HOME OWNERSHIP AND INTEREST RATES

HC Deb 23 July 1968 vol 769 cc288-354

4.9 p.m.

Mr. Geoffrey Rippon (Hexham)

I beg to move, That this House, noting the effect of the present high level of mortgage interest rates, deplores the policies of Her Majesty's Government which have caused hardship to existing house purchasers and are discouraging home ownership. The provision of good housing must be the most important social objective of any Government, yet there is no other sphere of activity in which the present Administration have more cynically abandoned the many pledges on the faith of which they secured office. Both before the 1964 and the 1966 General Elections, the leaders of the party opposite repeatedly promised much more help to home ownership through bigger and cheaper mortgages. The House will recall that the White Paper on the Housing Programme 1965 to 1970 (Cmnd. 2838), published in 1965, spoke of …a large and rising demand for more houses for owner-occupation which shows no sign of abating, and the housing plan must meet it. No one disputes the demand for home ownership. Survey after survey has shown that at least 70 or 80 per cent. of our people, particularly young people, want to own their own homes. What has happened? In absolute numbers and as a percentage of total completions —both figures are relevant—private house building for owner-occupation has declined year by year since 1964. On the other side of the picture, when the present Government came to office in October, 1964, the building society mortgage interest rate was 6 per cent.; in February, 1965, it rose to 6¾ per cent.; in June, 1966, it rose to 7⅛ per cent. for new borrowers; and now it is at 7⅝ per cent. Interest rates have now risen to a record level, and they have been higher for a longer time than at any other period in our history.

We have come a long and miserable way since the right hon. Member for Belper (Mr. George Brown) flew his gay kite of 3 per cent. which brightened the sky of the 1964 General Election, and— let us face it—induced many thousands of people to vote for the Labour candidates. I know that some people say, as I think the right hon. Gentleman does himself, that there is doubt about the exact terms which he used, but at Colchester on 29th September, 1964, he said: People do not care whether I said 3, 4, 2 or no per cent. We will get the cost down. In fact, as everyone knows, the Government have not done it. At least the right hon. Member for Belper has had the decency to resign from a Government who are totally discredited.

The present record rate of interest means that a man buying a three-bedroom house has either to pay, on average, at least 10s. a week more than in October, 1964, or extend, as many people do, the period of replayment. What does extending the period of repayment mean in practice? As theBuilding Societies Gazette pointed out in May, many householders with owner-occupier mortgages may not be able to pay off their debts during the remainder of their working lives. They face a prospect of never-ending debt.

Hon. Members may have seen the article in theSunday Express of 14th July which gave the example of a man of 30 who was granted a loan of £4,000 early in 1965 towards the purchase price for a £4,500 house at the rate of 6 per cent. Repaying the loan over a period of 25 years at £312 per annum, he would have had the house as his own at the age of 55. Now, within four years, the interest rate has been raised three times, till it is now at 7⅝ per cent. On each occasion, because ho could not afford to increase his annual repayments, he had to opt to extend the period of the mortgage, with the result that the house will not be his until he is 73.

That is, perhaps, a reasonably average case. At least, he is better off than the man who had an unusually long mortgage, a 35-year mortgage, who found to his horror that, unless he increased his repayments, his home loan would take 2,000 years to pay off.

It is no good hon. Members opposite suggesting, as they sometimes do, that the building societies should keep the rate down. Obviously, the building society rate had to be raised if a mortgage famine were not to be created, and it became inevitable, because of high Bank Rate, rising taxation and Government fiscal and monetary policies which have severely curtailed saving and so forced many small savers to withdraw their deposits.

If the hardship to existing house purchasers is great, the discouragement to those who believed that a Labour Government would help them to become home owners has been even worse. It is true that building societies are lending more money to house purchasers than ever before—that is a measure of the demand for home ownership—but the pressure for advances is so great that rationing of mortgages remains severe, and steadily rising house and land prices mean that each purchase requires more money than ever before.

A young married couple who today seek a house of their own are much worse off than a corresponding couple in 1964. and their position is deteriorating month by month. Here is an example. In 1964, mortgage repayments on a £3,000 house would have taken a quarter, of average industrial earnings. Today, they take over one-third, and at that price, of course, it would be a smaller and inferior house. This is where the present high mortgage rates have their most crippling effect on young couples without much capital and with their present earning capacity well below their future prospects.

Many building societies normally restrict the amount which they are prepared to lend so that monthly repayments do not exceed one week's wages. The high rates, therefore, mean that many prospective buyers are being offered much smaller mortgages. Nor is it any good for most of them to look to the local authorities for loans, since the Government have deliberately restricted the funds available for this purpose. After the savage cuts from mid-1965 to mid-1966, the Minister fixed the figure at £130 million for 1967–68, and he has announced a similar limit for the current financial year. This is £50 million a year below 1964, although house prices have risen since then by over 25 per cent. and, as I suggested at Question Time today—I have thought about the matter carefully—may well rise by another 10 per cent. this year, or certainly considerably more than the Parliamentary Secretary suggested.

Many local authorities are at this stage of the year already in a critical position in regard to home loans. Some have already had to suspend their loans altogether because their quotas have been exhausted.The Times published a list of some of these on 6th June. I hope, therefore, that the Minister will tell us what he proposes to do to remedy the present serious situation.

It will not be enough for the right hon. Gentleman to say that the Government have introduced their much-heralded mortgage option scheme or that, as from 1st April, 100 per cent. mortgages may be available for those who exercise their option, although—and in our view, this is quite wrong—for no one else.

In the debate on the Housing Subsidies Bill, I described the Government's proposals as the great mortgage fraud, and everything that has happened since has confirmed that verdict. The principle of a mortgage option scheme to help those paying less than the standard rate of tax is unexceptionable—it was in the Conservative Party's own election manifesto—but the Government's scheme does little to assist anyone. It is not surprising, therefore, that it has attracted only about 5 per cent. of existing borrowers and 10 per cent. of new borrowers—many of whom, as I shall show later, rather regret the decision which they have made.

At best, the Government's scheme is a classic example of giving away with one hand what they have already more than taken away with another. Moreover, as I said at the outset, the need to make an irrevocable choice to opt in which is based simply on a man's estimate of his own earning capacity and tax liability throughout, perhaps, a whole decade is bound to create something of a lottery. What I did not expect was that this year's Finance Bill would change the terms of the lottery so quickly and so cruelly. Once again, not only have thousands of people who trusted the Government been robbed of any hope of a prize, but they have had to pay more for their tickets. Many of them are in the position of punters who have lost not only their shirt, but their braces.

The Government spent about £80,000 advertising their mortgage option scheme, and published a booklet called, "Your Guide to the Mortgage Option Scheme", which indicated that anyone paying less than £80 a year in tax was likely to benefit from an option mortgage.

As a result of this year's Finance Bill, in many cases this has proved wrong. I shall not reiterate the arguments I put forward during the debate on 3rd July, except to say two things. First, in our view the Government are now under a clear duty to warn people that the rise of the mortgage rate from ⅛ per cent. to 7⅝ per cent. means that the advantage of opting has seriously diminished. Secondly, there is a clear moral obligation to compensate those who have suffered hardship as a direct result of the Government's misleading advice to them.

On 3rd July 1968, at column 1611, the Financial Secretary said that because he could not help within the framework of the Finance Bill that did not mean that that shed the whole Government obligation, and he agreed that the matter should be given the most urgent examination by the Minister of Housing and Local Government. I tabled a Question today To ask the Minister of Housing and Local Government whether he has completed the urgent consideration of the effect of the provisions of the Finance Bill on the operation of the mortgage option scheme; and if he will make a statement. No doubt there will be a Written Answer to that Question as it was not reached this afternoon, but perhaps the Minister can explain the position to the House today.

The evidence of hardship is clear, and it was clear during the debate on the Finance Bill. Many hon. Members on both sides of the House have sent cases to the Government and explained the difficulties confronting their constituents. I have had a mass of letters on this subject, and I shall quote just one from a man in Newcastle. The letter is dated 13th July, and arose out of the report of the debate on 3rd July. He said: I hope to hear more about the repeal or review of that legislation and in particular the refusal of any opportunity for opting out by the borrower. It was my misfortune that I signed an option for this property before the Budget and would have benefited from the conditions that obtained at that time. Now however I estimate that I shall be paying this year £8 more than I would expect to pay outside the scheme and future years will cost me some £20 annually over the ordinary borrower. How can one trust a Government that perpetrates such frauds continually? How, indeed? And that is not by any means an exceptional case. Indeed, his loss may be regarded as rather on the low side compared with some of the other cases brought to my attention.

I have three questions which I hope the Minister will answer. First, will he give an undertaking that when this extremely misleading document, "Your Guide to the Option Mortgage Scheme" is reissued, as the Joint Parliamentary Secretary promised, it will be drastically amended to show the danger of going into this option without much more advice than many people have had, and that he will issue a further series of advertisements explaining how the Government falsified the hopes of so many people and what he is going to do about it?

Secondly, will he state the steps which the Government propose to take to enable those who have suffered hardship as a direct result of the Government's actions and statements in their guide book to be compensated? Thirdly, will he say now what he proposes to do to afford those who have been mistakenly induced to opt into the Government's scheme an opportunity to opt out?

I know that this requires discussions with the building societies. As we were told, there are administrative difficulties, but, clearly, some people have been wrongly induced to come in, and they ought to be given the opportunity to get out. I know that the Minister invariably pleads that he is bound by the provisions of the Housing Subsidies Act, but it is not impossible for the Government to remedy their own mistakes in their own legislation if they really want to do so.

I have dealt briefly with the harsh effects of high mortgage interest rates on existing and new borrowers, whether in or out of the mortgage option scheme. No one can doubt the damage which the Government have done. The question now is: how can we mitigate the hardship they have caused and give new hope to those who want to own their own homes? I shall not pretend that we can evade all the consequences which flow from economic and fiscal policies which have brought this country so low, but I believe that there are some things which could be done immediately to encourage home ownership and to bring it within the means of more people.

First, the Government have it within their power to cut the cost of new housing by abolishing the Selective Employment Tax—it should be altogether, but certainly for the construction industry, which serves such an essential social purpose—and by bringing down the price of land by repealing the Land Commission Act and abolishing the Land Commission.

Secondly, as part of a policy of reducing the cost of house purchase they should reverse their recent regrettable decision to suspend the extension of compulsory land registration. This has apparently been done by the back door, through correspondence with the Lord Chancellor and others. This is a serious state of affairs, because the extension of land registration is about the only practicable way of reducing the incidental costs of house purchase which is fair to all the interests concerned.

The Minister will recall that some proposals for simplifying conveyancing were shelved because the extension of land registration was to be expedited. Perhaps I might give some indication what is at stake. In the case of a £5,000 house there is a saving of more than £20 in fees if the land is registered. I hope the Minister will give us an assurance that this matter will be reconsidered.

Thirdly, in our view the Government should recognise that difficulty in finding the deposit is at least as formidable an obstacle to the prospective house purchaser as the mortgage repayments. The Government's insistence on limiting 100 per cent. loans to those who have entered the option scheme is illogical, and it may be dangerous, because this policy may induce some more borrowers to exercise this irrevocable option when it would be against their long-term interests to do so. I submit that 100 per cent. loans, or help with the deposit in some other form— perhaps in the way that has been suggested from these benches—should be designed to help young people who had not got much capital, but may already be standard rate taxpayers, or expect to be before long. In our view the cost might be met, at any rate in part, out of the savings on the current level of housing subsidies of one sort or another.

Fourthly, the Government should stimulate far more than they have done private house building for owner occupation. While the total number of completed houses has crept upwards since 1964, completions in the private sector have gone down steadily, and the outlook for the future is far from reassuring. It is true that rather more houses were started in the private sector in 1967 than in 1966, but it was the start of the betterment levy which inflated the figures by at least 20,000.

So, while, this year, we may see some improvement, at any rate at the beginning of the year, in the total number of private houses completed, the underlying downward trend continues. This is illustrated by the fact that this year's starts in the private sector have been officially estimated at 205,000, or more than 30,000 down compared with last year.

But, more fundamentally, the Government have shifted the balance between private house building and council building by an increasingly costly subsidy bill. Ever since 1964 the public housing sector has been growing at the expense of the private sector, in spite of the rising demand for home ownership. Thus housing subsidies for new dwellings in Great Britain have risen from £68 million in 1963–64 to about £100 million in the current financial year. At the same time the rate fund contribution to local authority housing revenue account has risen from £21 million in 1963–64 to an estimated £40 million in 1966–67. These costs will rise still further as a result of the Government's interference through the Prices and Incomes Act with the statutory responsibility of local authorities to strike a fair balance between their tenants and other ratepayers.

We have to recognise that council housing is not only more expensive in terms of cost to taxpayers and ratepayers, but is more inflationary than private housing, which is financed by individual savings. We are in the ridiculous position of raising housing subsidies and controlling rents of council houses to divert many families from what they really want, which is to own homes of their own. It is, therefore, far more sensible to give such aid from public funds as we can to young people to buy their own homes, rather than spend public money on what is fundamentally the wrong objective.

Finally, the Government must give some indication of their long-term policy on mortgage interest rates. At Question Time an hon. Member opposite referred to the fact that high rents are caused, in the local authority sector as anywhere else, by high interest rates. The report of the Prices and Incomes Board showed that interest rates now amount to about 50 per cent. of total local authority housing costs. This is inevitably reflected in higher rents. The same considerations apply in the private sector.

In the old days members of the party opposite used to say that it was a brutal as well as a foolish thing to make the innocent householder pay for the doubtful luxury of attracting hot money to London. I do not know how much hot money is being attracted today, but it is certainly doubtful whether such a prolonged period of high interest rates as we have suffered under this Government—the most prolonged period of high interest rates in our history—can do anything but put up costs without a sufficient corresponding benefit to our balance of payments or reserves.

To summarise our case against the Government: their basic concepts are in conflict with the ideal of a property-owning democracy; it is not what they really want at all. Their house building programme has yielded a diminishing number of houses for owner-occupation each year. They have attacked the idea of giving council tenants the opportunity of buying their own homes. Their misconceived fiscal policies have caused house prices to soar, and their mismanagement of the economy has precipitated quite astronomic mortgage interest rates. The benefit of their much-vaunted mortgage option scheme has been dissipated by their financial and economic policies and the fact that their scheme has been rejected by the overwhelming majority of mortgagors is the measure of its worth. Their 100 per cent. mortgage scheme, which the Prime Minister and other members of the Government promised in their election manifestos, remains out of reach to all but an infinitesimal minority.

