painted the colour which the borough surveyor likes. I thought that I detected a desire to cut back private building.

Mr. Crossman

Nonsense.

Mr. Boyd-Carpenter

The right hon. Gentleman says "Nonsense", but that has been the policy of his party in the past. Let me remind him what was said by a greater figure in the Labour Party than himself. Mr. Aneurin Bevan said: Inside the Labour Party, there has always been argument as to whether we ought to have allowed any private building for sale at all. —[OFFICIAL REPORT, 4th December, 1951; Vol. 494, c. 2256.]

He also made an attack on building societies, and here, perhaps, he was a forerunner of the right hon. Gentleman, when he said that building societies were little if anything better than moneylenders, and that to describe them as building societies was a complete misnomer. What we want to know, and what I am certain people outside want to know, is not only whether the Government can devise means to help those who want to buy a home, but whether they want to do so, and whether they are prepared to make the effort to do so.

The right hon. Gentleman will no doubt recall the article that he wrote in the New Statesman some years ago, entitled "The Stimulus of Defeat". He will probably have to write another under that title before long. I often wonder whether he feels that home ownership means that people living in their own homes perhaps become Tories, I do not know, but he must realise that our people have an enormous urge to own a home of their own, and not to be dependent on any landlord, however amiable, or any local authority, however benevolent.

That is not particularly a craving of the very rich. On the whole, they live in rented flats and villas. It is a characteristic of some of the best, most effective and active of our people. We in the Conservative Party have sought to serve this during the last 13 years, with the result that there has been this massive increase in home ownership, with the immense contribution that that has made to human happiness. It has meant the security of a home of one's own, with which no local authority and no landlord can interfere, as a basis for family life for bringing up children decently. Security in a home of one's own is a powerful urge. That is why people are prepared to make great sacrifices. That is why they are prepared to pay even the present rates, if they can get an advance at all, to have a home of their own and to live self-respectfully in their own homes.

This is a deep urge in our people. It is an urge which the right hon. Gentleman frustrates at his peril. The pledges which have been made are clear and explicit, and I cannot see how any Minister could fail to take some steps now to implement them, or resign, because they are so clear and explicit. Far more important than the transient pledges of a transient party is the real social issue which underlies this, that of the Englishman owning and living in his own home.

This is the issue which the Government thwart at their peril. Unless they redeem their pledges, unless they take effective action to help, either in the way suggested by my right hon. Friend, or in the way suggested by the hon. Member for Bodmin (Mr. Bessell), they will lose a great deal more in the estimation of the British people than the right hon. Gentleman and his hon. Friends realise. After this performance, and after his speech, I cannot see how any sensible elector can ever trust a Labour Party pledge again.

I beg to move that Class VI, Vote 1 (Ministry of Housing and Local Government) be reduced by £1,000.

6.39 p.m.

The Chief Secretary to the Treasury (Mr. John Diamond)

It is because I share many of the sentiments expressed by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) about the desirability of home ownership, a sentiment which is shared by hon. Members on both sides of the Committee—[Hon. MEMBERS: "Oh."] I shall not get very far if I cannot make a statement like that.

It is because I share the sentiments expressed by the right hon. Member that I wanted to say how glad I was to hear him repeat those phrases, and how sorry I was that in the course of a 25-minute speech he did not suggest one thing which would help. There was not even the suspicion of a policy, no idea at all of what he would do, or what we should do, beyond requesting the resignation of my right hon. Friend. [Interruption.] I am happy to know that apart from one sugge3tion made by the hon. Member for Holland with Boston (Sir H. Butcher), right hon. and hon. Members opposite have made exactly the same proposals for dealing with this problem as they made during their 13 years of office—none.

What is it that we are supposed to be dealing with? In every speech by an hon. Member opposite the problem that has been put before us has been represented as the crisis facing the building societies and the lack of finance for mortgages. The right hon. Member for Bexley (Mr. Heath) said, "There is an acute shortage of mortgage funds. The process of changing houses is grinding to a halt." The hon. Member for Holland with Boston, referring to the present situation, said, "It has completely disrupted the building industry. It has kicked hell out of the building industry." The hon. Member for Bodmin (Mr. Bessell) said, "There is a financial crisis facing the building societies."

