§
At the end of section 28 of the Housing Subsidies Act 1967 (aggregate amount of subsidy under Part II) there shall be added the following:—
'(3) The Minister of Housing and Local Government, the Secretary of State for Wales and the Secretary of State for Scotland acting jointly may, with the approval of the Treasury, by order made by statutory instrument provide that with respect to interest payable for any period beginning on or after such date as may be specified in the order the calculation required by subsection (1)(b) of this section shall be made as if such higher percentages as may be specified in the order were substituted respectively for the two per cent. mentioned in that subsection and the one and three-quarters per cent. mentioned in subsection (2) of this section.
(4) An order under this section—
686
(5) The power to make an order under this section includes power to vary or revoke such an order by a subsequent order; but no such order shall be made unless a draft thereof has been laid before and approved by the Commons House of Parliamenr.—[Mr. Greenwood.]
§ Brought up, and read the First time.
§ The Minister of Housing and Local Government (Mr. Anthony Greenwood)I beg to move, That the Clause be read a Second time.
The purpose of the Clause to which I referred in the debate we had last week on the housing programme is to enable the Minister of Housing and Local Government, the Secretary of State for Wales and the Secretary of State for Scotland, acting jointly, to make an Order adjusting the option mortgage subsidy. The Order is to be subject to approval of the Treasury and an affirmative Resolution of the House of Commons; and it may be varied or replaced by any subsequent Order. This power is needed to keep the option mortgage scheme doing what it was originally devised to do, that is to say, to help people with moderate incomes to buy their own homes by giving them benefits roughly equal to those benefits available to people with higher incomes.
With an ordinary mortgage a person is excused paying income tax on that part of his income he uses to pay mortgage interest. With an option mortgage he gives up the right to tax relief on that interest, and instead has part of the interest on his loan paid by a Government subsidy. When the scheme was introduced the subsidy was expressed, for the ordinary kind of building society mortgage as a flat 2 per cent. reduction on the interest charged to the mortgagor. But while the subsidy has remained as a flat rate the interest charged by building societies has risen.
When the 2 per cent. subsidy was calculated the rate of mortgage interest recommended by the Building Societies Association was 6¿ per cent. Since then it has risen by steps to 8½ per cent. When the scheme was introduced a family man with modest earnings by opting into the scheme could put himself in a position reasonably comparable with that of the man who could get tax relief on earned income at the standard rate.
687 This no longer holds. The position has to be restored to secure three things, first, that the value of the option mortgage subsidy is broadly related to normal tax relief, secondly, that the value of the subsidy is greater than the tax relief to a taxpayer who pays his mortgage interest wholly out of earned income taxed at the reduced rate of 6s. in the £—which, under the Budget, is now the only reduced rate of tax; and thirdly, that the value of the subsidy is less than the value of tax relief to a taxpayer who pays his mortgage interest wholly out of earned income taxed at the standard rate—there is, of course, no intention to make the option mortgage subsidy more favourable than standard tax relief.
4.30 p.m.
It may be that a scale of rates of subsidy coresponding to rates of mortgage interest would fit all cases better than one new flat rate of subsidy. Just one new rate might lead to anomalies with certain mortgages with low fixed rates of interest. In this connection I have invited representatives of the Building Societies' Association and the other lending agencies, by which I mean the Life Offices Association, the British Insurance Association, the Friendly Societies' Liaison Committee and the local authority associations, to discuss in detail how some suitable arrangements might be worked out.
Two considerations will govern the exercise of this power to make an Order. These are changes in mortgage interest rates on the one hand and changes in taxation arrangements on the other. If changes in mortgage interest rates had been the sole relevant consideration, it might have been possible to incorporate in the Bill itself some new rate, or rates, of subsidy to fit all possible rates of mortgage interest. But changes in taxation cannot be anticipated. Nor would it be reasonable to provide for anyone's opting out of the subsidy unless or until the Building Societies' Association modifies or withdraws its objection on administrative grounds to a second option.
The new Clause adds three subsections to Section 28 of the Housing Subsidies Act, 1967. The new subsection (3) empowers the three Housing Ministers acting together with Treasury approval to make an Order replacing the subsidies 688 of 2 per cent. and 1¾ per cent. by higher subsidies. While, as I have indicated, the precise method of exercising the Order-making power will be worked out after consultation with the associations representing the lending agencies, it seems right to ensure as far as is possible at this stage that the power to make such an Order is wide enough to cover certain possibilities set out in a new subsection (4) to Section 28 of the 1967 Act. These, however, have been included without prejudice to the discussions to which the associations have been invited and if these discussions lead to the view that something extra or something different is required, the Government will propose further Amendments in another place.
The new subsection (4)(a) allows the Order to be made to fix different rates to fit varying circumstances and in particular to set out a scale of rates of subsidy corresponding to different rates of mortgage interest. This would enable the subsidy to fit future changes in the Building Societies' Association's recommended rate as well as existing differences amongst various lending agencies.
The new subsection (4)(b) allows the Order to keep the present rates of subsidy for certain cases. This is needed to deal with certain existing mortgages with low fixed rates of interest when an increase in subsidy would be unjustified and could even result in an option mortgagor receiving benefit in excess of the standard rate of relief.
The new subsection (4)(c) forestalls the possibility of collusion between mortgagor and mortgagee in the event of the Order setting out a scale. Such a scale would set out a rate of subsidy corresponding to a band of mortgage interest rates and so, if the mortgage rates were near the top of a band, the mortgagor might be tempted—and I am bound to say that I do not think that this would often happen—to ask the lender to give him a slightly higher rate of interest to bring his rate into the next band and so attract a higher subsidy. The Minister concerned is accordingly given power to specify and take for subsidy purposes the ordinary rates of interest charged to a non-option borrower of the class into which the borrower would fall if he were not an opting mortgagor.