In the view of my right hon. and hon. Friends and myself the primary objective of a housing policy in any modern democracy must be the fostering of home ownership. Far from smoothing the path towards that goal the Government have made it much more stony. We can say, in the words of Sydney Smith: The vigour of the Ministry is like the vigour of a grave digger—the tomb becomes more ready and more wide for every effort which they make. Unfortunately, while Ministers' souls lie mouldering in the grave their bodies go marching on. The sooner they resign the better it will be for all of us. Perhaps the Minister has already made plans to move on to happier spheres of activity. If so, I hope that his swan song this afternoon—if it is to be his swan song— will enable him to depart with a bang and not a whimper.

4.34 p.m.

The Minister of Housing and Local Government (Mr. Anthony Greenwood)

My surprise and gratification that the Opposition should have chosen this of all subjects for debate today have not been lessened by the speech to which we have just listened from the right hon. and learned Member for Hexham (Mr. Rippon). It is part of the stock-in-trade of the Opposition to pretend that the Government are hostile to home ownership and have done nothing to encourage it. Nothing could be further from the facts and I am grateful to the Opposition for the chance which they have given me today to prove it.

The right hon. and learned Gentleman referred to the White Paper—The Housing Programme 1965–1970—which set out our policies very clearly. There, we said that the first task was to give housing a greater priority and to push up the rate of building, while within the enlarged housing programme there would be a balance—roughly 50–50—between public building for rent and private building for owner occupation. We said that at that time while the Government must provide for a steady growth of building for owner occupation, it would be criminal, at the present time, not to allow an even faster growth of building to let but we added: the expansion of building for owner-occupation … reflects a long-term social advance which should gradually pervade every region. That was the statement of our long-term aims, and it is those aims that the right hon. and learned Gentleman says that we have abandoned. He looks to the future and says that it is far from reassuring. I always regard him as the most cheerful Cassandra on the Opposition benches. Over and over again he has prophesied housing failures and all of his prophesies have been belied. On 1st November, 1966, he asked my right hon. Friend the Joint Parliamentary Secretary, who is now Minister of Public Building and Works: Is the Parliamentary Secretary aware that while the public sector may be holding its own, the private sector is steadily falling? What does he propose to do about that? Does he agree that now there is very little chance of building 400,000 houses even by 1967?"— [OFFICIAL REPORT, 1st November, 1966; Vol. 735, c. 228.] A short time later, on 15th December of the same year, the right hon. and learned Gentleman turned his fire on the Prime Minister and asked: Does he agree that there is now no prospect of exceeding 380,000 houses this year, or next year, either?"—[OFFICIAL REPORT, 15th December, 1966; Vol. 738, c. 658.] The right hon. and learned Gentleman must be even more despondent about the fact that his prognostications have been so wrong.

Mr. Rippon

Have they been so wrong? Is it a matter of 3,000 or 4,000, or 10,000 houses?

Mr. Greenwood

On 15th December, 1966 the right hon. and learned Gentleman was saying that there was no chance of exceeding 380,000 houses in 1967.

Mr. Rippon

Nevertheless, the Government have been very far from the mark.

Mr. Greenwood

Far from the mark, the right hon. and learned Gentleman says. In fact, we completed 404,000. [Interruption.] I am sorry, but that is so. The right hon. and learned Member asked my right hon. Friend the Prime Minister: Does he agree that there is now no prospect of exceeding 380,000 houses this year, or next year, either? We built 404,000, which was 24,000 more than the right hon. and learned Gentleman had predicted. We have to measure our achievements against the smokescreen of gloom that he is trying to create.

During every year since we took office we have built a record number of houses. Last year, for the first time in history, more than 400,000 houses were built in Great Britain. The figures for the first half of this year have been published this afternoon and show that 12,000 more houses were completed in that period than in the first six months of 1967— 199,000 compared with 187,000 in the first half of 1967. Since more houses are normally finished in the second half of the year we shall build well over 400,000 houses this year. Another record year is before us.

Within the total we have, as we have promised, made a large increase in building to rent—from 156,000 in 1964 to 204,000 in 1967. Building for owner-occupation has fluctuated, but has never fallen below 200,000 a year, so that in three years 619,000 houses have been built. In the last three years under the Opposition only 568,000 were built.

Perhaps I could put it in another way. If we take the 44 months of Labour administration, 768,000 houses for private ownership have been completed. During the last 44 months of Conservative rule the figure was 678,000. We are, therefore, doing a great deal better.

The rate of building is rising again. During the first six months of this year 107,000 houses were built for owner-occupiers compared with 90,000 in the same period last year, an increase of 17,000 in half a year, or over 19 per cent. Altogether, we have built about 1½ million houses since October, 1964, fairly evenly divided between the public and private sectors.

Mr. Eric Lubbock (Orpington)

The right hon. Gentleman keeps saying "We have done" this and that. Is he aware that the building industry has achieved these figures?

Mr. Greenwood

This has been a remarkable piece of co-operation between the building industry, local authorities, building societies and the Government. It was left to the Labour Government to get together the Joint Housing Programme Working Party, which is comprised of the various interests, all of which are concerned with house building. It staggers me to think that the right hon. and learned Member for Hexham did not get round to this point a great deal earlier.

I was interested in what the right hon. and learned Gentleman said about the expensiveness of council house building, and many people will draw conclusion from what he did say on the subject. Far from discouraging home ownership, we have done much better than the party opposite. This increase in private building has been more than matched by the success of the building societies in meeting the growing demand for home ownership.

Mr. James Allason (Hemel Hempstead)

When the right hon. Gentleman says that the Government have done better than the Conservative Party achieved when in office in 44 months, is he saying that the pledge given by the Labour Party in 1964 to build more houses for owner-occupation related to an average over the last 44 months and not to the current figures?

Mr. Greenwood

Our statement meant that we would do better than the Conservatives. That we have done. It meant that we would seek to strike a balance of about 50-50 between the public and private sectors. That we have done. However, we do not have much time for this debate and, while I shall be pleased to give way to any hon. Member who wishes to intervene, I trust that there will not be many interventions, because many hon. Members wish to speak and I do not want them to be crowded out.

In 1960, the building societies advanced £558 million. In 1966 and 1967, they lent £1,245 million and £1,472 million respectively. This year, they are confident of being able to lend a record £1,550 million.

It would be wrong to think that we are concerned only with numbers. We are equally concerned with quality. That is why the National House Builders Registration Council has been reorganised. Private builders and Ministers between them—this is another piece of valuable co-operation—have created a valuable new instrument which is already having its effect on the quality of the houses produced in the private sector. I appointed Mr. Douglas Calverly as the Chairman of the Council, and under his able leadership well over 80 per cent. of the houses completed for owner-occupation this year will carry the Council's 10-year guarantee of quality. In 1964, the figure was 35 per cent. I do not believe that it is an exaggeration to say that in a very few years' time jerry-building will be literally a thing of the past.

I come to the question of option mortgages, to which the right hon. and learned Member for Hexham referred. We have taken positive action to increase the number of houses built and to improve the quality. We have helped owner-occupiers by the Option Mortgage Scheme, which started on 1st April this year. The Option Mortgage Guarantee Scheme started on the same day.

The first gives borrowers who do not qualify for tax relief a subsidy of 2 per cent. on their interest payments. All borrowers get help, and either the option mortgage subsidy or the tax relief substantially reduce the effective cost of a mortgage. The second helps families who can make larger regular payments, but who have little capital to buy a house.

About 10 per cent. of new borrowers, as the right hon. and learned Gentleman conceded, choose an option mortgage, and the great majority of these are people who would not have been able to obtain a mortgage at all because the regular payments, without the option subsidy, would have been too large in relation to their income.

The Option Mortgage Guarantee Scheme has been criticised because few 100 per cent. loans have so far been given. But many more people have used the scheme than those who have had 100 per cent. loans because many borrowers do not want 100 per cent. loans. The Scheme enables them to get the loan they do want at lower cost than before. The right hon. and learned Gentleman asked three specific questions on this subject, one of which appeared on the Order Paper today. My hon. Friend the Joint Parliamentary Secretary, who answered that Question, will deal later with the three points raised by the right hon. and learned Gentleman.

The right hon. and learned Gentleman expressed concern, which we all feel, at the high level of interest rates. I wish to put the building societies' rates in a more general context. We agree entirely that there are strong objections to high interest rates, which increase housing costs, industrial costs, and the cost of servicing public sector debt. The hard fact is, however, that high rates are necessary for the time being as a means of protecting the reserves.

In the short-term, and at the present stage of our economic recovery, we cannot unilaterally reduce our interest rates unless other countries reduce theirs. In the longer-term, the best hope for reducing our interest rates lies in getting the balance of payments right, thus removing the main cause of pressure on the reserves; and the Government are determined to achieve this.

I need hardly say that I regret as much as anyone that housing interest rates are high, but high interest rates are necessary at present to protect the reserves, and loans for house purchase can be financed only if the current rate is paid to the investors who provide the money for them. If building societies, or other bodies, offered less than the market rate they would not attract the funds they need to sustain the high level of building that we all want to see. I am glad that the building societies are now receiving more money than in the early months of the year and that the movement is confident of being able to lend £1,550 million this year.

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

Does the right hon. Gentleman think that his right hon. Friend made the position clear and dealt with these fundamental facts concerning mortgages when he made his stupid promise of low mortgage rates?

Mr. Greenwood

My right hon. Friend did not make a stupid promise about mortgage rates. We have carried out the pledge we gave. We promised to reduce the rate of interest paid by people in the lower income groups.

Mr. Rippon

The right hon. Gentleman surely agrees that the Prime Minister clearly promised 100 per cent. mortgages and low interest rates for all and said he hoped that that would benefit all mortgagors.

Mr. Greenwood

I do not recall such a far-reaching statement having been made.

Mr. Rippon

It was.

Mr. Greenwood

If the hon. Gentleman who will wind up the debate for the Opposition wishes to deploy that in his speech, I shall listen to it with interest.

Some house buyers may need a bridging loan and some builders rely on loans to tide them over between the purchase of the site and the completion of the house. Bank lending for housebuilding and bridging loans for house purchase are categories of lending which fall below the priority categories of lending which will help the balance of payments, but are not specifically mentioned in the Bank of England's latest guidance to banks as needing to be reduced. It is too early to say what the effect will be on specific borrowers, but the banks continue to have full discretion to decide the distribution of their lending within the ceiling. I hope that I have said enough to demonstrate that we believe in encouraging home ownership. We have taken positive action to encourage it.

Mr. Rippon

May I just put the record straight for the Minister? The Prime Minister said in his election address in 1964: 100 per cent. mortgages, lower interest rates, and cheaper loan charges will help those who wish to buy. That was quoted in the debate of 15 th December 1966, at column 682, if the Minister cares to check it.

Mr. Greenwood

That is not nearly so wide-reaching as the right hon. and learned Gentleman originally said. Of course, they do help them, and that is exactly what we have done; we have helped the categories to which my right hon. Friend the Prime Minister referred.

I believe that the time is right for further development of our policies to help home ownership. There is, as I have said, a strong demand for home ownership, and that demand we have fostered and encouraged. I am glad that the party opposite agrees with me that many families at present renting houses from a local authority wish to own a home of their own, but, equally, there are many families living in slums, overcrowded or sharing. who cannot afford to buy, and must rent a house.

We believe that both these needs must be met. The Opposition seem only too willing to forget the second. There is at present no significant source of new rented housing other than the houses provided by councils. Yet some Tory-controlled councils, encouraged by their national leaders, are seeking to reduce the supply by selling off part of their stock of rented houses and so reducing the chances of those who must rent getting a decent house.

In the circular which I issued in March 1967, I gave clear guidance to authorities about the sale of council houses. I said that it would be wrong for there to be large scale sales in areas where there is a pressing social need for more rented housing. To do so would postpone the time when an adequate supply of rented housing becomes available. Moreover, the sale of a substantial number of older houses and their replacement by new houses to let could have the effect of unnecessarily increasing rates or rents, or both. I am sorry to say that some local authorities have not complied with the spirit of that circular, and have spent large sums of money on popularising the sale of their council houses regardless, apparently, of the needs of the many thousands of people on their waiting lists.

The House will be interested to note that this policy of Conservative councils has come under strong attack, not only from Labour groups but also from the private builders. They have criticised the policy, both in letters to the Press, from the President of the Federation of Registered House Builders, and in representations from that body to me. They have said that not only does sale reduce the pool of houses for letting, but that a house sold has to be replaced by an expensive new house, raising both rents and the cost to the Exchequer.

I have come to the conclusion that this dissipation of public assets must be brought under control. I accept that in some areas where, because of our successful large programme of new building, pressures have eased, a few sales do no harm, but in the areas of greatest demand sales on more than a minimum scale ought not to be allowed.

I have, therefore, decided that in the four conurbations of Greater London, the West Midlands, South East Lancashire and Merseyside, sales should be limited to a quarter of 1 per cent. of the total housing stock in any one year. A circular modifying the general consent, to take effect from 1st August this year, will shortly be issued.

This does not mean that we are disregarding the wishes of those council tenants who want to become home owners. I know that many do, and that many have the resources to make their desires effective. There is a double benefit in this, for if such a family moves to its own house it releases a house for letting to a family in need who cannot afford to buy. I am accordingly studying proposals which have been made to me that, where such tenants wish to move to a house of their own, the council should have power to help with removal costs and perhaps also with legal expenses.

I come now to the question of local authority home loans, to which the right hon. and learned Gentleman referred. As I have said, in 1960 the building societies advanced £558 million, and this year they expect to lend £1,550 million. We can expect their ability to lend to continue to grow, whatever the temporary fluctuations in their current borrowing. They have a steadily expanding supply of funds from the repayment of principal on their outstanding mortgages, and I share their confidence that they will be able to make an ever-growing contribution to the finance of house ownership.

I have, therefore, been reviewing the function of local authorities in this field. The vast majority of councils operate only on a very modest scale. About two-thirds of lending is carried out by no more than 54 authorities whose activities are very localised. They provide nothing like the nation-wide service of the building societies, and the main distinction between the practice of local authorities and other lenders has vanished with the introduction of our mortgage guarantee scheme.

I have, therefore, decided, in view of the continuing call for restraint in public expenditure and the need to concentrate resources on discharging the main housing tasks, that this less essential service ought to be conducted on a more modest scale, and that the local authorities' quotas for lending this year should be reduced to about 80 per cent. of the sums originally envisaged. I shall, of course, be keeping the operation of this service under review. I shall most strongly urge councils to concentrate their lending on assisting persons whose need cannot be met elsewhere. In particular, they should concentrate on council tenants who wish to move, to enable them to buy privately and thus release accommodation for those in need.