All those statements are grossly inaccurate, grossly exaggerated, and grossly damaging to the building societies. The building societies would be most grateful if right hon. and hon. Members opposite would stop creating a lack of confidence in the societies in this way.

Mr. Bessell rose—

Mr. Diamond

I will give way in a moment. I will not follow the example of the right hon. Member for Kingston-upon-Thames, who took more time than he has left me.

Mr. Boyd-Carpenter

The hon. Gentleman knows that it was arranged that I should sit down at twenty minutes to seven—and I sat down at twenty-two minutes to seven.

Mr. Diamond

That is quite right. The fact remains that the right hon. Gentleman failed to give way once, although he had more time at his disposal.

My first point is that the real facts, not only with regard to building but with regard to building finance, both in terms of local authority loans and building society loans, are that we have just had published for the last quarter the highest ever figures of lending and of building. That is putting the matter in its proper context. As for wrecking the building industry, and knocking hell out of it, and completely disrupting it, as was said by the hon. Member for Holland with Boston, who is a director of a building company and also of a building society, in every single category of trade of building employee there are more jobs looking for men than men looking for jobs. There is no evidence, therefore, that if a single additional loan were granted there would be an additional man laying an additional brick.

What we are not concerned with is the crisis which right hon. and hon. Gentlemen opposite are trying to create. We are concerned with the regular flow of finance for providing homes. We are concerned with an increase in the provision of homes, and we are anxious that there should be an increase in the number of home owners. We are anxious that houses should be built for people to live in, both for rent and to own. But we must find out whether there is a real crisis or a "phoney" crisis.

Every quotation that I have given from speeches made today—quite apart from the propaganda write-up to which my right hon. Friend referred, which has taken place previously—shows that what the Opposition are trying to do is to build up a "phoney" crisis, which, the building societies tell me, is damaging them and will continue to damage them.

Mr. Bessell

I must ask the hon. Gentleman to accept that in quoting part of my speech he failed to give it its proper meaning. He should have quoted the rest of it, in which I expressed complete, and absolute confidence in the future and stability of the building societies.

Mr. Diamond

If the hon. Member did that he had no reason grossly to exaggerate the present situation in order to make party political capital out of it. If he is so confident, he should not be so ambivalent. That is the trouble with some Liberals; one never knows where one is with them.

Dr. Wyndham Davies (Birmingham, Perry Barr) rose—

The Chairman

Order. If the Minister does not give way the hon. Member must not persist in rising.

Mr. Diamond

We now have to face three questions, which the Opposition have put to us. First, why are the rates high when we promised they would be lower; secondly, why is there not sufficient finance available; and, thirdly, have we any plans for the future? As for the lack of finance, I have indicated the present position. We have reached an all-time high, both in lending and in building.

If we start out in a year with what I can only call an enormous spring flush, and intend—as has been suggested by the hon. Member who is a director both of a building society and a building company—to lend the same amount and to build the same amount during the course of that year as was lent and built in the previous year, it follows that the graph, which has been going up, must level out and, indeed, come down for the rest of the year. [Laughter.] That is a simple matter of arithmetic to which hon. Members opposite have not turned their minds.

If the figures for the first quarter are well above the newly-posed target—and the hon. Member for Holland with Boston was the only one to pose a target; nobody on the Opposition Front Bench did—if we start with the first quarter above that target it follows inevitably that during the remaining three quarters, if the target is kept to, we shall go at a slower rate than we went in the first quarter.

The situation with which we have to deal is not the anxiety that exists at the moment, but the possible anxiety for the future. What we must ask ourselves, therefore, is what has caused the present situation, in terms both of the falling off in funds and of high rates. The same answer applies to both. It is the lack of confidence in building societies. It is not the lack of deposits made with the building societies. The societies have continued to receive a very full share of their normal deposits.

What has happened is that withdrawals have increased out of all proportion.[HON. MEMBERS: "Why?"] I am coming to that. Withdrawals have increased because the very large depositors with building societies have withdrawn their deposits, in search of higher rates which they can get elsewhere, particularly from the local authorities [HON. MEMBERS: "Why?"] They are getting higher rates from the local authorities because funds which were previously available from abroad to lend to local authorities have gone back. [HON. MEMBERS: "Why?"] The reason for that, as every hon. Member—and particularly the Leader of the Opposition—knows, is that there was a crisis last year, caused, in particular, by the Government of the day, who allowed this country to overspend £750 million.