The new subsection (5) extends the Order-making power so as to allow an 689 Order to be varied or revoked by a subsequent Order. It also provides that no Order made under the Section is to be made unless a draft of the Order has been approved by an affirmative Resolution of the House of Commons.
§ Mr. Peter Walker (Worcester)I should like first to protest at the Government's increasing tendency to introduce substantial and important legislation—and we welcome the new Clause, although we are suggesting a number of Amendments to it—by moving a new Clause on Report. This prevents any Second Reading debate and any Committee debate and limits opportunities for discussion of what may be a matter of considerable importance to Report and Third Reading. With matters such as leasehold reform, with which we shall deal later when we discuss the appropriate new Clause, and a complete revision of the option mortgage scheme, it would be far better for the Government to introduce separate legislation which could be quickly handled in the proper way through all the Parliamentary procedures.
The Minister cannot protest that on this occasion it was a matter of speed or time, because the problems facing those with mortgage options have been in existence for many months. The Opposition have pressed the Government to revise the mortgage option scheme because it was no longer functioning in the manner originally intended. Yet for months no action has been taken. But suddenly, at the end of the Committee stage of a Bill which does not deal in any way with mortgage options, the Government introduce a new Clause, allowing the House little time in which to study it and amend it and limiting discussion of it to Report and Third Reading. They also somewhat delay the passage of an important Bill through the House of Commons.
The Minister explained why the new Clause was needed. The reason is that the Government have completely failed to fulfil their promise to lower mortgage interest rates. If the original promise had been fulfilled, the promise which the Government made in their election manifestos and party political broadcasts there would have been no need for the new Clause. It shows the failure of the Government to run the economy that 690 since the original scheme was devised mortgage interest rates have gone up from 6¾ per cent. to 8½ per cent., and belatedly the Government are expressing their intent to discuss the matter further and then perhaps to take some action.
Here I come to the most disappointing factor in the Minister's speech. He gave no indication of when the Government expect to act and no indication as to the extent they hope to act. We are discussing a new Clause not to take belated action, but in the middle of the Minister having discussions about action. There is no reason why the Minister should not have completed discussions about a varying scale many months ago. He must have known when mortgage interest rates went up to 8½ per cent. that this problem was facing the mortgage option scheme, and there was no reason why he could not enter discussions at that stage about the possibilities of scale rates to deal with this problem. Only now, many months later, has he introduced a provision to provide powers perhaps to do something in future, and he says that he is having discussions about the possibility of a scale.
He has given no indication of the possible cost of the new Clause on the basis of restoring the situation to what it was when the scheme was introduced. I hope that the Government will tell us the extent to which they intend to deal with the problem, the estimated cost, and the time scale. Is there to be any suggestion of retrospective payment? Will the Government provide this additional assistance only from the time when this scheme is put into effect, or will it be given from the time when mortgage interest rates went up to 8½ per cent?
The Minister said that the object was to see that the amount equalled normal tax relief—something more than 6s., but less than the standard rate. After the mortgage option scheme came into operation certain allowances were increased. This lifted some people into new scales of tax payments—
§ Mr. Eric Lubbock (Orpington)Family allowances.
§ Mr. WalkerFamily allowances are instanced by the hon. Member for Orpington (Mr. Lubbock), and there were other similar increases. As a result, a whole host of people who had entered 691 mortgage option schemes suddenly found that they were in the wrong scheme and were thereby deprived of the full tax refunds they would otherwise have enjoyed. When looking at variations of tax we should not look only at the actual levels of taxation. We should look also at the effects of grants and allowances on people in the scheme.
There is the suggestion that the Minister should be able to make a scale because there may be people on the lower than average rate, but the right hon. Gentleman did not make clear whether the scale would apply also to those on a much higher rate. We talk of the terrifying position of most people having to pay 8½ per cent. but, as many hon. Members know, there are many people with local authority mortgages who will pay as much as 9½ per cent. I therefore presume that any scale will deal with those who pay above the standard 8½ per cent. charged by building societies as well as dealing with those—the minority—who are fortunate enough to have obtained mortgages at a lower level.
It is right and sensible that there should be power to vary, but after major increases of mortgage rates there should be a compulsion on Ministers to declare their intention fairly quickly on this topic. One of the present disadvantages is that a lot of people who will consider home ownership if the mortgage option scheme is substantially improved will look for a house, start negotiations, and so on, but the new Clause gives them no indication whether the changes will take place this year, or next year, or at all.
It is therefore important that if in future there is an increase of some substance in mortgage interest rates the Government should make fairly clear the date on which they intend to take action to improve the position. People in a state of uncertainty cannot start negotiations, for example, with their landlords or start talks with building societies. They can only do that when they know clearly when the new scheme will operate, and how it will operate.
We agree with subsection (4)(a). Paragraph (b) deals with some cases in which there might be an improvement in the standard rate, and I can see a need for that in a minority of cases. I am, however, 692 more concerned with paragraph (c), in which we have the question of collusion to get a higher rate. We cannot discuss that matter yet, because we have no indication of what scales may be involved. Our feeling is that the paragraph is drawn far too widely for the purpose mentioned by the Minister. My hon. Friend the Member for Crosby (Mr. Graham Page) will later seek to deal with this aspect in rather greater detail.
4.45 p.m.
