HC Deb 19 January 1965 vol 705 cc23-6
Q2. Mr. Fletcher-Cooke

asked the Prime Minister whether he will make special arrangements to co-ordinate the work of the Ministries concerned with a view to alleviating the effects of the 7 per cent. Bank Rate on mortgage rates for home ownership and local authority house-building.

The Prime Minister

No special arrangements are needed to co-ordinate the work of the Departments concerned.

Mr. Fletcher-Cooke

Since the Chancellor has attacked the building societies for following the Bank Rate in putting up mortgage rates, is not the Prime Minister taking urgent steps to follow up the promises made in October that mortgage rates would be lowered, not merely below the Bank Rate as it then was but even more so as it now is?

The Prime Minister

My right hon. Friend the Chancellor of the Exchequer answered that point a few minutes ago. Of course, if it is going to be said that mortgage rates have gone up because the Bank Rate has gone up, then the whole country will expect them to come down when the Bank Rate comes down.

Mr. Maudling

Is there not now a good case for co-ordination, because the First Secretary has told us in the past that something will be done to help house ownership through mortgage rates while the Chancellor has made it clear that the Government are thinking only in terms of local authority housing?

The Prime Minister

I should have thought that of all the people who felt that they had anything to contribute to this, the right hon. Gentleman would be the last person to do so.

Mr. Peter Emery

Would the Prime Minister tell the House of the large number of local authorities which have had to stop giving mortgages to applicants because of the financial position? Can he give that figure and would he, secondly, consider consulting Socialist councils such as Reading, which are condemning the present position because they are not able to get money to lend to young borrowers?

The Prime Minister

The hon. Gentleman will, no doubt, wish to put a Question to my right hon. Friend the Minister of Housing and Local Government as to the number of local authorities concerned.

Mr. Peter Emery

No, to you.

The Prime Minister

I am certain that local authorities throughout the country realise the situation with which my right hon. Friend has had to deal in this matter of interest rates.

Mr. Gower

Cannot the Prime Minister say what has happened to the two-tier system and the specially low interest rates held out as baits to the electorate?

The Prime Minister

My right hon. Friend has already indicated the special help being given to local authorities, help which has never been given before and help which is being given at a time when the Bank Rate has been raised to 7 per cent.

Q3. Mr. J. E. B. Hill

asked the Prime Minister what recent correspondence he has had with the Chairman of the Association of Building Societies about finance for house building.

The Prime Minister

None, Sir.

Mr. Hill

Is not the Prime Minister aware that his election pledge, which followed his letter to the President of the Building Societies Association on 7th April last, aroused great expectations, which have subsequently been disappointed by the Government's economic policy? Ought he not, therefore, either to take further steps to implement the pledge or to make it quite clear how far he is bound to disappoint the building societies?

The Prime Minister

My letter to the building societies of a year ago, which I very well remember, was a pledge that we would not introduce differential interest rates so that local authorities would be able to offer at rates lower than the building societies could offer. Nothing has been done in contravention of that pledge—I have the letter here. With regard to our general policy, which was stated before and during the election, of providing special help in the matter of mortgage rates, this is still our policy.

Hon. Members


Mr. Peter Walker

Is the Prime Minister aware that before the election he boasted that the Socialist council of Birmingham gave 100 per cent. mortgages at low rates of interest, but that since he has been returned it has stopped giving 100 per cent. mortgages, and has put on higher rates?

The Prime Minister

Those mortgages were given against a national financial position in which the country was keeping going by borrowing £3 million a day.