When our total reserves are of the order of £900 million, those irresponsible Members sitting on the Front Bench opposite, knowing full well what was going on—I refer particularly to the right hon. Gentleman the Leader of the Opposition—and determined to see, as he himself said, that what came first was winning the election and not the welfare of the country, caring nought for the £, for our balance of payments or anything else, went overspending at the rate of £3 million a day until, last year, our balance of payments suffered to the extent of £750 million, a sum which would have been greater had we not intervened.

Sir Alec Douglas-Home (Kinross and West Perthshire)

I thought that I had better wait a moment for the hon. Gentleman to calm down a little. Is not my memory correct that when our side of the Committee put forward, at the General Election, programmes for roads, hospitals, education and all the rest of it, the hon. Gentleman and his right hon. and hon. Friends put forward a programme which was far higher? If so, how can they accuse us of over-spending?

Mr. Diamond

The right hon. Gentleman's recollection is not all that good. What the right hon. Gentleman should recollect is that he told the whole of the Conservative Party that as from October or November, 1963, the only thing that mattered was winning the next election. What did not matter was protecting the £. What did not matter—[HON. MEMBERS: "Withdraw"]—was protecting the £ and our credit. [HON. MEMBERS: "Withdraw."] When a country is overspending to the extent of £750 million, with reserves of about £900 million, it is not surprising, is it, that when foreign countries find out the facts they have doubts about the stability of the economy of this country—[HON. MEMBERS: "Oh."]—they have doubts about its ability to pay its debts? As everybody knows, it was that situation—[Interruption.]

The Chairman

Order. I hope that hon. Members will not shout across the Floor at each other, but will let the debate continue in a reasonably orderly manner.

Mr. Diamond

We on this side of the Committee have listened with care and consideration to every speech made throughout the debate, but, of course, right hon. Gentlemen opposite did not expect to get a reply and did not want the Committee to be reminded of the facts.

The facts are that as a result of the situation which we inherited, and which hon. Members opposite cannot laugh off, and about which no one in the country is in any doubt; the result of that and the consequences arising—the Bank Rate and the consequent increase in the level of rates—local authorities which found themselves short of funds borrowed in the market and borrowed at increasing rates; and people prepared to take advantage of those increased rates withdrew their funds from the building societies in order to do so——

Sir Godfrey Nicholson (Farnham) rose—

Hon. Members

Sit down.

Mr. Diamond

That is a temporary situation, because we are taking all the necessary steps to restore the strength of the £—[HON. MEMBERS: "Oh."] Hon. Members may laugh, but they will be glad to know that the £ is standing at the highest it has been for over a year—they can laugh that one off.

It is only when we restore the situation that it will then be possible for rates to become more normalised. It will then be possible for funds which have been withdrawn to find their way back to the building societies. That process has already started in the sense that local authorities are no longer offering anything like the rates they were offering a short time ago to further clients. They are offering about 1½ to 2 per cent. per annum less than they were a short time ago. This is an indication—we hope it is a sound indication—that funds are beginning to flow the other way. If that is so, there will no longer be the level of withdrawals from the building societies and the temporary difficulty we are all anxious about and wish to avoid.

In particular I wish to refer, because the right hon. Gentleman asked me to refer to it, to the further statement made by the Bank of England today. As the Committee knows, my right hon. Friend the Chancellor of the Exchequer said in his Budget speech that he would take further measures to reinforce control over bank lending if it were proved necessary. The London Clearing Banks' monthly statement, published today, discloses a big increase in advances and my right hon. Friend has decided that a further measure of control is needed. The Government are determined that the expansion of the economy, which is evidenced in all the economic indicators, should proceed in a controlled manner.

The call for special deposits takes its place among the other measures which the Government are promoting and, in particular, will assist to realise the Government's prices and incomes policy—[HON. MEMBERS: "Stop."] Hon. Members opposite shout "Stop". Let me tell them what I believe "stop" really means. It really means stopping people going to work. That is what it really means, that is the essence of the thing—men at work. Men at work is substance, and all the economic arguments, by and large, are shadow. Men create when they are working and the present position of the unemployment rate in this country is about 1½ per cent. That is the answer to any hon. Gentleman who is alleging questions of stop.