It will be seen that we have tabled a number of Amendments to the proposed new Clause. The first is Amendment (a), in line 4, after 'jointly', insert:
'shall as soon as may be practicable whenever any change in interest rates has been recommended by the Building Societies Association to its members, inform Parliament of their intentions as to the exercise of their powers under this section and'.We seek here to deal with the uncertainty that will otherwise prevail in future whenever there is a change in mortgage interest rates. As I say, I agree with the Minister taking the power to vary the mortgage option scheme, but we should write into the Bill something to which hon. Members can refer when demanding of Governments, of whatever political complexion, whether they intend to vary the mortgage option scheme. Otherwise, there will be considerable uncertainty in the whole house purchase market, with detrimental effects. Although we shall not press the Amendment to a Division, perhaps the Government will see no objection to it. We have not specified a time. We have just asked the Government to agree that in future when there is a change in interest rates they will declare to the House how they intend to use their powers to vary the mortgage option scheme.Next, we have Amendment (b), in line 4, live out 'may' and insert
'shall before 31st December 1969'.This Amendment seeks to pin down the Government to a date by which they shall act. We have inserted 31st December, 1969, but we should have liked a much earlier date because we naturally hope that the Government will have acted long before then. We recognise that time is needed to make the administrative changes required, so we have not put in an earlier date.693 All hon. Members will know the very real hardship caused to people with mortgages by the present appallingly high rates of interest. A person obtaining an 80 per cent. mortgage on the average priced new house is now paying £2 15s. a week more in mortgage repayments than was the case when the Labour Government came to power. Those in the mortgage option scheme are, by definition, people with large families or low total incomes, and they must be the most adversely affected in terms of personal hardship by the enormous increase in mortgage repayments. They are in great desperation and face a very real and appalling personal problem.
We have criticised the Government for their delay in taking action to vary the mortgage option scheme. Therefore, we want an undertaking from them about the date on which these proposals will come into operation. For the Government not to accept this Amendment would be to show that there was very little hope for these people for many months to come. I cannot believe that the Government cannot get the scheme into operation long before the date we have mentioned, but if that is the case some immediate aid must be given to these people.
The next Amendment is Amendment (c), in line 6 leave out from 'after' to second 'the' in line 7 and insert '31st December 1969'. The theme here is similar.
Then we have Amendment (d), in line 8 leave out from 'if' to 'were' and insert
'four per cent. and three and a half per cent.'.This Amendment seeks to find out the extent to which the Government wish to provide help. All that it would do would be to return people to the position in which they would have been if under the present Government, mortgage interest rates had not gone up. We seek to put them in the position in which they would have been if the Government had fulfilled all their election and other promises.I am sure that the Minister will consider that, if anything, this Amendment is modest. Perhaps he will ask us to withdraw it so that he can insert a larger figure. I am sure that he will want to fulfil those election promises. To do so, he will have to insert a larger figure than 694 we have inserted. If the Minister wants to do that we will be only too pleased to withdraw the Amendment and accept an Amendment which substitutes a more substantial figure.
The Minister laughs at this possibility. He is laughing at the possibility of this Government fulfilling their election promises. Perhaps by now that has rather sadly become a laughing matter.
Amendment (e) is a matter of real concern about the powers in subsection (4)(c). We believe that these powers could be interpreted in a way which will give the Government power to exercise authority over what should be the mortgage interest rates charged by building societies. We will, therefore, be probing that matter later.
I understand that we are permitted to discuss new Clauses 17 and 18. New Clause 17 is important. It reads:
Any person who effectively elected that a loan to him should be subsidised in accordance with Part II of the Housing Subsidies Act, 1967 may by notice in writing to the lender (in such form, at such time and in such manner as the Minister may direct) elect that the loan shall, as from the 1st April, 1970 or on any third anniversary of that date, no longer be so subsidised.The option mortgage scheme has failed for two reasons. First, the original effects have not been what people anticipated, due to the failure of the Government to run the economy properly. Secondly, a large number of people who entered this scheme have since deeply regretted it and would very much like to get out of it.People have entered the scheme for one of two reasons. Either tax changes and increased allowances have put them into a position where they would be obtaining more benefit than if they were obtaining full tax rebates, or, alternatively, their incomes have gone up and they now find themselves at a disadvantage which they would not be suffering had they not gone into the scheme but had taken advantage of income tax rebates.
One great advantage of an option mortgage scheme would be to advise young people with prospects of increased earnings some years hence that at this initial period, instead of going on the council housing list and going into a council house, they should receive assistance in 695 owning a house of their own and then, when their earnings rise, to get out of the option mortgage scheme. This is the main problem facing us. What happens is that young people go along to their solicitor or an estate agent and ask, "Should we take advantage of the option mortgage scheme?" The right professional advice to such young people, if they have any prospects of improving their position, must be, "No, we do not advise you to go into the scheme. Although it would be of advantage to you now, you will find in five years' time, if your salary or wages increase, that you will regret being in the scheme because you will be worse off than had you decided not to go into it."
As hon. Members know, once people are in the option mortgage scheme they are in for the whole mortgage period and there is no possibility of getting out. So the moment that a person rises from below the 6s. tax level to the standard rate, or above, he is at a disadvantage through being in the scheme. This is why only 6 per cent. of all people with mortgages are taking advantage of the option mortgage scheme. The Minister recently expressed how contented he was with that figure. He thought that it was what he originally expected. Of course it was what he originally expected, because he brought in an option mortgage scheme which had this great disadvantage.
The only excuse that I have heard against the proposal in new Clause 17 is that administratively the building societies would find it impossible to do. The Minister once quoted a letter in this House on another topic saying how difficult the building societies would find it to deal with another issue connected with the option mortgage scheme. The Minister, therefore, said that this would be more difficult to do.
I accept that the building societies would find it administratively difficult, if not almost impossible, for people to come in and out of the option mortgage scheme whenever their tax position changed. Therefore, I accept that we must lay down that there will only be certain points at which they can change—and perhaps only once or twice during the mortgage period. New Clause 17 suggests an option once every three years. I am willing to concede that if that 696 imposes an enormous administrative burden it could be changed perhaps to the fifth or the tenth year, or something of that nature. But I am determined that there should be a point in time, some years after the commencement of the option mortgage scheme, when people in the scheme can get out of it.