This, I am sure, is a more useful and effective way of helping, and more in accordance with the wishes of council tenants who wish to become owner-occupiers than the unwise policy of reducing the pool of houses available for renting. I am issuing a circular tomorrow explaining the new arrangements in more detail.

I have spoken already of the steps which we have taken to protect owner-occupiers from the jerry-builder. I should be less than human if I did not draw the House's attention to yet another way in which we have set out to give owner-occupiers protection and help which the Opposition consistently denied them during their period of office.

In our White Paper "Old Houses into New Homes" we have taken two further steps to help owner-occupiers. We propose to increase the standard grant for improvement from £155 to £200 and the discretionary grant from £400 to £1,000. As a result of this, many owners will be able to live in a degree of comfort which in the past they never thought possible.

Secondly, we are ending the monstrously unjust situation under which owner-occupiers whose houses are demolished under a clearance scheme get far less than the real value of their house. Under our scheme they will be entitled to supplementary payments over and above site value, which has hitherto been the normal basis of compensation. In effect, they will at least get the market value of their house. I am amazed that the right hon. and learned Gentleman and his hon. Friends tolerated this blatant injustice for so long.

I suppose that the Opposition, having run away from the opportunity of having a debate on the economic situation—a debate which we should have greatly enjoyed—had to find some other subject to take up the time. They could hardly have chosen a subject more welcome to us than the question of home ownership.

We have built far more homes for owner-occupiers than the Conservative Party did during a similar period. We have raised the total house-building programme to a level which the right hon. and learned Gentleman did not believe was possible. We have helped would-be buyers with the option mortgage guarantee scheme—something which the Tories never thought of doing. We have waged an effective campaign against the jerry-builders. We are introducing very generous changes in the level of improvement grants, to the great benefit of many owner-occupiers, and we are ending the injustice of site value compensation, with all that it has meant in hardship to owner-occupiers, many of them old and many of them only with modest means.

It is a record of which we on this side of the House are proud. It is one to which I am glad to have been able to contribute, and one which I am happy to defend today.

5.0 p.m.

Mr. David Waddington (Nelson and Colne)

If I may crave the indulgence of the House, I should like at the outset to pay a tribute to my predecessor at Nelson and Colne. One thing he certainly had was political courage. There were, perhaps, not many occasions when I agreed wholeheartedly with the political opinions which he expressed, but I always admired the completely fearless way in which he expressed them. I am sure that the House will long remember his relentless campaign to bring about the end of capital punishment.

I trust that the House will also bear with me for a little time while I speak about my division. I do not think that there are many hon. Members—excluding, of course, the right hon. Gentleman the Minister of Housing and Local Government—who know very well that part of the world. I find that many people in London imagine that it is a very bleak, drab and damp place in the centre of industrial Lancashire with very little to commend it. The recent by-election in Nelson and Colne may at least have educated many of the journalists who then visited our town.

The division is, in fact, a very grand place in which to live and work. One has only to travel for a very few minutes from the centres of our towns and one is in the most beautiful unspoilt countryside. Beyond that, a very great deal has been done in recent years to improve the amenities of the towns. Thus they are no longer composed of serried ranks of "Coronation Streets", and no longer do those towns lack all amenities. I understand that not long ago hon. Members received from the local paper a coloured supplement which set out in great detail how good a place it was in which to live and work.

In recent years we have been confronted with very real and special problems, first of all because of the contraction of the cotton textile industry and, secondly, because of the very strong—and, as I believe, far too strong—inducements offered by the Government to industry to go to the development areas, which are not so very far from the boundaries of the Nelson and Colne division. This is a subject about which I hope I may have an opportunity to speak on another occasion.

On this occasion I must direct my attention to housing, and it is right to say that even there our part of the world has its special problems. It is interesting to note that although over England as a whole about 48.5 per cent. of all dwellings are owner occupied, the figure in Colne is 62.1 per cent. and in Nelson it is no less than 72.3 per cent. There must therefore be many people in Nelson and Colne who are extremely disturbed at the high level of the mortgage interest rates, and I hope that I am not being too controversial in a maiden speech in saying that I am bitterly disappointed at the non-fulfilment of the election promise of 3 per cent. mortgages. I suppose that the non-fulfilment is partly responsible for my presence in this Chamber now.

There are two or three specific points that I should like to make. What we all want, of course, is an end to the crisis conditions in which we have lived since 1964 so that we can move away from crisis rates of interest and thus allow the mortgage interest rates to fall. Obviously, however, the crisis will not end in the twinkling of an eye—indeed, I doubt very much whether it will end before the end of this Parliament.

In those circumstances, therefore, it cannot be in anyone's interest for the Government to try—and I hope that they will no: seek to do so—to prevent the building societies from charging such a rate of interest as will enable them to pay investors what is necessary to pay them in order to get the money needed in the movement. At the moment, I understand that at least twice as many people are wanting mortgages as the societies can provide for, and the Government are not providing a service to those people who are waiting in the queue— and it is often people with the more slender means who are waiting in the queue and who have not yet been provided for—when they carp at and try to prevent increases in the mortgage rate.

Secondly, I consider—as does my right hon. and learned Friend the Member for Hexham (Mr. Rippon)—the mortgage option scheme to have been a monumental flop. Only 10 per cent. of new borrowers have opted, and the reason is quite obvious. One needs a crystal ball to know whether or not it will be to one's ultimate benefit to opt into the scheme. One has to bear in mind the possibility of the standard rate of Income Tax going up, in which case the benefit of mortgage option will diminish. One has also to bear in mind the unlikely eventuality of the standard rate of Income Tax coming down. One has to bear in mind that one's earnings may increase, but one has also to bear in mind that one's earnings may increase, but one has also to bear in mind the possibility that one may encounter trouble and one's earnings decrease.

One has to bear in mind that after one has opted for the scheme the Government may, as the Government have done this year, increase family allowances and draw more people into the tax net. Perhaps—one never knows—the day may arrive when the mortgage interest rate will drop below 6 per cent. when, again, the advantages of having opted into the scheme will diminish. One really has to bear in mind the innate optimism of the British working man which must in itself militate against the success of the scheme. It is a rare bird who does not hope that either through his own efforts or good fortune—by winning the pools, perhaps—his means will increase, yet he now has to make the best calculation he can of his ultimate prospects and earnings.

One has to recognise also that the booklet advertising the scheme is very complicated as, indeed, it must be because of the complicated calculations that have to be made when a man is deciding whether or not the scheme will be to his benefit. There must be some better way of giving help to those with smaller means, and perhaps in the long run if not in the short run we should consider allowing everyone, whatever his means and whether he pays the standard rate of Income Tax or a lower rate, the right to withhold the equivalent of tax at standard rate in respect of mortgage interest payments.

I finish with a positive suggestion for the encouragement of home ownership. I think that the best incentive and the best way of encouraging people to improve their own homes would be by the introduction of some sort of tax allowance for improvement. Not only would that be a positive encouragement to home ownership, but it would also have one very beneficial side effect. One would remove a lot of the built in antagonism to re-rating and make more sense of the rating system if people knew that they could spend up to the annual value of their houses on repairs and improvements and get tax relief on those sums.

I hope that I have not trespassed for too long on the time of the House, and I am grateful for the patient way in which hon. Members have listened to me.

5.10 p.m.

Mr. W. S. Hilton (Bethnal Green)

Quite a number of hon. Members are experts either by their own choosing in certain subjects or simply because their constituencies demand that they concentrate on interests such as agriculture, fisheries or industry. Most of us, however, have a housing problem, and constituents are very fortunate if they have an hon. Member who is able to put forward their housing problems succinctly, with clarity and understanding. The constituents of Nelson and Colne, after reading the speech which has just been made by the hon. Member for that constituency (Mr. Waddington), will feel with some justification that they have someone who understands their problems and will be able to put them in this House with great clarity and effectiveness.

I have rather mixed feelings, of course, in congratulating him, as a new Member of this House, on his maiden speech. It is a rather bitter-sweet duty for me because we on these benches obviously would have hoped to retain the seat for this side of the House but I was very impressed with the fulsome tribute he paid to his predecessor. We all appreciated his objectivity in that matter, just as we appreciated the opinions he expressed in the other matters he brought before us. While I listened to him I rather got the feeling that we must be in telepathic communication because some of the things he said I intended to deal with. I do not know whether that will be taken as a compliment, but I am sure that we all listened to him with great interest and we shall always be interested to hear what he says in our debates whenever we discuss housing.

One thing he stated none of us can deny. This was that high interest rates we have to suffer at any time are usually due to the fact that the economy at that moment is unstable. It is not only interest on mortgage rates but interest on everything which goes up in such circumstances. I was very surprised that the right hon. and learned Member for Hexham (Mr. Rippon) made the speech he did in view of this central fact. I am sorry that he is not present now because I intend to say one or two things about his speech. He knows I have a great respect for him in relation to his work when he was a Minister in a Conservative Government, but, having listened to his speech today, I have the feeling that he is not the same man at all; that he apparently did not enter politics until 1964.

Surely when one is moving a censure Motion and wishes to attack a Government one does so partly because of pride in one's own past Government record and the fact that it successfully redeemed its promises while the other lot failed and are deserving of censure. But the right hon. and learned Gentleman said nothing about pre-1964; yet the party opposite has always been a great sponsor of owner-occupation. Hon. Members opposite are the people who avowed their desire to promote a property-owning democracy in this country. But there are people who took up mortgages in 1951–52 at the start of the Conservative administration and, during the financial crisis of 1957–58, found their interest rate was going up to 7 per cent. and they had a tremendous burden on their backs as a result. We heard nothing of this from the right hon. and learned Gentleman. He must realise, however, that he has been wielding a two-handled sword in this debate. The more he tries to say that the present increase in interest rates is a breaking faith with electors in comparison with promises given, the greater wounds he inflicts on past Conservative Administrations because this also happened under them.

I do not make these points because I want this to be a partisan debate. I am bitterly disappointed with the contribution the right hon. and learned Gentleman made because today we have an opportunuity to discuss the real problems of owner-occupiers and we do not often have such an opportunity. Even when the right hon. and learned Genleman moved on to suggestions about what could be done to improve the situation, he missed what I consider to be the central core of thinking on this problem, that not all owner-occupiers suffer from the impact of higher interest in exactly the same degree. He therefore made several suggestions for general improvements towards helping owner-occupation— making land cheaper and cutting building costs among them—but that would not significantly help many owner-occupiers who are already in the situation that their income is so low in relation to family responsibilities that they do not pay Income Tax.

Does the House realise that there are considerable numbers of owner-occupiers who real income increases every time the mortgage interest rate rises? At one end of the scale this is the position. Under the interest adjustment clause in a mortgage one has the right to pay the same total amount in repayment accepting that when the interest goes up the period of the mortgage will extend. Consequently what happens is that a greater part of the repayment is taken for interest and one receives a higher allowance from the Inland Revenue. We then have the paradox that real income increases as a result of an increase in the interest rate.

At the other end of the scale there are people who get no relief on this at all simply because they are not paying Income Tax. The flaw in the Income Tax relief scheme for owner-occupiers is the same flaw as exists at any time when we are trying to help people by the negative Income Tax system. Those who are worse off get very little and those who are better off get most aid. The inequities that exist among owner-occupiers due to trying to help them by tax reliefs are very much greater than the inequities that presently exist among the tenants of local authorities in relation to rents they pay and subsidies they receive. Yet outside this House and inside we are constantly discussing local authority tenants, the rents they pay and their subsidies to try and devise fairer schemes. Yet rarely do we have an opportunity of discussing owner-occupiers and attempting to achieve greater equity for them.

That is why I am grateful to the Opposition for raising this matter today so that we have an opportunity of providing solutions to the problem. I say "solutions" because I should think it a waste of the time of the House today to pursue sterile political arguments on either side when we have a chance of getting to grips with the anomalies and making suggestions to get rid of them and bring about greater equity. The level of a mortgagee's income at present determines the amount of help he is to receive instead of our giving positive Government help to all owner occupiers much along the lines as was suggested by the hon. Member for Nelson and Colne.

On one point I must agree with the right hon. and learned Member for Hexham, and this is that the option mortgage scheme has not met with anything like the success we hoped it would have when we discussed it on the Housing Subsidies Bill. This is not necessarily the fault of the Government. The Government tried to devise a scheme which would be of assistance to owner-occupiers with low incomes. It was a genuine attempt. For all the fire and fury attempted to be generated by the right hon. and learned Gentleman it should be remembered that not once in 13 years did hon. Members opposite even dream of bringing anything like the Option Mortgage Scheme into existence. However, it has one great flaw in that it asks the owner-occupier to gamble perhaps for 20 years ahead. I do not think that in the provision of something which is socially necessary we should ask anyone to gamble. We must therefore seriously consider the option mortgage scheme and try to discover where we have fallen down and perhaps devise a better method of helping owner occupiers before the position greatly worsens.

I want to put forward for my right hon. Friend's consideration my suggestions for what might be done. Throughout the years the House has not clearly realised the positive weapon which we have in the Inland Revenue mechanism for giving social aid. Every time we have tried to do anything to help people, such as by allowances in relation to personal responsibilities, it has always been on a negative basis so that those on low incomes did not benefit.

We must try to ensure that the Inland Revenue acts in a positive way to help owner-occupiers, but it must act in such a way that those with the lowest incomes will also receive assistance. As I understand it—the Minister will be able to verify this—at present the total net relief which the average owner-occupier receives—this is in £s, not the amount of relief allowed against Income Tax—is £31; in other words, he is £31 better off as a result of his being able to set his (mortgage interest against his Income Tax. The theory is then that some owner-occupiers get nothing and some get £62. Some get more. Why cannot we decide that £31 is the amount that we want to give owner-occupiers as a direct Government subsidy? Why allow the pure incidence of incomes of owner-occupiers to determine the level of assistance they receive?

Let us suppose it was decided that £31 was a reasonable amount. Then allbona fide occupiers—I do not believe in convenience owner-occupiers who would do this to get advantage of the subsidy —would be treated as if each year they had made a payment of £31 in Income Tax. At the end of the year owner-occupiers would receive their Income Tax assessment. An owner-occupier with a large income who was assessed to pay, say, £180 in tax for the year would pay that amount minus the £31 which he had notionally already paid; so in that way he would get his £31 subsidy.