We are concerned at this situation. We are anxious that it should not con-

tinue. The first thing, therefore, that we want to do is to repeat an appeal to right hon. and hon. Members opposite not to decry the building societies and exaggerate the situation and talk about a crisis when there is no crisis——

Mr. Heath

I am sorry to interrupt the hon. Gentleman right at the end of his speech, but both the hon. Gentleman and his right hon. Friend have been trying this afternoon to create a bogy and a myth of lack of confidence in the building societies which has never existed on this side of the Committee.

Mr. Diamond

Of course it does not exist; of course it is "phoney". That is my whole point. It is a pure "phoney" in order to make political capital and to discredit the building societies. [HON. MEMBERS: "No."] I took down word for word what the right hon. Gentleman said and I do not detract from it. I am quoting him and his hon. Friends word for word. There is nothing wrong with what I have said, and I hope that he will co-operate with me in this endeavour.

Question put, That a sum, not exceeding £16,481,000 be granted for the said Service:—

The Committee divided: Ayes 284, Noes 296.

Division No. 97.]	AYES	[7.0 p.m.
Agnew, Commander Sir Peter	Brooke, Rt. Hn. Henry	Dance, James
Alison, Michael (Barkston Ash)	Brown, Sir Edward (Bath)	Davies, Dr. Wyndham (Perry Barr)
Allan, Robert (Paddington, S.)	Bruce-Gardyne, J.	d'Avigdor-Goldsmid, Sir Henry
Allason, James (Hemel Hempstead)	Bryan, Paul	Dean, Paul
Anstruther-Gray, Rt. Hn. Sir W.	Buchanan-Smith, Alick	Deedes, Rt. Hn. W. F.
Astor, John	Buck, Antony	Digby, Simon Wingfield
Atkins, Humphrey	Bullus, Sir Eric	Dodds-Parker, Douglas
Awdry, Daniel	Burden, F. A.	Doughty, Charles
Baker, W. H. K.	Butcher, Sir Herbert	Douglas-Home, Rt. Hn. Sir Alec
Balniel, Lord	Buxton, R. C.	du Cann, Rt. Hn. Edward
Barber, Rt. Hn. Anthony	Campbell, Gordon	Eden, Sir John
Barlow, Sir John	Carlisle, Mark	Elliot, Capt. Walter (Carshalton)
Batsford, Brian	Cary, Sir Robert	Elliott, R. W.(N'c'tle-upon-Tyne,N.)
Beamish, Col. Sir Tufton	Channon, H. P. G.	Emery, Peter
Bell, Ronald	Chichester-Clark, R.	Errington, Sir Eric
Bennett, Sir Frederic (Torquay)	Clark, Henry (Antrim, N.)	Farr, John
Bennett, Dr. Reginald (Gos & Fhm)	Clark, William (Nottingham, S.)	Fell, Anthony
Berkeley, Humphry	Clarke, Brig. Terence (Portsmth, W.)	Fletcher-Cooke, Charles (Darwen)
Berry, Hn. Anthony	Cole, Norman	Fletcher-Cooke, Sir John (S'pton)
Bessell, Peter	Cooke, Robert	Foster, Sir John
Biggs-Davison, John	Cooper, A. E.	Fraser,Rt.Hn.Hugh(St'fford & Stone)
Bingham, R. M.	Cooper-Key, Sir Neill	Fraser, Ian (Plymouth, Sutton)
Black, Sir Cyril	Cordle, John	Galbraith, Hn. T. G. D.
Blaker, Peter	Corfield, F. V.	Gammans, Lady
Bossom, Hn. Clive	Costain, A. P.	Gibson-Watt, David