I have spoken about this to the building societies, including some of the leading building societies. They all say that it is impossible to have a scheme where people can go in and out. I accept that. But they do not and they could not possibly say that it is administratively impossible for them, at the beginning of every fifth year's repayments, to say to those in the scheme, "If you wish, you can now go out of it". Anybody thinking of the administration involved will recognise that, although there would be an additional administrative expense, it would be small. If necessary, some form of allowance could be made in the tax rate charged to building societies to meet the relatively minute administrative expense of saying, to those in the scheme, at the end of five years, that they have an opportunity of getting out of it.
I plead with the Minister to go back to the building societies on this matter, because I believe that they have misunderstood him. I believe that they have taken the Minister as meaning that people can get out whenever they wish, or that they have to circulate everybody in the building society movement whenever they make a break. They do not need to do that at all. All we are asking is that those who go into this scheme should periodically—every three or five years or perhaps twice in the whole mortgage period—be given an opportunity of getting out and taking advantage of the full tax rebates.
I believe that new Clause 17 has immense merit. It will give many young people who cannot at the moment contemplate buying a house the opportunity of doing so. With the present flagging housing figures I should think that the Minister would grasp at any thing which will stimulate and improve the market. The Minister makes a great mistake in thinking that, having put up the mortgage interest rate to 8½ per cent., this will bring in the flow of funds which the building societies so desperately need, will stop the shortage of mortgages, and 697 will stimulate the housing programme again. The mistake in that logic is that when money is attracted in at the level it now is, mortgages have to be charged at 8½ per cent. and people cannot afford to take advantage of the money, if it is there.
This is the problem facing the Government. That is why they must bring about improvements in the scheme. The most important substantial improvement that they can bring in is to make a break in the option scheme available to those who have taken advantage of it.
If the Government do not accept new Clause 17 today we will press it to a Division. In any event, I hope that they will go back to the building societies and quickly come back to this House with some form of legislation to meet the principle outlined in new Clause 17.
Finally, I come to new Clause 18 which embodies another important principle. This new Clause is designed to see that in future the 100 per cent. mortgage scheme is not linked to the option mortgage scheme. The 100 per cent. scheme is a matter of immense importance to people on low incomes and devoid of capital. I see no reason why this scheme should be linked, as it has been in the past, with the option mortgage scheme. It is a principle which will encourage the spread of home ownership—and the next Conservative Government will substantially widen the scope of the 100 per cent. scheme—but this cannot be done if it is linked to those who take advantage of the option mortgage scheme. It is an unnecessary and unwarranted link, and in new Clause 18 we endeavour to change it.
5.0 p.m.
In the limited time that has been made available to us to amend the new Clause moved by the Government, belated as it is, vague as it is, with no dates, we have, by a series of Amendments and new Clauses, endeavoured to bring about substantial improvements to the option mortgage scheme, and if we do not succeed with this Amendment tonight, it outlines the line of action that we will take when we have a majority in this House.
§ Mr. LubbockI agree with the hon. Member for Worcester (Mr. Peter Walker) that the Government's new Clause has come very late in the day. The Minister cannot possibly pretend that 698 he has not for many months, and indeed longer than that, known of the difficulties of people who went into the option mortgage scheme, because the changes in family allowances to which I referred in in an intervention in the hon. Gentleman's speech have been causing difficulties ever since the 1968 Budget in which these changes were introduced.
I am glad of the opportunity to emphasise the point made by the hon. Gentleman, because it is a serious one. These people went into the option mortgage scheme in all good faith thinking that they would benefit from it, and indeed they would have done had there not been this substantial change in our tax and allowances system. Suddenly, at a stroke of the Chancellor's pen, they find that the advantage is wiped out and they are stuck with the option mortgage scheme until they transfer the mortgage or move to another house.
This is monstrously unfair. These family allowance increases which we all welcomed at the time were intended to benefit people with large families, yet the Government have taken away all the money with another hand from those breadwinners who have taken advantage of the option mortgage scheme. This is very mean indeed, and therefore I strongly support new Clause 17 which gives these people some opportunity of amending their financial situation at a future date.
I would not be tied to the proposals submitted by the hon. Gentleman, and I do not think that he would either. All that he is trying to do—and this is a very helpful attitude—is to make things as easy as possible for the building societies who, no doubt justifiably from their point of view have said that they cannot have people opting in and out of the scheme every few weeks and creating administrative chaos.
If the Minister is to have these discussions with the building societies and other lending agencies about the new Clause which he has put forward, he might discuss with them this other matter at the same time. What better opportunity could there be for reviewing the situation and seeing whether, in the light of their experience, the building societies, local authorities, and so on, might be prepared to make some concessions on this matter.
699 The time is probably opportune now for doing that because of the tremendous advances in mechanised accounting which have taken place in the lending agencies in the last few years. If one reads the Building Societies Gazette, almost every issue contains news of computerisation by some of the medium-sized building societies and the co-operative arrangements which have been made by some of the smaller societies to acquire data processing facilities. This rather transforms the position and makes it easier for these societies to allow people this option perhaps every three years, or perhaps even more frequently. I would have been rather more ambitious than the hon. Gentleman, but I suggest that this could be a matter for discussion between the Minister and those authorities when he is discussing with them the other important matter of how to improve the percentage subsidy under the main option mortgage scheme.
It is also unsatisfactory that the Minister has produced this new Clause without saying anything about the cost. Although we wish to make some redress to the people who have been hoodwinked into entering the scheme, there is another question that we have to face, and that is the amount by which Government spending will increase as a result of the concession which the Minister plans to make. The right hon. Gentleman must have some figure in mind. Although he is not able to tell us precisely the details of the scheme—quite rightly, because it would be discourteous to the lending agencies to introduce it without first discussing it with them—I am sure that he has spoken to the Chancellor of the Exchequer and is at least able to say what the overall sum is, even if he cannot be precise about the percentage involved.