It is important to realise that, if this subsidy is regarded as a payment of Income Tax actually made, at the other end of the scale the man with family responsibilities on a low income and who has paid no Income Tax would be treated as if he had made an over-payment of £31, and the Inland Revenue would have to send him a warrant for that amount. Again an owner-occupier due to pay £10 in tax would receive a warrant for £21 as a rebate. I do not suggest that this in detail is the scheme which should be adopted. However, this is the type of suggestion which I would hope would arise from this debate.

I believe that the Inland Revenue could be used in this way to implement a scheme for the benefit of owner-occupiers. With this scheme there would be an adjustment automatically every year to suit the changing income of the individual and his changing family responsibilities. There would be no question of a gamble as there is at present under the option mortgage scheme.

We often talk about means tests. Many of our schemes tend to founder because people do not like filling in many forms. However, people have to fill in a form stating the number of their dependants for Income Tax purposes. It is the one annual Income Tax form to be completed and the one annual test of means. The scheme I have suggested should commend itself to my right hon. Friend simply because we should be utilising something which already exists; there would be no extra charge to the Exchequer; we would be using the Revenue in a positive rather than in a negative way.

Mr. Costain

Does the hon. Gentleman suggest that the £31 should be allowed whether or not a person has a mortgage? Would someone who owns two houses get £62?

Mr. Hilton

These are details which would have to be thought out in the operation of the scheme. My right hon. Friend would have to check with the building societies to ensure that a genuine mortgage was in existence. By an owner-occupier, however, I mean someone who owns the house in which he lives. I do not contend that my suggested scheme would be a panacea for all time and that there would not be problems to be ironed out. It is time, however, that there was a general recognition that not all owner-occupiers feel the impact of high interest rates to the same degree. Unless we discriminate in the help we give, we shall be failing in our duty to them.

I do not expect the Minister to answer in detail the points I have raised, but if he can give an assurance that as a result of this debate he will take these ideas back to the Ministry and will not kick them out perfunctorily without studying them we shall all be able to say, as my right hon. Friend has already said, that we are delighted that this debate was initiated.

5.27 p.m.

Mr. Walter Clegg (North Fylde)

It is many years since Conservative Members were able to welcome to their ranks a Member from Nelson and Colne. It has been well worth our waiting. My hon. Friend the Member for Nelson and Colne (Mr. Waddington) showed his knowledge and love of his constituency, because it is a part of the world that he knows very well. As I am a local boy, it is particularly pleasant for me to be able to welcome another local boy to the House and to express the hope that he will take part in our housing debates in the future.

As always, I found the contribution of the hon. Member for Bethnal Green (Mr. Hilton) very interesting. I had difficulty in following the ramifications of his proposed scheme. It would give rise to practical problems. As I understood it, there was to be one allowance for all borrowers; it would be worked out on a mean figure, and it would be general over the country. This would be unfair and dangerous, because house prices vary from area to area. A man living in London or the South-East would have to have a much larger mortgage than someone living in Lancashire. It would be wrong that he should get only the same allowance of £31.

Mr. Hilton

I admit that there would be anomalies, but does not the hon. Gentleman realise that the problems which he suggests would arise under my scheme already arise in the aid we now offer? I am trying to refine it a little more.

Mr. Clegg

I agree that there are anomalies, and there has been a general desire on both sides of the House to help the owner-occupier who does not pay Income Tax. The method to which the hon. Gentleman referred, that is, using the Inland Revenue in a positive way, has been proposed not only in the housing context but in the general social security context as well, and it may well be that we shall have to wait for a general review of social security before we find an answer of the problem of helping the man who does not pay Income Tax.

The Minister made a complacent speech today. No Minister of Housing, whatever his party, can afford to be complacent when faced with the housing problems which this country has, but it seemed to me that, for a large part, the right hon. Gentleman's speech was little more than a series of pats on his own back. There is great cause for concern and there are many problems to which he ought to be paying attention. For example, there is the imbalance now developing between public sector housing and private owner-occupier housing. I notice something of a Pavlovian reaction on the benches opposite, particularly those behind the right hon. Gentleman, when this question is discussed. Public sector housing seems to receive general approval, while private sector housing is not regarded in the same way.

What worries me about the balance between the two sectors which is being deliberately created as an act of policy is that, with each extension of the public housing sector, we are building up a more rigid society. What does the council tenant have? He does not have much legal security. He holds his council house at the whim of the local authority; he is not protected as a tenant of private property is. His tenancy depends upon the good will of the housing committee. But, more important than that, it is very difficult for him to move.

Every hon. Member must have come across this problem time after time. After years on the housing list, someone is given a council house. It is likely that it will be his home for the rest of his life, much though he may wish to move at some time. The council tenant cannot just arrange an exchange with another council tenant who, perhaps, has a smaller house. It all has to be filtered back through the local authority and be approved by the housing committee. All this tends to create an excessively rigid pattern in our society.

The problem of moving from a council house in one part of the country to a council house in another is even more difficult, if not impossible of solution. I have in the past made some suggestions for overcoming the difficulties, but I am beginning to think that they are overwhelming in the practical sense. What we ought to do—this is what the Minister should be boasting about—is make a real extension in the private sector. Any man who owns his own house is far more free to move if his job calls him to another part of the country; he can sell his home and buy another. But a man in a council house is greatly restricted in his freedom to move elsewhere, and sometimes he may even be unable to move and take up a new job.

I was astonished at the action which the Minister is taking about the sale of council houses by local authorities. It is an intolerable interference with the independence of local authorities and contrary to democratic principle. Many Conservative councils were returned after it was made clear that this was to be their policy. They won sweeping victories, which put them into power, on the basis that they would pursue a policy of selling council houses, yet now the veto is put on from Whitehall. The implication is serious. In one region after another, it is constantly said that there is too much power at the centre. We are constantly asked by local authorities and others in the regions, particularly in Scotland and Wales, as we well know, that more authority should be devolved. But the limitation which the Minister is putting on the sale of council houses is rule from the centre.

We shall never have really good local government until we have real local responsibility. If the Minister does not like the sale of council houses, it is not for him to make rulings. The answer to the problem, if he sees it as a problem, is for the people who elected the local authorities to throw them out at the next election if they do not like what they are doing. If the Minister's present attitude is to be perpetuated, whatever may be done by the present or a subsequent Government after the report of the Royal Commission will be a waste of time.

The Minister seemed to think that the Prime Minister had made no promises about private sector housing or that, if he had, they were limited. In fact, on 10th October, 1964, in a party political broadcast, the Prime Minister said: We believe that the Government should act positively to help owner-occupiers by lowering interest rates and, of course, to help them with cheaper land. Interest rates have been dealt with fully in the debate so far, and I shall not repeat the argument. I want to say something about cheaper land.

A clear promise was made about cheaper land, and the Government's chosen instrument for the purpose was the Land Commission and the betterment levy. The great cry went out—and people believed it, no doubt—that the speculator would be hammered and that the new organisation would provide cheaper land. From the very beginning, we on this side said that, far from decreasing the price of land, the betterment levy would raise it, and we had support in that argument from the hon. Member for Rugby (Mr. William Price).

I can speak with practical experience in this matter as a solicitor dealing with the sale of building land. Vendors are adding the levy to the purchase price, and builders are paying it. The builder does not mind paying because he will pass it on. The man who ultimately pays the levy which goes to the Treasury is the purchaser of the new house. We said that it would happen, and it has happened in practice. It is difficult to isolate the increasing price due to this one measure alone, but that it has had some influence I am convinced from my own experience and that of colleagues in the legal profession who have told me the same.

A man goes to his solicitor and says, "I have a piece of land, with planning permission, and I want to sell. I want £X for it". The solicitor explains that there is the levy to be paid. The vendor asks, "what levy?", and then, after the solicitor has told him all about it, Be says that instead of £X he wants £X plus Y, that is, including the amount of the levy. When the land is put on the market, the builder buys at that price. It is as simple as that.

The machinery which the Government set up to redeem the Prime Minister's promise has done the very opposite of what they hoped and will continue to do the opposite. One cannot take a levy and pay it to the Treasury and hope that it will bring the price of land down. No tax ever brought the price of anything down. So that is another promise which the Government have failed to redeem.

There is another side to the operations of the Land Commission which should be noted. The argument advanced for the Commission—and there had to be an argument, expensive thing that it is—was that land was being held back by speculators and that the new system would force land out of the speculator's hands and on to the market as a result of the compulsory purchase powers. We said at the time that that was not the reason for the shortage of land or the high price but that what was wrong was the planning system in this country, and that this was creating the shortage of land.

What happened? The Land Commission went out looking for land to buy and it found the very situation which we had described. It is not speculators who are holding land back. Shortage of planning permission's is holding land back. The Government could have achieved a better result by making a change in planning procedures—in fairness to them, they brought in the Town and Country Planning Bill—and they could have avoided setting up an expensive agency like the Land Commission. If they had wanted to raise a tax on land profits, they could easily have done it without the monster which they have now created, and created on a false premise.

We shall miss the whole point of the land shortage and land values unless we have a positive drive to provide more land for builders to develop and shake out all the old permissions, or many of them, as the new Act will enable us to do. But, more than that, there must be positive planning. The planner must go out and look for land instead of waiting for applications to come to him and then either approving or disapproving them.

If that had been done, we could have avoided the expense of the Land Commission and the millions a year needed to run it. As was said at Question Time today, the Land Commission is now being used as a stalking horse by builders. Some say, "Unless you sell me this piece of land, I shall go to the Land Commission and get them to use a C.P.O." Others might go to the Land Commission first and then say, "I have been to the Land Commission, and it is interested." Some of the owners of the land may, like a constituent of mine, have thriving businesses on it. So pestered was my constituent by this kind of threat being made to him that he told me, "The only thing missing from the front of the Land Commission Act is the swastika." I am sure that the Act was not meant to work in this way, but we must judge it in practice.

There is not a great deal of time available for the debate. I think that the Minister was far too complacent. I believe that he under-estimates the bitterness which the failure of the Government's promises has caused among the people, and if he continues to be complacent we shall not get the results which the country needs. What the country needs is a great expansion in the private housing sector.

5.42 p.m.

Mr. John Fraser (Norwood)

In their home ownership programme, the Government have little to apologise for. There is no need for them to be defensive about it. The Motion talks about "discouraging" home ownership. In 1965, for both old and new houses, 386,000 loans were taken up. In 1966, 461,000 were taken up. In 1967, the figure was 504,000. In the first quarter of 1968, the figure was running at nearly 600,000 for the year. That hardly suggests that the Government have been discouraging or hurting home ownership. In the last quarter of 1967, the total amount advanced by building societies was £411 million, a record. In the first quarter of 1968, the amount was £427 million, again a record.

The same trend is true of private house construction. In 1964—the last year of the Tory Government's programme—the number under construction was 174,000. Their previous best figure had been 149,000 in a year. The figure rose to 203,000 in 1965. It was 201,000 in 1966 and 189,000 in 1967—admittedly a drop. Nevertheless, this was still better than in any Tory year. At the beginning of 1968, there were 222,000 new houses under construction. Whichever form of measurement one takes, the present Government have done better than the Tory Government did at any time during their period of office.

But the figures are even better than they appear on the surface. Following the Rent Act, 1967, many people—and as a solicitor I had personal experience of this—were forced on to the house purchase market who should never have been there. This was because they were faced either with eviction or with buying a house they did not want or could not afford. This is why the prices of private houses rose so sharply when the Act began to take effect. Now, people who should properly do so are able to get local authority houses or can remain in private accommodation at reasonable rents.

Then there is the question of the sale of council houses. There are many economic advantages in the sale of council houses. For example, the local authority is able to reduce its capital debt. As my right hon. Friend has pointed out, in areas where there is no housing need there is nothing particularly wrong in the sale of council houses. In an open market, there is no objection to selling council houses, giving a choice of renting or buying local authority accommodation.

But in a borough like mine, with 15,000 families on the waiting list, it is hard to justify the sale of council houses. It would be totally unjustified and would mean taking these houses out of the available resources for ever. There is, however, even in the Inner London area, need for local authorities to sell houses to people who have been moved from one area to another under clearance schemes. One of the difficulties is that, in such clearance, both owner-occupiers and tenants are affected. People like teachers, solicitors and assistant town clerks, who have tended to buy their own houses and would not get local authority rented accommodation, need to be catered for.

One of the results of the failure here is, for example, the situation in Tower Hamlets, which is denuded of teachers who live locally. They would like to buy their own houses and they cannot get local authority rented accommodation. Local authorities in these circumstances should take up the option arrangements for the sale of houses. This is a scheme whereby, when the person to whom the house was sold in the first place wished to sell it again, it could be re-purchased by the local authority to be made available again to the some sort of person who needs such accommodation within the borough.

It is certainly disturbing that interest rates should have risen by 1⅜ per cent. since 1964, but between March, 1952, and July, 1956, interest rates on building society mortgages rose by 2 per cent. This is not something, therefore, for which the Government can be blamed. Economic circumstances make it necessary to have high rates of interest and I urge the Government not to interfere with building societies in exercising their discretion to raise interest rates, because lack of mortgage funds caused by not putting up interest rates at the right time distorts the housing programme and makes it difficult for builders and those developing estates to plan some time ahead.

Mr. Frederic Harris (Croydon, North-West)

Has not the hon. Gentleman missed the vital point that the Labour Party promised 3 per cent. mortgages?

Mr. Fraser

Some people like to believe that they read something in theDaily Express about what was said by my right hon. Friend the Member for Belper (Mr. George Brown) but are not prepared to quote it in full. I shall not go back to that quotation, which is rather longer than hon. Members are prepared to quote.

The Government have examined mortgage interest rates—something which the Conservative Party never did—by sending the whole issue to the Prices and Incomes Board. This has stimulated the building societies into taking a close look at their interest rates, liquidity and reserve position. The Building Societies Association is now considering the Hardie Report and this is being discussed by member societies. I hope that the Government will consider the possibility of giving help to the Building Societies Association by making changes in the law and practice of reserves and cash liquidity ratios. The present amount of building society funds is about £7,200 million, of which about £1,200 million is tied up in reserves and cash. If the Government could underwrite the liquidity position, with no strings attached—because the building societies would on no account accept such strings—it might be possible to release from the present liquidity arrangements about £600 million for house purchase purposes, and this in turn might enable a small reduction in interest rates to be made.