Bowen, Roderic (Cardigan)	Courtney, Cdr. Anthony	Giles, Rear-Admiral Morgan
Box, Donald	Craddock, Sir Beresford (Spelthorne)	Gilmour, Ian (Norfolk, Central)
Boyd-Carpenter, Rt. Hn. J.	Crawley, Aidan	Gilmour, Sir John (East Fife)
Boyle, Rt. Hn. Sir Edward	Crosthwaice-Eyre, Col. Sir Oliver	Glyn, Sir Richard
Brains, Bernard	Crowder, F. P.	Godber, Rt. Hn. J. B.
Brewis, John	Cunningham, Sir Knox	Goodhart, Philip
Brinton, Sir Tatton	Curran, Charles	Goodhew, Victor
Bromley-Davenport,Lt.-Col.Sir Walter	Dalkelth, Earl of	Gower, Raymond
Grant, Anthony	Lloyd, Rt. Hn. Selwyn (Wlrral)	Ridsdale, Julian
Grant-Ferris, R.	Longbottom, Charles	Robson-Brown, Sir William
Gresham-Cooke, R.	Longden, Gilbert	Roots, William
Grieve, Percy	Loveys, Walter H.	Royle, Anthony
Griffiths, Eldon (Bury St. Edmunds)	Lubbock, Eric	Russell, Sir Ronald
Griffiths, Peter (Smethwick)	Lucas, Sir Jocelyn	St. John-Stevas, Norman
Grimond, Rt. Hn. J.	McAdden, Sir Stephen	Scott-Hopkins, James
Gurden, Harold	Maclean, Sir Fitzroy	Sharpies, Richard
Hall, John (Wycombe)	Macleod, Rt. Hn. Iain	Shepherd, William
Hall-Davis, A. G. F.	McMaster, Stanley	Sinclair, Sir George
Hamilton, Marquess of (Fermanagh)	McNair-Wilson, Patrick	Smith, Dudley (Br'ntf'd & Chiswick)
Hamilton, M. (Salisbury)	Maginnis, John E.	Smyth, Rt. Hn. Brig. Sir John
Harris, Reader (Heston)	Maitland, Sir John	Soames, Rt. Hn. Christopher
Harrison, Brian (Maldon)	Marples, Rt. Hn. Ernest	Spearman, Sir Alexander
Harrison, Col. Sir Harwood (Eye)	Marten, Neil	Speir, Sir Rupert
Harvey, Sir Arthur Vere (Maccles'd)	Mathew, Robert	Stainton, Keith
Harvey, John (Walthamstow, E.)	Maude, Angus	Stanley, Hn. Richard
Harvie Anderson, Miss	Maudling, Rt. Hn. Reginald	Stodart, Anthony
Hastings, Stephen	Mawby, Ray	Stoddart-Scott, Col. Sir Malcolm
Hawkins, Paul	Maxwell-Hyslop, R. J.	Studholme, Sir Henry
Hay, John	Maydon, Lt.-Cmdr. S. L. C.	Summers, Sir Spencer
Heald, Rt. Hn. Sir Lionel	Meyer, Sir Anthony	Steel, David
Heath, Rt. Hn. Edward	Mills, Peter (Torrington)	Talbot, John E.
Hendry, Forbes	Mills, Stratton (Belfast, N.)	Taylor, Sir Charles (Eastbourne)
Higgins, Terence L.	Miscampbell, Norman	Taylor, Edward M. (G'gow, Cathcart)
Hiley, Joseph	Mitchell, David	Taylor, Frank (Moss Side)
Hill, J. E. B. (S. Norfolk)	Monro, Hector	Temple, John M.
Hirst, Geoffrey	More, Jasper	Thatcher, Mrs. Margaret
Hobson, Rt. Hn. Sir John	Morgan, W. G.	Thomas, Sir Leslie (Canterbury)
Hogg, Rt. Hn. Quintin	Morrison, Charles (Devizes)	Thompson, Sir Richard (Croydon, S.)
Hooson, H. E.	Mott-Radclyffe, Sir Charles	Thorneycroft, Rt. Hn. Peter
Hopkins, Alan	Munro-Lucas-Tooth, Sir Hugh	Thorpe, Jeremy
Hordern, Peter	Murton, Oscar	Tiley, Arthur (Bradford, W.)
Hornby, Richard	Neave, Airey	Tilney, John (Wavertree)
Hornsby-Smith, Rt. Hn. Dame P.	Nicholls, Sir Harmar	Turton, Rt. Hn. R. H.
Howard, Hn. G. R. (St. Ives)	Nicholson, Sir Godfrey	Tweedsmuir, Lady