§ Mr. Hugh Rossi (Hornsey)Will the hon. Gentleman agree that the cost is likely to be provided by raising the cost of meals in comprehensive schools?
§ Mr. LubbockI do not think the Permanent Secretary would allow that. I do not quite understand these abstruse accounting details and revelations made by the Secretary of State for the Social Services every so often, nor would it be proper to go into them in the course of this debate. What I am concerned about 700 is to know what the total amount of the expenditure is to be, and I think that the Minister ought to give us that figure before the conclusion of this debate, because we are representing taxpayers as a whole as well as option mortgage holders in particular when we speak on this subject.
If the Minister is not prepared to divulge the overall figure, perhaps he will till us what would be the cost of accepting the Amendment moved by the hon. Member for Worcester, because then we could at least do the arithmetic and calculate for our own benefit what amounts would be necessary to improve the scheme by ½ per cent., 1 per cent., 1½ per cent., and so on, and then form a judgment on what was merited in the present difficult economic situation.
As regards the Minister's difficulty about the different rates of interest, I have a suggestion to make which I think will get over the difficulty of evasion that he mentioned. Instead of having different rates of subsidy appfying to bands of mortgage interest rates, one could adjust the percentage level according to those bands. Perhaps I can explain what I mean by using an arithmetical example.
Let us say that between mortgage interest rates of 5 per cent. and 7 per cent. the subsidy is to be 2 per cent. as it was when the scheme was introduced, and the Minister decides that it would be appropriate for a 3 per cent. subsidy to be given for mortgage interest rates between 7 per cent. and 8 per cent. There would then be the difficulty that a person would be better off with a mortgage interest rate of just over 7 per cent., than just under, because he would get 1 per cent. extra subsidy. Instead of doing it that way, we could bring the level back to a certain percentage according to those bands. Between 5 per cent. and 7 per cent. we could bring the interest rate back to 4¾ per cent., where it was when the scheme was introduced. Above 7 per cent. and below 8 per cent. we could bring it back to 5 per cent. Above 8 per cent., and below 9 per cent., we could bring it back to 5¼ per cent. I think the Minister can see that if that were done there would be no advantage to the mortgagor in accepting slightly higher rates of interest when he was on the margin between one hand and another. I hope that that suggestion will be helpful to the 701 Minister in his discussions with the building societies.
In spite of the legitimate criticisms that one can make about the delay in bringing in the new Clause, I shall accept it, as will my party, because it is at least a belated recognition that the option mortgage scheme has not been as generous as even the Government wanted it to be when it was first introduced, and we are obliged to do something for this section of the public in spite of the great economic difficulty which the country as a whole is facing.
§ Mr. Walter Clegg (North Fylde)Like my hon. Friend the Member for Worcester (Mr. Peter Walker), I welcome the new Clause, which is the culmination of many months of probing and nattering by back benchers. It illustrates to those outside the House, who sometimes doubt the value of Parliament, just how grievances can be remedied by Parliamentary action. On the other hand, I echo the criticisms of my hon. Friend and the hon. Member for Orpington (Mr. Lubbock) about the way in which this has been done. We welcome it and would rather have it done this way than not at all. But there are grave disabilities arising out of this procedure, especially for those of us on the back benches on this side of the House.
The Government have behind them an enormous machine able to provide them with statistics and papers, making their task relatively easy. Over here we have to act as our own research team, relying on what small facilities this House provides for us. We have not the time here, in considering this new Clause, to research in depth. We have been very busy this week with the Finance Bill, in which all hon. Members are interested. Now we have this Bill, and it is not easy for hon. Members to deal adequately with it.
The other thing that we lack in this procedure—and the Minister is well aware of this—is that in Committee members of the Committee receive advice and comments from outside interested bodies. This procedure does not give us time for that to happen. This is important, because it is the only chance we shall have to do anything about this except, possibly, when we consider Lords' Amendments. This concerns me 702 because it is one of the most valuable things which occurs during the passage of a Bill, especially valuable for back benchers.
I also echo the protests made about the cost of this. The fashion being set by the Secretary of State for Social Security and the Chancellor is to announce something without giving the cost. It is too much to ask us to keep putting up with this. We should know before the end of this debate what the cost will be. It should be calculable, and I do not know why the Minister could not have brought it out in his opening speech.
May I also protest—this is a hobbyhorse of mine—about the verbiage with which we are being presented. I found the greatest difficulty in understanding (4)(c), and were it not that my hon. Friend the Member for Crosby (Mr. Graham Page) is a valuable guide through this jungle of verbiage I would still be wondering what it was all about, or at least would have had to listen to the Minister. I did not believe that it was anything to do with what he said. Now that I am enlightened I am able to comment upon it with, perhaps, a little more intelligence than would otherwise have been the case.
Paragraph (4)(a) deals with:
… different provision with respect to different cases or different classes of case and, in particular, with respect to repayment contracts providing for different rates of interest.I wonder whether it would be possible for any regional variation under this. It might be a useful power to have, because there are parts of the country where a more favourable rate would be a very useful adjunct to regional policies generally. It would help us in the North of England, and in the West, where houses are available standing empty. This might prove to be an attractive course for the Government, to be able to offer regional terms.5.15 p.m.
What is the effect of this on local authority mortgages? There was a time after the war when local authorities issued mortgages with fixed rates of interest. Some building societies did it for a while, with the rate about one half per cent. above the normal lending rate, the fixed rate being a guaranteed one. Perhaps the Minister can comment on this.