At present the tax allowance on mortgage interest works inequitably. The scheme which we devised for the composite rate of interest paid to investors in building societies penalises the person who does not pay tax at the standard rate. The standard rate payer gets some advantage from investing in building societies, but the person who pays less than the standard rate receives some disadvantage. Luckily, this is not generally realised. If it were, I fear that investment in building societies might fall somewhat.

Apart from the mortgage option scheme, which I welcome, the person who pays a high amount of Income Tax gets the highest advantage, while the person who pays little or no Income Tax, even under the mortgage option scheme, gets a lesser advantage than, for example, the person paying Income Tax at the standard rate. It should be possible to have a composite charge, taking the average of all the tax allowances given, in exactly the same way as we have a composite rate of interest paid to all those who invest in building societies.

I come to some of the wider issues of home ownership. I suggest that the Government should adopt, as part of an economic as well as housing strategy, a further extention of home ownership, both in terms of new and old houses. I use the words "housing strategy" because I believe that home ownership is one way by which one can get people voluntarily to devote more money to housing generally. As the representative of a London constituency, time and again I have seen how people living in houses with controlled rents of quite low amounts are not prepared to improve those houses because they have no incentive to do so. The landlord is in exactly the same position and, for exactly the same reasons, he is not interested in carrying out repairs and alterations.

The result is that premises of this type tend to fall into disrepair, and a very low amount of investment is put into them. When a house passes to the ownership of the tenant, almost immediately that tenant becomes prepared to devote more money to make the necessary improvements, no doubt because it is in his own interest so to do. In this way conflict is avoided between the landlord and tenant and one is using human nature to overcome an important housing problem.

This difficulty particularly applies in older areas. I hope that the Government's scheme for older houses proves successful. Older property being renovated by local authorities is an important aspect, but a greater degree of home ownership is the best answer because the owner occupier generally sets the pace in older areas.

I was sorry to hear my right hon. Friend's announcement about local authority loans. Perhaps I heard him incorrectly. If I did not, his announcement is to be regretted. I hope that local authorities, particularly in the London conurbations, will be given greater amounts to lend, particularly to purchasers of older houses, since in practice building societies will not make these loans.

As an innovation, I suggest that the Government should facilitate the sale of houses by landlords to existing tenants by guaranteeing an annuity to the landlord. For example, a house occupied by a statutory tenant may be worth £2,000. The Government should facilitate the transfer of that house from the landlord to the tenant by guaranteeing an annuity to the landlord. The landlord would, in effect, be selling the house on a 100 per cent. mortgage, but would be receiving a guarantee of repayment from the Government. This proposal has the support of many tenants and would facilitate the transfer of houses on controlled rents owned by landlords who in many cases do not require them.

In terms of economic strategy as individuals we devote far too little to housing, about 11 per cent. of personal expenditure—rather less than we spend on cars or tobacco and drink. We must increase this expenditure without forcing people to do so. A greater increase in home ownership would achieve that end. I suspect that an economic argument used by some people is that at a time of economic stringency we should cut down the amount spent on home ownership and the funds made available for house purchase. This view is utterly wrong because if one buys a new house the import input is 10 per cent., while if one does not buy that house but spends the money on consumer goods in the shops, the import input is 20 per cent. There is, therefore, an economic advantage to be gained from greater home ownership and of harnessing human nature to make these import savings.

House ownership develops the habit of saving and investment. One of our troubles as a nation is that we spend more per capita on personal consumption than any other nation. We devote far too little on investment. By selling home ownership to a greater extent, we would achieve housing and economic advantages which the people so badly need, particularly in the London area.

5.58 p.m.

Mr. Eric Lubbock (Orpington)

The speech of the hon. Member for Norwood (Mr. John Fraser) was an interesting exposition of the state of home ownership today. I was glad to hear him advocate some measures which would encourage home ownership still further and I was particularly interested in his remarks about encouraging statutory tenants to buy their own homes because this is a lacuna in Government policy which should receive urgent attention.

I have a constituent who owns two houses. He is an involuntary landlord who would be delighted to divest himself of the responsibility, provided that the statutory tenants, who are at present paying small rents—in one case of about £1 and in the other of about 30s.—would buy those houses. It is obviously not in the interests of the statutory tenants to buy them as long as their rents are controlled at such low sums.

We should consider further means of encouraging people to take on the responsibility of home ownership, particularly as many of them live in controlled houses by accident and are in no sense in need. In other words, their incomes should not entitle them to pay the very low rents which enable those on extremely low incomes to live properly. There is an element of illogicality in our housing policy and subsidies when the finances of the private landlord or the State are tied to the bricks and mortar and not to the personal needs of the tenant. So far we have been only tinkering with the problem and our housing policies have not tackled the fundamental problems. It is time that the Government addressed their minds to these urgent matters.

On the other hand, I disagree with many of the criticisms which were made by the right hon. and learned Member for Hexham (Mr. Rippon), and which were couched in rather extravagant terms. I can see that the Tory Party had to find a good substitute for the economic affairs debate, which did not take place in spite of the promises of the Leader of the Opposition, but I can also see how the Minister has welcomed this opportunity to say what the Government have been able to do about home ownership. At least we are forced to admit that in the last four years rather more has been done by the Labour Government than was done by the Tory Administration in the previous period. I do not go along with the generalised and sweeping criticisms which were made by the right hon. and learned Gentleman.

We all regret these very high mortgage interest rates, and those of us who have a high percentage of owner-occupiers in our constituencies can see the effects on the standard of living of our people—if they are paying more in interest on their mortgages, they have less to spend on other things and inevitably their standard of living declines. However, as the Minister pointed out, high interest rates are a product of the general economic situation, and to single out mortgages is to blind oneself to the fact that world interest rates generally have had to be maintained at a high level because of the international monetary situation. It is something which we all deplore, and we would all like them to be brought back to a more reasonable level, but that is not practicable in the present economic climate.

We hope that the measures taken to restore stability and to bring long-term backing to our reserve position will make it possible in the near future to do something about a general lowering of interest rates, but there is no use in going back over the remarks which may have been made by the right hon. Member for Belper (Mr. George Brown) in the 1964 Election. We all know that he tends to say things out of turn from time to time and we do not attach any very great importance to his remarks. I do not think that any people were taken in by the hare, which he started, of 3 per cent. mortgages. If anyone believed that and voted Labour as a result of the so-called undertaking given by the right hon. Gentleman, he needs his head examined, and I do not think that many people did. Not many people in my constituency were taken in. They knew that it would be totally impracticable and that the sum required to finance a general lowering of rates of interest on mortgages to 3 per cent. would be astronomical and beyond the reach of any Government, even if it had not been faced with the difficulties which the Labour Administration had to face on taking office in 1964.

Mr. Roy Roebuck (Harrow, East)

I am sure that the hon. Gentleman does not want to be unfair to my right hon. Friend in his absence. My right hon. Friend strongly disputed the one account of the statement which he made about housing interest rates which appeared in a Sunday newspaper.

Mr. Lubbock

That is why I was not entering into a discussion of whether he actually said that interests rates would be lowered to 3 per cent. He certainly gave the impression that that would be the policy of the Government if Labour were elected. Certainly he gave that impression to theSunday Express reporter who was at that meeting. I was saying that it would be fruitless to go back over that and discuss what was or was not said, because we are facing a situation brought about by the general economic climate in the world. Even if we had had the most brilliant men in office during the last four years, the most extreme geniuses, it would have been impossible to bring mortgage interest rates down to anywhere near 3 per cent. If we are to be realistic about this matter, we start from that position.

What can be done to help home owners within the limits of the nation's resources? I do not think that the Government have done so badly as is sometimes pretended. Their first priority was to increase the number of houses to let, so that there was a more reasonable balance between home ownership and houses to rent. We all know that the overwhelming number of housing cases which come to our advice bureaux in our constituencies are concerned with houses to rent and not with house purchase. That does not mean that people do not have difficulty about meeting their mortgage payments, but they are not so extreme as many of the sad histories to which we have to listen of serious overcrowding and of family break-ups and disputes caused by some of the appalling housing conditions in some major cities. The Government rightly gave priority to increasing the stock of houses to rent, while at the same time doing whatever could be achieved to encourage those who were capable of buying their own homes.

The mortgage option scheme is a step in the right direction, although not many borrowers have taken up this opportunity. However, the fact that 10 per cent. have done so shows that the scheme has brought home ownership within the reach of some individuals who would otherwise have been forced into the rental market, and this has diminished the pressure on council house accommodation and reduced the amount of capital expenditure which local authorities would have had to incur, not significantly perhaps, but still more than the Tories did when they were in office. Rather than hearing these generalised criticisms, I would be far more interested in knowing what the Tories would propose to do if they resumed office. In these debates the Tories adopt a rather negative attitude, only criticising the Government and not telling the House what they would do. Perhaps the hon. Member for Crosby (Mr. Graham Page) will bear that in mind when he winds up tonight.

I agree with the hon. Member for Norwood about the effect of taxation on mortgages and especially the fact that more tax relief is given in respect of the more expensive houses. This seems an anomaly, in that the encouragement of home ownership should be directed mainly towards those at the lower end of the income scale. If there is a larger market to be tapped and if there are many people who would like to own their own homes but who are unable to do so for financial reasons, we should remove some of the subsidies paid to the "pop" stars who buy £30,000 houses and get the Income Tax relief on the interest they pay, and use the amount to help those at the bottom end of the scale, that is to say, the 10 per cent. who are going in for the mortgage option scheme.

A reverse kind of subsidy is now paid to those who are very rich. The higher up the scale one goes, the larger the benefit to be gained from the Income Tax system. This is something to which the Government should give attention as part of a fundamental review of the financial help given to home ownership. I should like a scheme to be initiated which would lead to a reversal of these subsidies with more payment to those at the lower end of the income scale.

I want finally to deal with the sale of council houses. I agree with the Minister that one must carefully distinguish between areas where a near balance between supply and demand is being achieved and where it is perfectly legitimate and desirable to sell council houses, as long as there is a demand for them, and those areas, such as the big conurbations, which are very far from achieving such a balance and where it will not be achieved for many years.

People imagine that in my constituency we are well off for housing, but about one-third of the cases which come to my advice bureau every week are concerned with applications for local authority accommodation. That indicates the size and importance of the problem in a fairly well endowed constituency. It is morally wrong to reduce the stock of houses available for letting by selling them to well-off people who can easily afford to buy them on the open market.

Certainly local authorities should build houses for sale to people who are already in their own lettings, so as to release that accommodation for others. They should also build them for sale to people on the waiting list if there are those who can afford to buy them, so as to relieve pressure and also to make room for others whose need is greater. I do not think that consciously and deliberately to reduce the amount of houses available for letting while there is this tremendous shortage is correct.

I would beg the Minister to carry on with the policy he has announced today of preventing those local authorities who have ignored this advice so far from wantonly destroying the assets at present under their control. I do not feel that I can go along with the Conservative Party in the generalised and sweeping criticisms it has made of the Government's housing programme and therefore I shall recommend my hon. and right hon. Friend not to support it in the Division Lobby this evening.

6.10 p.m.

Mr. Hugh Rossi (Hornsey)

There is little that I find more sickening than the cynicism of the Government over home-ownership and the lamentably complacent speech of the Minister this afternoon. It may be that he has mesmerised himself with the figures that he has juggled about the Floor of the House, but he has certainly not convinced the struggling young couples, desperately anxious to buy their own homes. They will not be convinced when they realise that they have to try to find a deposit out of an income which is being virtually taxed out of existence by the Government and, having scraped together the deposit—without the help of this 100 per cent. mortgage farce, which is worthless—find that the house they want is gradually receding from their reach as prices continue to rise.

House prices have risen under this Government by something like 35 per cent. It is easy to say that mortgage interest rates were governed by factors outside our control, but this was not the impression given in the country in the last two General Elections, whatever gloss may be put on the public statements made by the Prime Minister and the right hon. Member for Belper (Mr. George Brown). These are matters about which the country knows and no amount of gloss, manipulation or juggling in the House will convince them otherwise.

I do not know why the Labour Party is not being honest over this. It proclaims itself as the party of public ownership. That is what it passionately believes in. Its platform over the years has been the nationalisation of land. More recently it was the municipalisation of rented properties. These are the things for which it has fought in the last 25 years. It was only in 1964 and 1966, when the tacticians of the Party decided that it was necessary to woo the middle class—

Mr. Roebuck

Bunkum.

Mr. Rossi

—that in desiring to woo the middle classes it was decided that home ownership was fair game. A number of reckless and dishonest promises were made.

Mr. Roebuck

rose—

Mr. Rossi

I will not give way, we have very little time. The hon. Gentleman has only been in the Chamber for five minutes; I have been here the whole of the afternoon. We have heard promise after promise made by right hon. Gentlemen opposite. We will cheapen the cost of housing by our interest rates policy. That was the Prime Minister in Stevenage in September, 1964. By intelligent monetary policies Labour will bring mortgages within the reach of young couples living on average incomes. The Prime Minister again, at Sitting-bourne in September 1963. Where are those promises today? What young couples now consider that mortgages are being brought within their reach by the high interest rates that they now have to pay?

According to a very rough calculation that I have made, the recent increase in interest rates makes a £3,000 mortgage £830 dearer over a period of 25 years. This is the sort of thing that the Government's policies have brought about; this is that sort of thing that young married couples have to face. I revert to the policy of the Government over home-ownership. It is implicit in the way that they have been handling money. Local authorities have been continually operating under a "stop-go" policy on funds available for mortgage loans.

We are always being told that local authorities have had to suspend their mortgage loan scheme. Even today, in the right hon. Gentleman's speech, he told us again that there was to be another stoppage or suspension. At the same time local authorities can have what money they want in order to buy in property for their own use. There is no restriction on that, not even on properties not required for development purposes. Local authorities throughout the country have been encouraged by the Government to acquire odd properties here and there, whether or not required for a redevelopment scheme.

This policy has not added one single new unit of housing accommodation to the stock of the country—it has not provided one extra home. It has brought into public ownership more and more property, and at the same time, by drying up the mortgage sources, has prevented more and more people from buying their homes. This is the real policy of the Government, and this is why I say that their attitude towards home-ownership is the utmost sickening cynicism.

I accuse them of this and they stand condemned of it on their own policy. Today we have an even greater discouragement for people buying their own homes when we axe told that local authority policy based on local needs is to be interfered with again because they will not be able to sell properties to then-own tenants.