Howe, Geoffrey (Bebington)	Noble, Rt. Hn. Michael	Van Straubenzee, W. R.
Hunt, John (Bromley)	Nugent, Rt. Hn. Sir Richard	Vaughan-Morgan, Rt. Hn. Sir John
Hutchison, Michael Clark	Onslow, Cranley	Vickers, Dame Joan
Iremonger, T. L.	Orr, Capt. L. P. S.	Walder, David (High Peak)
Irvine, Bryant Codman (Rye)	Orr-Ewing, Sir Ian	Walker, Peter (Worcester)
Jenkin, Patrick (Woodford)	Osborn, John (Hallam)	Walker-Smith, Rt. Hn. Sir Derek
Jennings, J. C.	Osborne, Sir Cyril (Louth)	Walters, Dennis
Johnson Smith, G. (East Grinstead)	Page, John (Harrow, W.)	Ward, Dame Irene
Jones, Arthur (Northants, S.)	Page, R. Graham (Crosby)	Weatherill, Bernard
Jopling, Michael	Pearson, Sir Frank (Clitheroe)	Webster, David
Joseph, Rt. Hn. Sir Keith	Peel, John	Wells, John (Maidstone)
Kaberry, Sir Donald	Percival, Ian	Whitelaw, William
Kerby, Capt. Henry	Peyton, John	Williams, Sir Rolf Dudley (Exeter)
Kerr, Sir Hamilton (Cambridge)	Pickthorn, Rt. Hn. Sir Kenneth	Wills, Sir Gerald (Bridgwater)
Kershaw, Anthony	Pike, Miss Mervyn	Wilson, Geoffrey (Truro)
Kilfedder, James A.	Pitt. Dame Edith	Wise, A. R.
King, Evelyn (Dorset, S.)	Pounder, Rafton	Wolrige-Gordon, Patrick
Kitson, Timothy	Powell, Rt. Hn. J. Enoch	Wood, Rt. Hn. Richard
Kirk, Peter	Price, David (Eastleigh)	Woodhouse, Hn. Christopher
Lagden, Godfrey	Prior, J. M. L.	Woodnutt, Mark
Lambton, Viscount	Pym, Francis	Wylie, N. R.
Lancaster, Col. C. G.	Quennell, Miss J. M.	Younger, Hn. George
Langford-Holt, Sir John	Ramsden, Rt. Hn. James
Legge-Bourke, Sir Harry	Rawlinson, Rt. Hn. Sir Peter	TELLERS FOR THE AYES:
Lewis, Kenneth (Rutland)	Redmayne, Rt. Hn. Sir Martin	Mr. McLaren and Mr. MacArthur.
Litchfield, Capt. John	Renton, Rt. Hn. Sir David
Lloyd, Ian (P'tsm'th, Langstone)	Ridley, Hn. Nicholas
NOES
Abse, Leo	Blackburn, F.	Carmichael, Neil
Albu, Austen	Blenkinsop, Arthur	Carter-Jones, Lewis
Allaun, Frank (Salford, E.)	Boardman, H.	Chapman, Donald
Aldritt, Walter	Boston, T. G.	Coleman, Donald
Allen, Scholefiold (Crewe)	Bowden, Rt. Hn. H. W. (Leics S.W.)	Conlan, Bernard '
Armstrong, Ernest	Boyden, James	Corbet, Mrs. Freda
Atkinson, Norman	Braddock, Mrs. E. M.	Craddock, George (Bradford, S.)
Bacon, Miss Alice	Bradley, Tom	Crawshaw, Richard
Barnett, Joel	Bray, Dr. Jeremy	Cronin, John
Baxter, William	Brown, Rt. Hn. George (Belper)	Crosland, Anthony
Beaney, Alan	Brown, Hugh D. (Glasgow, Provan)	Crossman, Rt. Hn. R. H. S.
Bellenger, Rt. Hn. F. J.	Brown, R. W. (Shoreditch & Fbury)	Cullen, Mrs. Alice
Bence, Cyril	Buchan, Norman (Renfrewshire, W.)	Dalyell, Tam
Benn, Rt. Hn. Anthony Wedgwood	Buchanan, Richard	Darling, George
Bennett, J. (Glasgow, Bridgeton)	Butler, Herbert (Hackney, C.)	Davies, G. Elfed (Rhondda, E.)
Blnns, John	Butler, Mrs. Joyce (Wood Green)	Davies, Harold (Leek)
Bishop, E. S.	Callaghan, Rt. Hn. James	Davies, Ifor (Gower)