703 My hon. Friend referred to our Amendment (b), and the reason why we ask the Minister to take action before 31st December, 1969, is that we want to know when an Order under this new Clause wil come before the House. It is popular to announce this, but we would be much more reassured if we knew when it was coming. Would it be this Session or next Session? Interested as all backbenchers will be in this, it is nothing like the interest of those who have option mortgages, and the sooner they are put out of their agony the better. They want to know if it is this year, next year, some time or never. It may be never unless the Government accept our arguments for a time limit for the first Order. I am assuming that the Minister will be able to tell us in winding up about this, because he would not have rushed into the Bill unless he was intending to act soon—I hope. I can see the reason for the distrust, among my hon. Friends, of (4)(c) which could lead to some interference by the Government with building society interest rates.
I am particularly interested in new Clause 17, because it relates to some cases that have been referred to me and which I have raised with the Minister. We discussed such cases in the Finance Bill last year, dealing with those who have opted for the mortgage but because they have a big family and the family allowance is "clawed back" then get no benefit. I have one case where it costs a man more than it would have done had he not exercised the option. Since last year mortgage interest rates have risen, and I am not satisfied that it will help those who suffer as a result of the family allowance "clawback". I hope the Minister will tell us whether this is so.
My hon. Friend spoke about the difficulty people had in making this decision under this law of the Medes and the Persians, when things cannot be varied until the end of the mortgage. As we know, the original pamphlet was slightly misleading, or could be so, and we were promised that it would be reprinted.
I have had to advise people who have come to my office and asked, "Should we exercise the option or not?" I have found this one of the most difficult professional decisions to make. It is difficult 704 to say to young people, "Are you limiting your ambition?" Am I to say to them, "I do not think you will ever get to a stage where you pay standard rate of income tax and where this will be to your advantage"? The only people to whom it may be really clear that it would be an advantage are those getting on in years who want only a small mortgage which they can pay off on retirement. Such people may have been in the same job and when looking at the general rate of increase one could say that it would be to their advantage.
The numbers of people taking advantage of the scheme bears out the validity of our arguments. It should be possible at stated intervals of three or five years, or on a change of Government, to give the option to people to change their minds. People's circumstances are infinitely variable. To ask them to take a once-and-for-all decision at the beginning of a mortgage is very wrong. I support new Clause No. 18 as I can speak on this with practical experience. The number of defaulters on building society or local authority mortgages is very small indeed. Most people when they get a house of their own consider paying off the mortgage as their first priority. Losses by building societies, local authorities and other lending agencies in this respect must be more than tolerable.
In the past normally one had to put down about 30 per cent. of the price. Gradually through indemnity guarantee schemes the rate went up to 80 per cent., 85 per cent., 90 per cent. and 100 per cent. I had misgivings and I wondered whether people with small capital would repay, but in my experience I have found this illusory. There is no worry at all. If we were to go forward with this idea of a 100 per cent. mortgage scheme not being limited to those who took out option mortgages, we should give an enormous boost to the housing programme. We would bring it within the reach of young people.
When young people go in for buying a house a major problem is not only that of getting a mortgage and a deposit, but that of furnishing the house. Often the carpet costs as much as the land on which the house is built. They also have to furnish their house and obtain all the necessities of life. This new Clause would 705 make a real impact on housing. It would enable a new group of people to own their houses, and the building societies and the State would not suffer. These Amendments and new Clauses suggested by the Opposition would make the option mortgage scheme an altogether better proposition. The position will be improved by this Bill unamended, but nothing like to the same extent as it could be if the Government would accept our Amendments.
§ Mr. James Allason (Hemel Hempstead)I have been for a long time a keen supporter of the idea of a good option mortgage scheme. I was delighted when at the Tory Brighton conference in 1965 my hon. Friend the Member for Finchley (Mrs. Thatcher) announced Tory policy and said that it included a very substantial option mortgage scheme.
I think that was the first announcement of this type of proposal. In the Queen's Speech of 1965 the Government fell into line and announced their intentions. They introduced a Bill which was overtaken by the General Election of 1966, and then until November, 1967, that they came forward with this scheme, which was geared to an existing mortgage rate of 61 per cent. It was 6½ per cent. by the time the Bill became an Act. It was carefully designed for a 2 per cent. subsidy in lieu of tax relief. If mortgage interest rates fell bellow 6 per cent. there would be a corresponding reduction in the subsidy. It was a complicated scheme. I would much prefer to give a rebate as if there were complete tax relief at maximum rates, than the type of scheme which was introduced.
It is tragic that the Government at that time did not foresee that interest rates would rise. They were thinking then in terms of reducing interest rates and there was provision in the Bill in case the rates came down. The tragic thing is that interest rates have risen as high as 8½ per cent., but until now the Government have done nothing to remedy the matter. From the wording of the scheme it would appear that there will be no retrospection and only after the Order is introduced will a new rate of subsidy come into effect. This is sad for those who are suffering under present conditions. It would be useful if the Minister would 706 say that for the second half of the year he will give a generous rate of subsidy to make up for the unhappy first half of the year. Perhaps from next April we could go on to a rate of subsidy which is natural.
Amendment (a) requires an early decicision when there is a change of Bank rate. This is very necessary. Even now borrowers are coming forward day by day and every new borrower has to decide whether to take advantage of the option mortgage scheme if interest rates rise, or even if they fall. He must know whether the Government will vary the scheme or that they intend to carry on with the existing rate. Obviously the Government cannot make an announcement simultaneously with the building societies' change of rate, but they have an obligation to make an announcement very soon about what they intend to do in regard to the option mortgage scheme. Having let this ride for two years, the impression is that they have made up their minds that they want to forget about the problem, but that problem does exist.
5.30 p.m.