As to house prices, we know the effects that S.E.T. has had. It is a direct policy of the Government, and from this side of the House we have urged them time and time again to relieve the building industry from the tax. It adds something like £40 or £50 to the cost of a three-bedroom house. Is this an encouragement towards home-ownership? What has devaluation added? It has increased home prices. There has been no preference given at all to the building industry, to essential social services. The Minister has turned a blind eye. There has been no agitation on his part to exclude housing materials from these impositions, yet he talks about wanting to encourage home ownership.

Home prices have increased under the Labour Party's administration by 35 per cent. What has happened to the promises made before the last two General Elections, that the cost of housing and land would be brought down? These pledges have been broken. The British public has seen this and realises the truth. It does not require the right hon. Gentleman to come here and juggle with statistics to convince them otherwise. They will judge and criticise him on his complacent manner in approaching this grave social problem. He has done himself no good in approaching the problem in this way.

The right hon. Gentleman has adopted an "Anything you can do I can do better" attitude towards the previous Conservative Administration. He has said that he has built more houses for home ownership than anyone else. He said that the Tory Party should look at its record. I have the statistics in front of me. In 1952, 34,605 houses were built for home ownership. That figure had gone up to 218,094 by 1964. [An HON. MEMBER: "What about 1963?"] There has been a progressive increase from 1953 to 1964. I do not wish to weary the House by reciting the figures, but the peak was reached in 1964, when over 218,000 houses for home ownership were built. Since 1964, there has been a progressive decline in the number of houses built for owner-occupation. In 1965, 213,000 were built; in 1964, 205,000 were built; in 1967, 200,000 were built. We are told that in 1968 200,000 will be built, but the starts this year are 32,000 down on last year. Therefore, next year the figure will have slid down again.

Mr. Costain

I hope that my hon. Friend will not let the Minister get away, as he tries to do, with what he says about 1963 when we had the coldest winter for a long time. No building was done for three months. The Government kept on using stupid arguments. We should show how wrong the Minister's arguments are.

Mr. Rossi

The figure for 1964 was only slightly up on the figure for 1962, but from 1952 until 1964 there was a continuing progression and a continuing decline from 1964 carried forward into next year, as the starts show.

These are the true figures, and the Minister should not juggle with selective statistics for his own benefit. He has no right to be complacent. He will stand judged, not on his words, but on his deeds. The people of this country know how easy it is to buy a house and to get a mortgage and to pay for it. On these facts, the right hon. Gentleman stands judged and condemned.

6.22 p.m.

Mr. Oscar Murton (Poole)

The Minister is a man of considerable charm, but in his speech I thought that he overdid it to the point of complacency. Virtually half the houses in Great Brtain are owned by their occupants compared with the figure of 28 per cent. in 1953. This reflects much greater credit on the last Conservative Administration than on anything which the present Administration has achieved in the last three and a half years.

Credit for this lies also with the building industry and the building society movement in the determined efforts which have been made to provide the necessary mortgage finance. Mr. Norman Griggs, the Secretary-General of the Building Societies Association, has forecast that his movement has expanded so rapidly during the last decade that if present progress is maintained it will outstrip and overtake the total assets of the joint stock banks.

That advance is conditioned entirely by the general financial climate of the country. There are signs that prospects are not reassuring. It is perhaps a truism to say that speculative house building —that is, the building of private houses for sale on the basis of market conditions and potential public demand—must of its nature be geared to and be affected by the general economic situation. We expect that about 215,000 houses will be completed in the private sector by the end of this year, but we must remember that from 1964 to 1967 inclusive there has been a steady fall in the stock of new housing from 58 per cent. to under 50 per cent. which has been caused, as we all know, by the restrictive financial policies of the Government.

Supporters of the Government may take gratification from the fact that for the first time there were indications of buoyancy in the private housing market in the early part of this year, but there are already signs of a downturn. There is considerable evidence that the consumer boom at the beginning of this year was reflected in a boom in housing. There is no doubt that the average man is frightened about the state of our money. He has preferred to put whatever money he could into something solid and to buy his home before the harsher measures which had been forecast overtook him. There has been a flight of money into ordinary shares, despite the fact that they show such a low return. There has been an unpturn in investment in unit trusts. On the other hand, there has been a downturn in investment in fixed interest stocks and in savings in building societies.

The building societies would face great difficulty if this movement were to continue. Although they are managing to hold their own and to serve the country faithfully, if investment is removed from the building societies to any great extent —and there is no doubt that members of the public are beginning to use them as a form of banking from which they can quickly withdraw their money—they will have to increase their rates. If that happens, it will be a tragedy for the home owner. This is something to which the Government should pay due regard.

The way to prevent that from happening is to overhaul the economic capability of the country and to lower interest rates so that home ownership is made easier and the building societies are able to attract the money which they can lend to the small man to help him to buy the home which is his heart's desire.

6.28 p.m.

Mr. Roy Roebuck (Harrow, East)

I have been provoked into saying a few words by the speech of the hon. Member for Hornsey (Mr. Rossi), who, having blown up, has blown out. I apologise for not having been present during the earlier part of the debate, but I was engaged in other parliamentary duties, as the hon. Gentleman perhaps would have realised if he attended as diligently to his parliamentary duties as I do.

The hon. Gentleman suggested that the Government were building too few houses for home ownership and in the next breath complained that it was alien to the philosophy of the Labour Party that people should buy houses for home ownership. Therefore, I did not know what he meant. I wish to correct that view, because it has always been the policy of the Labour Party that people should be encouraged to own their own homes. One of the first benefits which the early trade unions provided for their members was the collection of money to enable people to buy houses in rotation.

It is absolutely false to suggest that we on this side of the House do not wish to encourage home ownership among all members of the community. [An HON. MEMBER: "But not among council tenants."] An hon. Member opposite says that we do not desire to encourage home ownership among council tenants. That is wrong. What we say is that there is a great need for rented accommodation, and we must look after those people who require rented accommodation. But we desire to make easier the terms under which mortgages can be obtained so that those people can acquire houses of their own.

In that respect, the Government have done many excellent things. For instance, they have effectively reduced the mortgage interest rate payable by people who do not earn enough to benefit fully from Income Tax relief on mortgage interest payments. They have done a splendid job in house building, but there is no room for complacency. I should like the Government to do far more to encourage small builders to come together on a co-operative basis. Although the building industry, under the guidance of my right hon. Friends the Ministers of Housing and Local Government and Public Building and Works, has increased its productivity remarkably in the last year or two, far more could be done by getting small builders to work together co-operatively, possibly by buying machinery for their joint use, so that they can boost the building of houses.

I apologise for intervening in the debate when I had been present only a moment or two, but I was provoked to do so by the hon. Member for Hornsey, who most discourteously refused to give way.

6.30 p.m.

Mr. Graham Page (Crosby)

I should like, first, to offer my congratulations to my hon. Friend the Member for Nelson and Colne (Mr. Waddington), as other hon. Members have offered their congratulations to him, on a maiden speech the standard of which, I am sure, we all wish that we had achieved when making our own maiden speeches—and not only that, but a standard which we would like to have achieved in our subsequent speeches—I suppose one calls them "matron" speeches—in the House. If we all kept up to the standard set by my hon. Friend today, we should all be very happy and much more efficient Members.

The interesting point made by my hon. Friend about the very high percentage of owner-occupation of houses in his constituency was a justification of the choice of this subject for debate today. He gave us a searching analysis of the mortgage option scheme, which again justifies this debate, because I hope that out of it will come a review of the mortgage option scheme which will make it more acceptable.

To my congratulations I wish to add a note of sympathy to the Parliamentary Private Secretary to the Minister of State of the Department which is answering this debate for his sudden illness. I hear that, since we saw him last night, the hon. Member for Norwich, North (Mr. Wallace) has been taken to hospital for an operation.

I must declare an interest, as is the custom in this House. I am a director of a building society, but I hope that that interest will enable me to give information to the House in a form which is up-to-date and knowledgeable. The recommended rates of mortgage interest —those recommended by the Building Societies Association—and the recommended rate of interest to investors are, as right hon. and hon. Members know, 7⅝ per cent. to be paid by borrowers and 4½ per cent. to be paid to investors.

I must say at once, however, that the 7⅝ per cent. covers only a very narrow range of building society business—for example, 75 per cent. advances on new houses. In some societies it covers a wider range, but I would say that the average rate of interest now paid by borrowers is not the recommended rate of 7⅝ per cent. but is nearer 8 per cent. on an average taken over all borrowers and not simply borrowers on new houses. Accordingly, the rate offered to investors in many societies is now greater than 4½ per cent.

It was correctly said in an interjection during the debate that the present rate offered by some societies to investors is 8½ per cent. gross when one takes into account that it is paid, to use the well-known phrase, free of Income Tax although it is not really tax-free. However, the position is bad enough for the borrowers on the recommended rate at 7⅝ per cent. At 7⅝ per cent., a borrower on an average mortgage—£3,000 for a 25-year term—pays 10s. more a week than he paid when a Conservative Government were last in office. He pays 30s. more a week than he would have been paying had he believed what was said by the right hon. Member for Belper (Mr. George Brown), or what he was reported to have said. That 10s. a week applies if the borrower is lucky and is on a 7⅝per cent. mortgage. He is more likely to be paying about £1 a week more than he would have been paying in 1964. This is the measure of the increase of the rates of interest which are now being paid.

Building societies try to cushion this by leaving the instalments the same and extending the term of payment, but few things are more depressing to an owner or more discouraging to home ownership than to get one's mortgage repayment book at the end of the year and to find that, though the monthly instalments have been paid throughout the year, one has paid off only about £1 or £2 at the end of the year. This is most discouraging. In some cases, as a result of the high interest rates, the building societies have found that by extending the term there would not be any reduction in the amount owing at the end of the year.

Why should interest rates have gone to such a high level? Building societies have to pay sufficient to the investor to attract the money into the building society and to leave a margin, between what they pay the investor and what they receive from the borrower, sufficient to pay the liabilities. Here the Government come very much into the picture, and in a very harmful way.

The difference between £4 10s., the rate paid to the investor, and £7 12s. 6d., the money received from the borrower, has to be used in management expenses, which on average are 12s. 3d. of that margin, on Corporation Tax, on the composite rate of Income Tax and on maintaining reserves and liquidity.

The hon. Member for Norwood (Mr. John Fraser) said that the Government should in some way oblige the building societies to use the money which they keep for liquidity and should guarantee that liquidity in some way. That would be absolute folly. To direct building societies what reserves or liquidity they should keep would to attack them in a business which they know how to run. If they were to use up the money which they keep for liquidity, it would be a once-for-all operation. It can happen only once, and there is no advantage in that.

The Government's responsibility really falls in Corporation Tax, which takes a substantial amount of that margin, and, in particular, in the composite rate of Income Tax. In 1964, this used to be 5s. l0d. It has gradually crept up to 6s. 3d. It is generally anticipated that that 6s. 3d. will go up in the next Budget. Because there is always a three months' gap between the increase in the rate to investors and the return which a building society gets from its borrowers, and because the building societies will be liable for any increase in this composite tax as from 1st January, they now anticipate—wisely, I think—that there may be, and almost certainly will be, a rise in the composite rate in the next Budget. If the Chancellor of the Exchequer could give an assurance that he has no intention of increasing that composite rate, that would be a factor in stabilising mortgage interest rates.

The Motion refers to the effect of higher interest rates. There is an effect not only on the payment of interest on the mortgage—the mortgage instalments —but on the availability of money to lend. A building society has to pay sufficient to its investors to attract money, and it has to compete against those who are offering rates similar to Bank Rate plus.

The volume of sales and purchases depends on the availability of building society funds. One ought to look ahead at least for the rest of this year to see how much should be available to deal with the expected production of new houses. I am a little more optimistic than the Minister on the number of private enterprise houses which will be completed this year. I would have thought that we should get up to 215,000. If that is so, how much do we need in building society funds to ensure that those completed houses do not lie empty? My calculations are that we ought for the rest of this year, to be getting into building societies £80 million a month, and I am very doubtful whether, in present circumstances, 4½ per cent. interest to investors will produce as much as £80 million a month.

It has not been easy to recover from November, 1967, to March, 1968, when there were massive withdrawals from the building societies—withdrawals, and a spending spree, because of devaluation, because of the squeeze in January last, and because of the threats of what might happen in the Budget. Those massive withdrawals from the building societies at that time were a public vote of no confidence in the Government. People were taking their money out and spending it because they did not know what was going to happen to it in the Budget. I think there is bound to be difficulty in recovering from that in the rest of the year—unless we get that illusory economic miracle the Prime Minister talks about.

Some sales and purchases are not dependent on building society funds, but mainly it is always a chain of sales and purchases, a chain of people buying and selling their houses, and if one link in that chain cannot get a building society mortgage the whole chain collapses.

Another reason why the chain may break is that a bank refuses to give a bridging loan, and here the Government are responsible. We have been told by the Minister today of some new policy relating to bridging loans. What he assured the House, if I understood him correctly, was that that sort of loan is still not considered as priority for the banks—he said no more than that a bank might perhaps provide a bridging loan. Up to the present I have not found the banks are ready to do this even for the most substantial client.

These are practical obstacles which do cause hardship to the prospective house purchaser. As I have indicated in the last few sentences, perhaps I ought to declare another interest—as a practising solicitor.

In that connection, let me say that I regret that the Government, in their preoccupation with so-called reforms of steel and transport and taxation, have been unable to find the little time which would be necessary to reform the law of conveyancing, the law of selling and purchasing property, and thereby cutting down costs. In fact, as my right hon. and learned friend the Member for Hexham (Mr. Rippon) has said, they are doing just the opposite. They are increasing the costs of conveyancing by partially suspending the Land Registry. They have increased costs by such legislation as the Land Commission Act and the Leasehold Reform Act, and so they are making it more difficult for home owners to buy property.

It is little wonder that the housing waiting lists of local authorities get no shorter. As the hon. Gentleman the Member for Orpington (Mr. Lubbock) said, those who come to us in our advice bureaux or "surgeries" or whatever we like to call them, come for assistance in housing matters more than, perhaps, any other matter; they come to get our help, usually, I find, about their position on the housing waiting list, and, like other hon. Members, I am sure, I always tell them, "This is a matter for the local councillors".

But in going through the facts with them I sometimes find that here is a man earning £30 a week, or who has £35 going into the house a week, and I ask, "Why do you not save up and get a deposit and buy your own house? Why do you want to go on the councils waiting list?" He produces a little list of figures to show how impossible it is for him to do that out of his pay packet, out of which he has to meet rising prices for household goods and large sums for insurance contributions and so on. It really is extremely difficult, even for a man earning £30 a week to save up for a deposit.