Davies, S. O. (Merthyr)	Jenkins, Rt. Hn. Roy (Stechford)	Prentice, R. E.
de Freitas, Sir Geoffrey	Johnson, Carol (Lewisham, S.)	Price, J. T. (Westhoughton)
Delargy, Hugh	Johnson, James(K'ston-on-Hull,W.)	Probert, Arthur
Dell, Edmund	Jones, Dan (Burnley)	Pursey, Cmdr. Harry
Dempsey, James	Jones, Rt.Hn.SirElwyn(W.Hham,S.)	Randall, Harry
Diamond, John	Jones, J. Idwal (Wrexham)	Rankin, John
Dodds, Norman	Jones, T. W. (Merioneth)	Redhead, Edward
Doig, Peter	Kelley, Richard	Rees, Merlyn
Donnelly, Desmond	Kenyon, Clifford	Reynolds, G. W.
Driberg, Tom	Kerr, Mrs. Anne (R'ter & Chatham)	Rhodes, Geoffrey
Duffy, Dr. A. E. P.	Kerr, Dr. David (W'worth, Central)	Richard, Ivor
Dunn, James A.	Lawson, George	Roberts, Albert (Normanton)
Dunnett, Jack	Leadbitter, Ted	Robertson, John (Paisley)
Edelman, Maurice	Ledger, Ron	Robinson, Rt.Hn. K. (St.Pancras.N.)
Edwards, Rt. Hn. Ness (Caerphilly)	Lee, Rt. Hn. Frederick (Newton)	Rodgers, William (Stockton)
Edwards, Robert (Bilston)	Lee, Miss Jannie (Cannock)	Rose, Paul B.
English, Michael	Lever, Harold (Cheetham)	Ross, Rt. Hn. William
Ennals, David	Lever, L. M. (Ardwick)	Rowland, Christopher
Ensor, David	Lewis, Arthur (West Ham, N.)	Sheldon, Robert
Evans, Albert (Islington, S.W.)	Lewis, Ron (Carlisle)	Shinwell, Rt. Hn. E.
Evans, loan (Birmingham, Yardley)	Lipton, Marcus	Shore, Peter (Stepney)
Fernyhough, E.	Lomas, Kenneth	Short, Rt.Hn.E.(N'c'tle-on-Tyne,C)
Finch, Harold (Bedwellty)	Loughlin, Charles	Short, Mrs. Renée (W'hampton.N.E.)
Flitch, Alan (Wigan)	Mabon, Dr. J. Dickson	Silkin, John (Deptford)
Fletcher, Sir Eric (Islington, E.)	McBride, Neil	Silkin, S. C. (Camberwell, Dulwich)
Fletcher, Ted (Darlington)	McCann, J.	Silverman, Julius (Aston)
Fletcher, Raymond (Ilkeston)	MacColl, James	Silvcrman, Sydney (Nelson)
Floud, Bernard	MacDermot, Niall	Skeffington, Arthur
Foley, Maurice	Mclnnes, James	Slater, Mrs. Harriet (Stoke, N.)
Foot, Sir Dingle (Ipswich)	McKay, Mrs. Margaret	Slater, Joseph (Sedgefield)
Foot, Michael (Ebbw Vale)	Mackenzie, Gregor (Rutherglen)	Small, William
Ford, Ben	Mackie, John (Enfield, E.)	Smith, Ellis (Stoke, S.)
Fraser, Rt. Hn. Tom (Hamilton)	McLeavy, Frank	Snow, Julian
Freeson, Reginald	MacMillan, Malcolm	Solomons, Henry
Galpern, Sir Myer	MacPherson, Malcolm	Soskice, Rt. Hn. Sir Frank
Garrett, W. E.	Mahon, Peter (Preston, S.)	Steele, Thomas (Dunbartonshire, W.)
Garrow, A.	Mahon, Simon (Bootle)	Stewart, Rt. Hn. Michael
George, Lady Megan Lloyd	Mallalieu, E. L. (Brigg)	Stones, William
Ginsburg, David	Mallalieu,J.P.W.(Huddersfield,E.)	Strauss, Rt. Hn. C. R. (Vauxhall)
Gourlay, Harry	Manuel, Archie	Summerskill, Dr. Shirley
Greenwood, Rt. Hn. Anthony	Mapp, Charles	Swain, Thomas
Gregory, Arnold	Marsh, Richard	Swingler, Stephen
Grey, Charles	Mason, Roy	Symonds, J. B.