Amendment (d) raises the question of the rates the Government intend to insert. It is very helpful of us to give them an opportunity to go some way towards redeeming their election pledges of lower interest rates. Even so, I do not think that it would be sufficient merely to bring them down to 4½ per cent. That would hardly meet the ideas of at any rate the right hon. Member for Belper (Mr. George Brown) of what interest rates should be. It is not to be forgotten that instead of the Government fulfilling their pledges on lower interest rates for house owners we have seen interest rates go up and up.
I now turn to new Clause 17. We all recognise the extremely unsatisfactory position of anyone who must consider whether he wants to enter a option mortgage scheme. He must go into it for life. The usual advice to such a person is to say that if he thinks he will ever come on to the full rate of tax he should not go into the scheme. That is the present situation, but it was not the situation when the scheme was introduced. Nevertheless, as it has got so much out of hand it is necessary to allow the possibility to take the option at intervals. My right hon. Friend the Member for Worcester 707 (Mr. Peter Walker) has indicated that this is feasible.
Next, I turn to what the rate should be, taking the scheme as it is. The Minister mentioned the possibility of tax changes, which is highly relevant. If only we had a simple scheme giving relief equivalent to tax relief at full rates of tax, less earned income allowances, there would be little difficulty. But there is the possibility of income tax going up or down. We have just seen a change in the intermediate rates of tax, and more people are coming into standard rates because of family allowances. This means that any change is liable to involve a need for revision of the percentage figure.
It is curious that this was not envisaged in 1966, when the Measure was introduced. I suppose that the Government had then made up their mind that taxation would remain at a consistently high level for years, and that therefore this factor need not be considered.
The other factor with which we have been dealing mostly this afternoon is high interest rates. The Government did not foresee that interest rates would continue to rise, and I acknowledge that they could not have foreseen the appalling financial position of the country. I do not think that anyone could have foreseen the mess into which the country could be brought, which has necessitated the current appallingly high interest rates.
Introducing the Measure in November, 1966, the Minister of Housing and Local Government pointed out that while the standard rate of tax was 8s. 3d. in the £ the two-ninths reduction for earned income allowance made it equivalent to 6s. 5d. He said that the 2 per cent. subsidy on the then interest rate of 6½ per cent. was equivalent to 6s. 2d., so that there was fairly close correspondence between relief on the full rate of tax and the alternative scheme. If one was on the full rate of tax it was preferable—though only by 3d.—to take advantage of tax relief. But it was a close matter. If interest rates fell to 6 per cent. the 2 per cent. would be equivalent to 6s. 8d. on the subsidy scheme, and one would be better off in that than would be the standard ratepayer with his tax relief.
However, mortgage interest rates have moved in another direction. By the time the Bill came into force the rate had 708 risen to 6¾ per cent., and the subsidy was then equivalent to 5s. 11d. Now that interest rates have risen to 8½ per cent. it is only the equivalent of 4s. 8d. It is worth noting that the intermediate rate of tax of 6s. in the £, with a 2s. 9d. reduction for earned income, is also 4s. 8d. So at present anyone whose highest rate of tax is 6s. in the £ will not find it worth his while going into the mortgage option scheme. This is a ridiculous situation, and one that I trust the Clause will remedy.
What figure has the Minister in mind? He must increase the subsidy beyond 2 per cent. If he raises it to 2½ per cent that will only be equivalent to 5s. 11d. in the £ at the present mortgage interest rate of 8½ per cent., and therefore it will not be good enough. That is nowhere near the 6s. 2d. at which the scheme started.
A 2¾ per cent. subsidy, provided interest rates are 8½ per cent., would be equivalent to 6s. 5d. in the £, which means that it would be equivalent to the standard rate of tax on earned income. I trust that the Minister has 2¾ per cent. in mind.
I think that I have shown that whatever the mortgage interest rate is there must be an equivalent percentage sum. I think that this is what the Minister had in mind when he announced his variable band, and I certainly hope that it is. But I urge him to consider going not to 2¾ per cent. for the rest of this year but to 3½ per cent., in order to give the equivalent of standard rate tax relief to those who are in the scheme. Then in April next year he could, provided tax rates and interest rates remain the same, it would be reasonable to drop it to 2¾ per cent. and so give the full subsidy. But this seems a difficult and complicated way of doing it when it would have been simpler to grant the full rate of tax relief to all borrowers.
It is certainly high time that the Government brought in the new Clause. But I regret that they should have done so at this late stage and in this way. We spent weeks in Committee on the Bill, and if the Government did not think of this provision when they introduced the Bill, then surely it should have been brought in during the Committee stage when we could have dealt with it satisfactorily. Now we have to deal with it 709 among 41 pages of new Clauses and Amendments. This is an unsatisfactory procedure but at least it is a step in the right direction.
§ Mr. Martin Maddan (Hove)New Clause 17 is exceedingly important. We are at a late stage in the Bill and I hope that the Minister will be forthcoming in reply on this subject, because there is really no further opportunity for the House to do anything more about it.
There are areas of the country, including my constituency, both in the Borough of Hove and in the urban district of Portslade, where, to all intents and purposes, no building land is left for further council house development. Possibly the only way for a family to get a house is such areas is through a mortgage scheme in order to purchase one.
The sort of families the Labour Party purports to represent—I do not think that it does—are reliant in such areas upon a good, fair and flexible mortgage scheme and, if necessary, a mortgage option scheme. But the one we have is so inflexible that it puts them at a great disadvantage and, indeed, the whole area at a disadvantage compared with other parts of the country where council house provision is going ahead at a substantial rate.
Perhaps, Mr. Deputy Speaker, I can seek guidance from you about a matter which concerns me. When the Bill was presented, the Explanatory and Financial Memorandum said on page XIII that the total consequent public expenditure would be approaching £40 million by 1972–73. It went on to say that this expenditure would be contained within a total of public investment in housing at about the level explained in the White Paper.
