HC Deb 04 May 1965 vol 711 cc1093-5
16. Mr. Alison

asked the Chancellor of the Exchequer if he is aware of the disequilibrium between the demand for, and the supply of, building society funds; and if he will take steps to remove this disequilibrium.

35. Mr. Bence

asked the Chancellor of the Exchequer what steps he is taking to reduce rates of interest for owner-occupiers buying houses on mortgage from building societies.

Mr. Callaghan

I hope that the building societies' present difficulties will be temporary, and in any case they have been exaggerated. As for helping owner-occupiers, I refer my hon. Friend to what my right hon. Friend the Minister of Housing and Local Government said in the debate on home loans last Thursday.

Mr. Alison

Is the Chancellor aware that that is a very unsatisfactory and misleading Answer? Is he further aware that the net increase in building society savings in the first quarter of this year is something like 50 per cent. down on the comparable quarter of 1964 and it is likely to be something like 75 per cent. down in the June quarter, and that this reflects loss of confidence not in the building societies but in Government policy?

Mr. Callaghan

I do not know that it is very profitable to swop figures, but those which I have show that the total receipts of principal by the building societies in the first quarter were within an ace of being a record, whilst the mortgage advances were higher than in any comparable quarter of which I have information to hand. The hon. Member had, therefore, better try to find another hare to run.

Mr. Bence

Is my right hon. Friend aware that the building society of which I am a member is as strong as it ever was and that it is going through temporary difficulties, which, I am sure, will soon be overcome? Will my right hon. Friend bear in mind, however, that owner-occupiers and young people wishing to marry and to house themselves are looking to the time when he can introduce a fixed, stable interest technique whereby they can really get stability into their housing requirements instead of the chaos that existed over the last 20 years?

Mr. Callaghan

I have no doubt that many people are today finding things difficult because of high interest rates and I regret very much that it has been necessary to increase interest rates in this way in order that the country should escape from its economic problems. I certainly repeat the undertaking that was given, and by which we stand, that as soon as economic considerations allow, we shall most certainly bring some aid into this quarter, where it is very necessary.

Mr. Heath

Is the Chancellor aware that the question to which my hon. Friend referred was the amount of funds available? When the right hon. Gentleman gives a supplementary answer such as that which he has just given to my hon. Friend, he gives the impression that he himself does not know the real position. We all agree that the actual funds coming forward in the first quarter were only £1 million less, but is the Chancellor not aware—as he listened to last week's debate he must be—that withdrawals were £66 million more? This is a fact which he overlooks entirely. What is more, is the right hon. Gentleman aware that one of the major insurance companies—[HON. MEMBERS: "Speech."]—hon. Members opposite do not like it—one of the major insurance companies has announced to-day that it cannot continue with this arrangement for home loans?

Mr. Callaghan

There is no doubt that the efforts made, particularly by the United States, to balance its payments has caused the withdrawal of a great deal of funds from Europe and equally from this country. The right hon. Member for Bexley (Mr. Heath) is quite right to concentrate on the withdrawals which have taken place. Until we can get international liquidity arrangements on a more settled basis, as we were saying just now, then as long as building societies have to lend for 20 years, but borrow on a seven-day or even a one-day basis, these temporary difficulties are bound to recur from time to time.