Griffiths, David (Rother Valley)	Maxwell, Robert	Taverne, Dick
Griffiths, Rt. Hn. James (Llanelly)	Mayhew, Christopher	Taylor, Bernard (Mansfield)
Griffiths, Will (M'chester, Exchange)	Mellish, Robert	Thomas, George (Cardiff, W.)
Gunter, Rt. Hn. R. J.	Mendelson, J. J.	Thomas, lorwerth (Rhondda, W.)
Hale, Leslie	Mikardo, Ian	Thomson, George (Dundee, E.)
Hamilton, James (Bothwell)	Millan, Bruce	Thornton, Ernest
Hamilton, William (West Fife)	Miller, Dr. M. S.	Tinn, James
Hamling, William (Woolwich, W.)	Milne, Edward (Blyth)	Tomney, Frank
Hannan, William	Molloy, William	Tuck Raphael
Harper, Joseph	Monslow, Walter	Urwin, T. W.
Harrison, Walter (Wakefield)	Morris, Charles (Openshaw)	Varley, Eric G.
Hart, Mrs. Judith	Morris, John (Aberavon)	Wainwright, Edwin
Hattersley, Roy	Mulley,Rt.Hn.Frederick(SheffieldPk)	Walden, Brian (All Saints)
Hazell, Bert	Murray, Albert	Walker, Harold (Doncaster)
Healey, Rt. Hn. Denis	Neal, Harold	Wallace, George
Heffer, Eric S.	Newens, Stan	Warbey, William
Henderson, Rt. Hn. Arthur	Noel-Baker,Rt.Hn.Philip(Derby,S.)	Watkins, Tudor
Herbison, Rt. Hn. Margaret	Norwood, Christopher	Weitzman, David
Hill, J. (Midlothian)	Oakes, Gordon	Wells, William (Walsall, N.)
Hobden, Dennis (Brighton, K'town)	Ogden, Eric	Whitlock, William
Holman, Percy	O'Malley, Brian	Wigg, Rt. Hn. George
Horner, John	Oram, Albert E. (E. Ham, S.)	Wilkins, W. A.
Houghton, Rt. Hn. Douglas	Or bach, Maurice	Willey, Rt. Hn. Frederick
Howarth, Harry (Wellingborough)	Orme, Stanley	Williams, Alan (Swansea, W.)
Howarth, Robert L. (Bolton, E.)	Oswald, Thomas	Williams, Albert (Abertillery)
Howell, Denis (Small Heath)	Owen, Will	Williams, Mrs. Shirley (Hitchin)
Howie, W.	Padley, Walter	Williams, W. T. (Warrington)
Hoy, James	Page, Derek (King's Lynn)	Willis, George (Edinburgh, E.)
Hughes, Cledwyn (Anglesey)	Paget, R. T.	Wilson, Rt. Hn. Harold (Huyton)
Hughes, Emrys (S. Ayrshire)	Palmer, Arthur	Wilson, William (Coventry, S.)
Hughes, Hector (Aberdeen, N.)	Pargiter, G. A.	Wimerbottom, R. E.
Hunter, Adam (Dunfermline)	Park, Trevor (Derbyshire, S.E.)	Woodburn, Rt. Hn, A.
Hunter, A. E. (Feltham)	Parker, John	Woof, Robert
Hynd, H. (Accrington)	Parkin, B. T.	Wyatt, Woodrow
Irvine, A. J. (Edge Hill)	Pavitt, Laurence	Yates, Victor (Ladywood)
Jackson, Colin	Pearson, Arthur (Pontypridd)	Zilliacus, K.
Janner, Sir Barnett	Peart, Rt. Hn. Fred
Jeger, George (Goole)	Pentland, Norman	TELLERS FOR THE NOES:
Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Perry, Ernest G.	Mr. Sydney Irving and
Jenkins, Hugh (Putney)	Popplewell, Ernest	Mr. George Rogers.

It being after Seven o'clock, the Chairman left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of the Chairman of Ways and Means under Standing Order No. 7 (Time for taking private business).

Mr. SPEAKER resumed the Chair.