A 100 per cent. mortgage may be available for some, but these men are usually the ones who are on rising incomes; it is no good their taking an option mortgage and therefore they cannot get a 100 per cent. mortgage. This is where this policy has gone wrong. How much would he have to save up? If a house cost £3,000 in 1964 it would be £4,000 now. That is the rise in house prices. Why? Because of the recent increases from devaluation, from S.E.T., and from the general policies of the Government. Then the constituent says "Suppose I have got a house. I have managed to save up the deposit and I have managed to find a building society which will advance the money to me, but look at the expenses I will have to meet in repairs and rates".

The Government have not carried out their promise to reduce the burden of rates to home owners. [HON. MEMBERS: "Oh. They have."] Oh, no. The rate rebate scheme has just scratched the surface, in the same way as the Option Mortgage Scheme. Of all building society borrowers 10 per cent. have taken advantage of the Option Mortgage Scheme, and the percentage of people who have taken advantage of the rate rebate scheme really does not show that it is an advantage to home owners in general. On both these subjects, particularly the option mortgage, I appreciate the remarks of the hon. Gentleman the Member for Bethnal Green (Mr. Hilton), who said that the Government are asking a man to gamble for 20 years—if he takes up a Option Mortgage Scheme.

I hope that a review will result from this debate—perhaps an immediate review of the difficulties which have arisen out of the Finance Act. If I may offer a suggestion to the Minister about how he could solve this for those who have suffered from the Finance Act, I would suggest that they can escape from their option if they pay back the mortgage and take a fresh one from the same society. Perhaps the Government would pay the costs of that, since it is the Government's fault that the borrower has got into this difficulty.

It is no solution to all these problems to step up local authority building. It is no solution to shortening the waiting lists because the local authorities have already plenty of work to do in slum clearance, and it takes half as long again to build a council house as it does to build a private enterprise house. I think it is positively harmful to the total production of houses to force up the total quantity of council house building and to force down private enterprise building, as the Government have done over the past years.

Tonight we have been give two more damaging attacks on home ownership. First, forbidding the sale of more than an infinitesimal number of council houses in certain areas of the country—in major areas of the country. This really is a shocking interference with the right of the local authorities to decide their own needs in housing, and I think that the announcement which the Minister has made today will be a very great discouragement to home ownership in general and will be looked upon as an attack upon the local authorities in governing their affairs in their own districts.

The second attack on home ownership we have heard today is a reduction in the local authority home mortgages, denying the advantage which prospective house purchasers could obtain from borrowing the money from local authorities to two out of 10 people who would get it under the present policy. With the hon. Member for Norwood, I regret this and I think that the Government are wholly wrong to reduce the money available for loans by local authorities by 20 per cent.

Here are two major discouragements to home ownership, and this in face of the desire for home ownership. It has now risen to 50 per cent. of all households and the statistics show that between 70 per cent. and 80 per cent. of the rest also want to own the house in which they live. Government policy should recognise that. As my right hon. and learned Friend said, the primary object should be to promote home ownership.

My hon. Friend the Member for Hornsey (Mr. Rossi) said that perhaps this Government would not do that because they did not believe in it, but at any rate the Government are so far from realising that that should be a prime object of policy, and have so failed to make that an object of policy, that perhaps there should be an independent body to advise them how to do it, perhaps a Home Ownership Advisory Council, something between the National Insurance Advisory Council and the Prices and Incomes Board.

The Minister spoke of the Joint Standing Working Party, but that does not seem to have been very effective in guiding him along the right lines for the home owner. Perhaps a politically independent body such as I suggest—a Home Ownership Advisory Council—would consider Government policy with a view to giving those of modest means a fair deal in home ownership. They have not yet had a fair deal under this Government.

6.52 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)

It is very pleasant to be able to begin by paying a tribute to the hon. Member for Nelson and Colne (Mr. Waddington) for his extremely interesting maiden speech and for identifying himself with that group of us in the House to whom housing and local government are real and abiding interests and loyalties. I should also welcome him as joining that very select group of Lancashire Members. I also have an educational connection with him which, in these post-Newsom days, might be mutually embarrassing. But we are glad to see him in the House and hope that he will take frequent part in our debates.

The main accusation against my right hon. Friend and the Government has been of complacency. I agree that it is of great importance that no member of a Government talking about housing should ever allow himself to slip into complacency, but the temptation is great. When an Opposition, with the whole field of politics at their disposal, choose a Supply debate on home ownership and then, in every single respect, are found to be wrong in what they say, while the facts and statistics are found to be in our favour, the result is not a dispassionate debate with critical suggestions about the future, but a great deal of argument about the figures.

We who are being accused of being congenitally against home ownership and hysterically hostile to private building have, as a Government, presided over 200,000 completions every year of private sector houses. In only one year, the year that we came in, did the party opposite reach 200,000 completions. These are the facts upon which we must approach these problems.

I was glad that both my hon. Friend the Member for Norwood (Mr. John Fraser) and the hon. Member for Orpington (Mr. Lubbock) made the point with which I was going to start, that we must recognise that we are working under conditions of great economic difficulty. The facts of the situation are that we have a capital famine, that we must husband our resources and that we have to face a high international interest rate. But, without being complacent, we are entitled to take tremendous pride in the fact that, in spite of those difficulties, we have been able to achieve such a great success over such a wide field in housing.

I want to start with the Option Mortgage Scheme, which, rightly, played a large part in the debate. There has been a good deal of criticism of it and of our booklet. The dilemma is that one wants to give information—which we are always being accused of being slow to give—and, on a highly technical subject, one must balance the need to be clear and simple against the need to be accurate. There is nothing inaccurate in this booklet, which carefully says that one can talk only in general terms about when an option mortgage is likely to help. At the same time, in very large type, it emphasises that if you choose an option mortgage you will not be able to change your mind and go back to income tax relief afterwards. We make it clear. To suggest that this is some sort of fraud is an extremely inept observation by the right hon. and learned Member for Hexham (Mr. Rippon). We will certainly redraft the booklet, now that existing borrowers are no longer part of the scheme, to make it reliable and informative.

I do not agree with some of my hon. Friends, particularly my hon. Friend the Member for Bethnal Green (Mr. Hilton), who were inclined to dismiss the scheme because only 10 per cent. of people have opted for it. If we can keep up that steady rate, which we have since it began, that would not be a bad figure. These, after all, are essentially the people who will benefit, who do not benefit from tax relief. It was the difficulty over the discrimination of Income Tax reliefs for mortgages which we tried to overcome.

About 160,000 existing borrowers have opted. In May, a test sample showed that about 3,700 new borrowers had opted that month. These are people who are finding it of benefit, and the suggestion that they have all been outraged at discovering that they were not getting as much as they had hoped to get is very exaggerated. Our records in the Department show that we have had, from all those people, only about 200 letters complaining that they had not found the scheme as effective as they had hoped.

The great advantages of the scheme are, first, that it gives a lower and regular annual payment of the charges on the mortgage, and, second—this is not always appreciated—that it gives a quicker repayment of capital than under ordinary Income Tax relief. Therefore, when the time comes to sell a house, the value which comes back to the owner-occupier will be greater, because he has paid off more of the capital which he has borrowed; therefore, it will come to him on a scale proportionately greater than it would in a comparable situation under Income Tax relief.

Mr. Rippon

Is that all that the hon. Gentleman intends to say about the undertaking given by the Financial Secretary on 3rd July last, when he said that the most urgent inquiries would be made into the difficulties created by the operation of the Finance Act in this respect? Is he aware that his right hon. Friend said that while he regretted that, within the framework of the tax system, he could not solve the problem, he would see that the matter was put right? Will he make it clear that the Government will not shed responsibility for the position?

Mr. MacColl

My right hon. Friend has not shed responsibility for the position. The urgent inquiries have been made and we are satisfied that the scheme is working well and is performing a good service. Subject to carrying out a revision of the booklet, I do not think that we need do more.

Mr. Rippon

The Financial Secretary promised to help those who had suffered hardship.

Mr. MacColl

Nobody suffered hardship who read the booklet correctly. Warnings were given in the booklet about what one must do if one wished to take the option. The swings and roundabouts must be balanced in relation to possible tax changes, and so on. In any event, as the scheme has been in operation for only three months, it is too early to say that it is working unfairly.

There has been much discussion of my right hon. Friend's announcement to limit the sale of council houses in some big conurbations. Time does not permit me to go in great detail into this matter, but I must point out that my right hon. Friend has the responsibility of approving sales of corporation property. Hon. Gentlemen opposite have said that he should not interfere with the discretion of local councils. My right hon. Friend has a duty to see that corporation property is sold at the right price and in such a way that it assists the provision of houses.

My right hon. Friend has constantly been saying that he does not want to interfere or quarrel with local authorities, but that he has an overriding duty to see that there is an adequate supply of council houses. This has made it necessary for him to consider this whole matter. Indeed, in his circular issued in March, 1967, he said that within a year he would be looking at the problem. He said that before the local elections. My right hon. Friend is fully entitled to take this decision.

The Mortgage Guarantee Scheme, which enables people to get help, has also been greatly discussed. At first, hon. Gentlemen opposite said that this scheme would not come into operation. They then said that it was a flop, even before it had had time to work. It was interesting to hear the right hon. and learned Member for Hexham, who is a master of mistiming prophesies, say that the scheme was a betrayal. When the scheme was being debated I explained that we would discuss the matter with the lending agencies and that it would be brought into operation as soon as funds were available.

In denouncing us, the hon. Member for Southend, West (Mr. Channon) then accused us of being chicken hearted and pusillanimous and the great height of his peroration was that we were a timid collection of frightened geese. When one considers that when we came to power we did not have adequate housing subsidy arrangements, that we had to reconstruct the scheme for the public sector and get it through Parliament, design the option mortgage arrangements and introduce the guarantee scheme, we have done very well. Already, we have succeeded in protecting home owners through the work of the building societies, the builders and the house registration facilities.

About 80 per cent. of houses are registered in this way and are thereby guaranteed, compared with an extremely small number so guaranteed in 1964. These are real achievements. If we were a lot of frightened geese, I only hope that hon. Gentlemen opposite can get fertilised by the same gander.

Mr. Graham Page

Does not the hon. Gentleman realise that on the 100 per cent. mortgage issue we have been pointing out that such a mortgage can be given only to a man who can take advantage of the Option Mortgage Scheme, that such a man does not have a rising income and that he is just the man who wants a 100 per cent. mortgage? Since the scheme is bound to fail because of this, is not the hon. Gentleman prepared to look at the matter again?

Question put:—

The house divided: Ayes 234, Noes 318.

Division No. 284.]	AYES	[7.8 p.m.
Alison, Michael (Barkston Ash)	Clover, Sir Douglas	Munro-Lucas-Tooth, sir Hugh
Allason, Barnes (Hemel Hempstead)	Goothart, Philip	Murton, Oscar
Astor, John	Goodhew, Victor	Nabarro, Sir Gerald
Atkins, Humphrey (M't'n & M'd'n)	Grant, Anthony	Neave, Airey
Awdry, Daniel	Grant-Ferris, R.	Nicholls, Sir Harmar
Baker, Kenneth (Acton)	Gresham Cooke, R.	Noble, Rt. Hn. Michael
Baker, W. H. K. (Banff)	Grieve, Percy	Onslow, Cranley
Balniel, Lord	Griffiths, Eldon (Bury St. Edmunds)	Orr, Capt. L. P. S.
Barber, Rt. Hn. Anthony	Gurden, Harold	Orr-Ewing, Sir Ian
Batsford, Brian	Hall, John (Wycombe)	Osborn, John (Hallam)
Beamish, Col. Sir Tufton	Hall-Davis, A. G. F.	Page, Graham (Crosby)
Bell, Ronald	Hamilton, Michael (Salisbury)	Pearson, Sir Frank (Clitheroe)
Bennett, Sir Frederic (Torquay)	Harris, Frederic (Croydon, N.W.)	Peel, John
Bennett, Dr. Reginald (Cos. & Fhm)	Harrison, Brian (Maldon)	Percival, Ian
Berry, Hn. Anthony	Harvey, Sir Arthur Vere	Peyton, John
Biffen, John	Hawkins, Paul	Pike, Miss Mervyn
Biggs-Davison, John	Hay, John	Pink, R. Bonner
Birch, Rt. Hn. Nigel	Heald, Rt. Hn. Sir Lionel	Pounder, Rafton
Black, Sir Cyril	Heseltine, Michael	Powell, Rt. Hn. J. Enoch
Blaker, Peter	Higgins, Terence L.	Price, David (Eastleigh)
Boardman, Tom (Leicester, S.W.)	Hiley, Joseph	Pym, Francis
Bossom, Sir Clive	Hill, J. E. B.	Quennell, Miss J. M.
Boyd-Carpenter, Rt. Hn. John	Hirst, Geoffrey	Ramsden, Rt. Hn. James
Boyle, Rt. Hn. Sir Edward	Hogg, Rt. Hn. Quintin	Rawlinson, Rt. Hn. Sir Peter
Braine, Bernard	Holland, Philip	Rees-Davies, W. R.
Brewis, John	Hordern, Peter	Renton, Rt. Hn. Sir David
Brinton, Sir Tatton	Hornby, Richard	Rhys Williams, Sir Brandon
Bromley-Davenport, Lt.-Col.SirWalter	Howell, David (Guildford)	Ridley, Hn. Nicholas
Brown, Sir Edward (Bath)	Hunt, John	Ridsdale, Julian
Bruce-Gardyne, J.	Iremonger, T. L.	Rippon, Rt. Hn. Geoffrey
Bryan, Paul	Irvine, Bryant Godman (Rye)	Robson Brown, Sir William
Buchanan.Smith,Alick (Angus, N & M)	Jenkin, Patrick (Woodford)	Rodgers, Sir John (Sevenoaks)
Buck, Antony (Colchester)	Jennings, J. C. (Burton)	Rossi, Hugh (Hornsey)
Bullus, Sir Eric	Johnson Smith, G. (E. Grinstead)	Royle, Anthony
Burden, F A	Jones, Arthur (Northants, S.)	Russell, Sir Ronald
Campbell, B. (Oldham, W.)	Jopling, Michael	St. John-Stevas, Norman
Campbell Gordon (Moray & Nairn)	Joseph, Rt. Hn. Sir Keith	Sandys, Rt. Hn. D.
Carr, Rt. Hn. Robert
Cary, Sir Robert	Kaberry, Sir Donald	Scott, Nicholas
Channon, H. P. G.	Kerby, Capt. Henry	Scott-Hopkins, James
Chichester-Clark, R.	Kershaw, Anthony	Sharples, Richard
Clark, Henry	Kimball, Marcus	Shaw, Michael (Sc'b-gh & Whitby)
Clegg, Walter	King, Evelyn (Dorset, S.)	Silvester, Frederick
Cooke, Robert	Kirk, Peter	Sinclair, Sir George
	Kitson, Timothy
Cooper-Key, Sir Neill	Knight, Mrs. Jill	Smith, Dudley (W'wich & L'mington)
Corfield, F. V.	Knight, Mrs. Jill	Smith, John (London & W'minster)
Costain, A. P.	Lambton, Viscount	Speed, Keith
Craddock, sir Beresford (Spelthorne)	Lancaster, Col. C. G.	Stainton, Keith
Crouch, David	Lane, David	Stodart, Anthony
Crowder, F. P.	Legge-Bourke, Sir Harry	Stoddart-Scott, Col. Sir M. (Ripon)
Cunningham, Sir Knox	Lewis, Kenneth (Rutland)	Summers, Sir Spencer
Currie, G. B. H.	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Tapsell, Peter
Dalkeith Earl of	Lloyd, Ian (P'tsm'th, Langstone)	Taylor, Sir Charles (Eastbourne)
Dance, James	Longden, Gilbert	Taylor, Edward M. (G'gow, Cathcart)
d'Avigdor-Goldsmid, Sir Henry	Loveys, W. H.	Taylor, Frank (Moss Side)
Dean, Paul (Somerset, N.)	McAdden, Sir Stephen	Teeling, Sir William
Digby, Simon Wingfield	MacArthur, Ian	Temple, John M.
Dodds-Parker, Douglas	Maclean, Sir Frtzroy	Thatcher, Mrs. Margaret
Doughty, Charles	Macleod, Rt. Hn. lain	Tilney, John
Douglas-Home, Rt. Hn. Sir Alec	McMaster, Stanley	Turton, Rt. Hn. R. H.
Drayson, G. B.	Macmillan, Maurice (Farnham)	van Straubenzee, W. R.
du Cann, Rt. Hn. Edward	Maddan, Martin	Vaughan-Morgan, Rt. Hn. Sir John
Eden, Sir John	Maginnis, John E.	Vickers, Dame Joan
Elliot, Capt. Walter (Carshalton)	Marten, Neil	Waddington, David
Elliott, R.W. (N'c'tle-upon-Tyne,N.)	Maude, Angus	Walker, Peter (Worcester)
Emery, Peter	Maudling, Rt. Hn. Reginald	Walker-Smith, Rt. Hn. Sir Derek
Errington, Sir Eric	Mawby, Ray	Wall, Patrick
Farr, John	Maxwell-Hyslop, R. J.	Walters, Dennis
Fisher, Nigel	Maydon, Lt.-Cmdr. S. L. C.	Ward, Dame Irene
Fletcher-Cooke, Charles	Mills, Peter (Torrington)	Weatherill, Bernard
Fortescue, Tim	Mills, Stratton (Belfast, N.)	Webster, David
Foster, Sir John	Miscampbell, Norman	Wells, John (Maidstone)
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Mitchell, David (Basingstoke)	Whitelaw, Rt. Hn. William
Galbraith, Hn. T. G.	Monro, Hector	Williams, Donald (Dudley)
Gilee, Rear-Adm. Morgan	Montgomery, Fergus	Wills, Sir Gerald (Bridgwater)
Gilmour, Ian (Norfolk, c.)	Morrison, Charles (Devizes)	Wilson, Geoffrey (Truro)
Gilmour, Sir John (Fife, E.)	Mott-Radclyffe, Sir Charles	Wolrige-Gordon, Patrick
Wood, Rt. Hn. Richard	Wylie, N. R.	TELLERS FOR THE AYES:
Worsley Marcus	Younger, Hn. George	Mr. Jasper More ond
W right, Esmond		Mr. Reginald Eyre.
NOES
Abse, Leo	Edwards, Robert (Bilston)	Jones, J. Idwal (Wrexham)
Albu, Austen	Edwards, William (Merioneth)	Jones, T. Alec (Rhondda, West)
Allaun, Frank (Salford, E.)	Ellis, John	Judd, Frank
Alldritt, Walter	English, Michael	Kelley, Richard
Allen, Scholefield	Ennals, David	Kenyon, Clifford
Anderson, Donald	Ensor, David	Kerr, Mr. Anne (R'ter & Chatham)
Archer, Peter	Evans, A. T. (Caerphilly)	Kerr, Dr. David (W'worth, Central)
Atkins, Ronald (Preston, N.)	Evans, Albert (Islington, S.W.)	Kerr, Russell (Feltham)
Atkinson, Norman (Tottenham)	Evans, loan L. (Birm'h'm, Yardley)	Lawson, George
Bacon, Rt. Hn. Alice	Faulds, Andrew	Leadbitter, Ted
Bagier, Gordon A. T.	Fernyhough, E.	Ledger, Ron
Barnes, Michael	Fitch, Alan (Wigan)	Lee, Rt. Hn. Frederick (Newton)
Barnett, Joel	Fletcher, Raymond (Ilkeston)	Lee, Rt. Hn. Jennie (Cannock)
Baxter, William	Fletcher, Ted (Darlington)	Lee, John (Reading)
Beaney, Alan	Foley, Maurice	Lestor, Miss Joan
Bence, Cyril	Foot, Rt. Hn. Sir Dingle (Ipswich)	Lever, Harold (Cheetham)
Benn, Rt. Hn. Anthony Wedgwood	Foot, Michael (Ebbw Vale)	Lever, L. M. (Ardwick)
Bennett, James (G'gow, Bridgeton)	Ford, Ben	Lewis, Arthur (W. Ham, N.)
Bessell, Peter	Forrester, John	Lewis, Ron (Carlisle)
Bidwell, Sydney	Fowler, Gerry	Lipton, Marcus
Binns, John	Fraser, John (Norwood)	Lomas, Kenneth
Bishop, E. S.	Freeson, Reginald	Loughlin, Charles
Blackburn, F.	Galpern, Sir Myer	Luard, Evan
Blenkinsop, Arthur	Gardner, Tony	Lubbock, Eric
Boardman, H. (Leigh)	Garrett, W. E.	Lyon, Alexander W. (York)
Booth, Albert	Ginsburg, David	Lyons, Edward (Bradford, E.)
Boston, Terence	Gordon Walker, Rt. Hn. P. C.	Mabon, Dr. J. Dickson
Bottomley, Rt. Hn. Arthur	Gourlay, Harry	McBride, Neil
Boyden, James	Gray, Dr. Hugh (Yarmouth)	McCann, John
Braddock, Mrs. E. M.	Greenwood, Rt. Hn. Anthony	MacColl, James
Bradley, Tom	Gregory, Arnold	MacDermot, Niall
Bray, Dr. Jeremy	Grey, Charles (Durham)	Macdonald, A. H.
Brooks, Edwin	Griffiths, David (Rother Valley)	McGuire, Michael
Brown, Rt. Hn. George (Belper)	Griffiths, Eddie (Brightside)	McKay, Mrs. Margaret
Brown, Hugh D. (G'gow, Provan)	Griffiths, Rt. Hn. James (Llanelly)	Mackenzie, Alasdair(Ross&Crom'ty)
Brown, Bob (N'c'tle-upon-Tyne, W.)	Griffiths, Will (Exchange)	Mackenzie, Gregor (Rutherglen)
Brown, R. W. (Shoreditch & F'bury)	Grimond, Rt. Hn. J.	Mackie, John
Buchan, Norman	Hamilton, James (Bothwell)	Mackintosh, John P.
Butler, Herbert (Hackney, C.)	Hamling, William	Maclennan Robert
Butler, Mrs. Joyce (Wood Green)	Hannan William	MacMillan, (Glasgow, C.)
Carmicheal, Neil	Harper, Joseph	McNamara, J. Kevin
Carter-Jones, Lewis	Harrison, Walter (Wakefield)	Mahon, Peter (Preston, S.)
Castle, Hn. Barbara	Hart, Rt. Hn. Judith	Mallalieu, J. P. W. (Huddersfield)
Coe, Denis	Haseldine, Norman	Marks, Kenneth
Coleman, Donald	Hattersley, Roy	Marquand, David
Conian, Bernard	Hazell, Bert	Marsh, Rt. Hn. Richard
Corbet, Mrs. Freda	Healey, Rt. Hn. Edward	Marsh, Rt Hn. Richard
Craddock, George (Bradford, S.)	Heffer, Eric S.	Mason, Rt. Hn. Roy
		Maxwell, Robert
Crawshaw, Richard	Henig, Stanley	Mayhew, Christopher
Cronin, John	Herbison, Rt. Hn. Margaret
Crosland, Rt. Hn. Anthony	Hilton, W. S.	Mellish, Rt. Hn. Robert
Crossman, Rt. Hn. Richard	Hooley, Frank	Mendelson, J. J.
Cullen, Mrs. Alice	Horner, John	Mikardo, Ian
Dalyell, Tam	Houghton, Rt. Hn. Douglas	Millan, Bruce
Darling, Rt. Hn. George	Howarth, Harry (Wellingborough)	Milne, Edward (Blyth)
Davidson, Arthur (Accrington)	Howarth, Robert (Bolton, E.)	Mitchell, R. C. (S'tn'pton, Test)
Davies, Ednyfed Hudson (Conway)	Howell, Denis (Small Heath)	Molloy, William
Davies, G. Elfed (Rhondda, E.)	Howie, W.	Moonman, Eric
Davies, Dr. Ernest (Stretford)	Hoy, James	Morgan, Elystan (Cardiganshire)
Davies, Harold (Leek)	HUCKFIELD, Leslie	Morris, Charles (Openshaw)
Davies, Ifor (Gower)	Hughes Rt. Hn. Cledwyn (Anglesey)	Morris, John (Aberavon)
Davies, S. O. (Methyr)	Hughes, Emrys (Aryshire, S.)	Moyle, Roland
de Freitas, Rt. Hn. Sir Geoffrey	Hughes, Hector (Aberdeen, N.)	Mulley, Rt. Hn. Frederick
Delargy, Hugh	Hughes, Roy (Newport)	Murray, Albert
Dell, Edmund	Hunter, Adam	Newens, Stan
Dempsey, James	Hynd, John	Norwood, Christopher
Dewar, Donald	Irvine, Sir Arthur (Edge Hill	Ogden, Eric
Diamond, Rt. Hn. John	Jackson, Colin (B'h'se & Spenb'gh)	Oram, Albert E.
Dickens, James	Janner, Sir Barnett	Orbach, Maurice
Dobson, Ray	Jay, Rt. Hn. Douglas	Orme, Stanley
Doig, Peter	Jeger, George (Goole)	Oswald, Thomas
Driberg, Tom	Jenkins, Hugh (Putney)	Owen, Dr. David (Plymouth, S'tn)
Dunn, James A.	Jenkins, Rt. Hn. Roy (Stechford)
Dunnett, Jack
Dunwoody, Mrs. Gwyneth (Exeter)	Johnson, Carol (Lewisham, S.)	Owen, Will (Morpeth)
Dunwoody, Dr. John (F'th & C'b'e)	Johnson, James (K'ston-on-Hull W.)	Page, Derek (King's Lynn)
Eadie, Alex	Jones, Dan (Burnley)	Paget, R.T
Edelman, Maurice	Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)	Palmer, Arthur

Pannell, Rt. Hn. Charles	Shaw, Arnold (Ilford, S.)	Tuck, Raphael
Pardoe, John	Sheldon Robert	Urwin, T. W
Park, Trevor	Shinwell, Rt. Hn. E.	Varley, Eric G.
Parker, John (Dagenham)	Shore, Rt. Hn. Peter (Stepney)	Wainwright, Edwin (Dearne Valley)
Parkyn, Brian (Bedford)	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Wainwright, Richard (Colne Valley)
Pavitt, Laurence	Short, Mrs. Renée (W'hampton, N. E.)	Walker, Harold (Doncaster)
Pearson, Arthur (Pontypridd)	Silkin, Rt. Hn. John (Deptford)	Watkins David (Consett)
Peart, Rt, Hn. Fred	Silkin, Hn. S. C. (Dulwich)	Weitzman, David
Pentland, Norman	Silverman, Julius	Wellbeloved, James
Perry, Ernest G. (Battersea, S.)	Silverman, Julius	Wells, William (Walsall, N.)
Perry, George H. (Nottingham, S.)	Skeffington, Arthur	Whitaker, Ben
Prentice, Rt. Hn. R. E.	Slater, Joseph	White, Mrs. Eirene
Price, Christopher (Perry Barr)	Small, William	Wilkins, W. A.
Price, Thomas (Westhoughton)	Snow, Julian	Willey, Rt. Hn. Frederick
Probert, Arthur	Spriggs, Leslie
Pursey, Cmdr. Harry	Steele, David (Roxburgh)	William, Alan (Swansea, W.)
Randall, Harry	Steele, Thomas (Dunbartonshire, W.)	Williams, Clifford (Abertilley)
Rankin, John	Stewart, Rt. Hn. Michael	Williams, Mrs. Shirley (Hitchin)
Rees, Merlyn	Stonehouse, Rt. Hn. John	Williams, W. T. (Warrington)
Richard, Ivor	Strauss, Rt. Hn. G. R.	Willis, Rt. Hn. George
Roberts, Rt. Hn. Goronwy (Caernarvon)	Summerskill, Hn. Dr. Shirley	Wilson, William (Coventry, S.)
Roberts, Gwilym (Bedfordshire, S.)	Swain, Thomas	Winstanley, Dr. M. P.
Robertson, John (Paisley)	Swingler, Stephen	Woodburn, Rt. Hn. A.
Robinson, Rt. Hn. Kenneth (St.P'c'as)	Symonds, J. B.	Woof, Robert
Robinson, W. O. J. (Walth'stow, E.)	Taverne, Dick	Wyatt, Woodrow
Rodgers, William (Stockton)	Thomas, Rt. Hn. George	Yates, Victor
Roebuck, Roy	Thomson, Rt. Hn. George
Rogers, George (Kensington, N.)	Thornton, Ernest	TELLERS FOR THE NOES:
Boss, Rt. Hn. William	Thorpe, Rt. Hn. Jeremy	Mr. Ernest Armstrong and
Rowlands, E. (Cardiff, N.)	Tinn, dames	Mr. J. D. Concannon.
Ryan, John	Tomney, Frank