When a Minister comes to the House with a new Clause on Report involving substantial public expenditure, is it in order, and if it is, is it usual, for him to do so without explanation of the cost to public funds? I am not an expert on Erskine May, but I remember being told by a senior Member of the House when I came here many years ago—he may have been wrong, or I may have misunderstood—that it was an obligation, and one which applied to me when I was 710 promoting a Private Member's Bill, that, if a substantial amount of public funds was at issue, there should be attached a Financial Memorandum explaining what that cost would be.
If a new Clause is introduced at a late stage of a Bill like this, does the procedure exonerate the Government or the promoter of a Private Member's Bill from making any financial explanation to the House? If so, it suggests an unsatisfactory aspect of our procedure and stultifies the efforts of hon. Members in their prime duty of trying to see that public funds are controlled. I do not know whether it is even in order to raise a point of order during one's own speech.
§ Mr. Deputy Speaker (Mr. Harry Gourlay)The hon. Gentleman's remarks do not really amount to a point of order. The Bill is normally reprinted after Standing Committee but the Financial Memorandum is not.
§ 5.45 p.m.
§ Mr. MaddanThis emphasises an unsatisfactory state of affairs in that we should have a Bill back from Standing Committee without a Financial Memorandum. When the Government adopt the device of sticking in a new Clause at this late stage, the House is not given the information which it would have been given had the provision been contained in the Bill originally or in a separate Bill. That is what I am protesting against. I thought that the hon. Member for Orpington (Mr. Lubbock), who raised this point, rather unusually let the Government off lightly.
§ Mr. Deputy SpeakerI can assist the hon. Gentleman by reminding him that the House has passed a Money Resolution in connection with the Bill and that there was an opportunity for hon. Members then to ascertain additional costs which might be involved.
§ Mr. MaddanBut I did not know at the time that this new Clause was coming. That is the whole point. We open the stable door for a horse of a certain size and colour to pass through, but, having opened it, we find a herd of ponies galloping behind the horse as it comes out. I wonder whether the Chair can do anything to enable the House properly to fulfil its traditional duty.
§ Mr. Deputy SpeakerThere is nothing that the Chair can do to assist the hon. Gentleman in his dilemma at the moment other than to advise him that he can pursue the matter with the Minister in debate.
§ Mr. MaddanI thank you, Mr. Deputy Speaker. I will pursue this matter with the Minister and I hope, in the light of the exchanges I have just had with you—and you have been very helpful—that we shall be given proper information.
§ Mr. Oscar Murton (Poole)My hon. Friend the Member for Hemel Hempstead. (Mr. Allason) gave the House an interesting historical summary, going back to 1965, of what the Conservative Party intended to do about this problem and how the Government stole its clothes. It enables me to go back to my own favourite quotation—a statement made by the Prime Minister as Leader of the Opposition in 1963, when he said:
By intelligent monetary policies, Labour will bring mortgages within the reach of young couples living on average incomes.I do not know about intelligent monetary policies in the wider context, but I do not suggest that that was an accurate statement or a promise that has been kept. But, at last, after long delay, new Clause I has been brought forward in a rather irrelevant manner and at the very last moment. It occurred to those of us who served on the Standing Committee which considered the Housing Subsidies Bill that there would be certain difficulties in having such a rigid system.It is true to say that although few people have availed themselves of the mortgage option scheme the benefits available under the scheme have tapered off virtually to nothing, principally because of a combination of the increased interest rates since April, 1968, and also the no less vital problem of rising house prices.
I also wish to ask the Minister when something will be done to implement the Clause. The right hon. Gentleman has said that it is subject to the Treasury, and I understand what he said. But the sands are running out. If public confidence is to be maintained, or indeed retained, in the mortgage option scheme something will have to be done quickly to make it a more than worth-while enterprise.
712 I am astonished that, the Government having taken the opportunity to rephrase the new Clause and to introduce it in this slightly irrelevant manner, nothing has been done to enable anybody who opts to join the scheme at least to have one chance of changing his mind in the light of his subsequent circumstances.
On other occasions the Minister has said that it will be administratively difficult for building societies to implement such an arrangement. Undoubtedly a problem is involved. Building societies are hard working and do not always have the staff they would wish to have, and the scheme by its nature is to some extent complicated. But since the Minister has introduced a Clause of this nature, surely he should have attempted to provide for the possibility that at least once during the life of a mortgage—or, as we would prefer, it at more frequent intervals according to interest rates—a person who has joined the scheme should be given the opportunity to leave it.
My hon. Friend the Member for North Fylde (Mr. Clegg), who is a professional man, said that one of his most difficult duties was in advising his clients whether or not they should opt for this scheme. How much worse is it for somebody like myself, who is extremely unprofessional in that respect, when students come to me with a similar problem. I advise them to go to their solicitors to find out what they should do. When I have listened to the problems which they put to me, with my limited knowledge of the subject, I wonder whether their solicitor will be able to help them.
The circumstances of young and newly married people can easily change. It is likely that they will quickly obtain a much better job, but, on the other hand, they may suffer the misfortune of some accident or illness which might slow up their progress. It is, therefore, wrong that a man should have to saddle himself with something for 15, 20, or 25 years without any possibility of changing his mind.
The 100 per cent. mortgage is needed by people with little capital, whereas the option mortgage scheme is needed by people with low earnings. The two categories are not necessarily the same. Both sides of the House wish to see help given to young married couples and to council tenants. They are the people 713 who need 100 per cent. mortgages. Because of low earnings, they are unable to take part in the option mortgage scheme. Our new Clause seeks to break the link between the two schemes. Could the Minister give us some indication of the costs involved in the scheme, and say when he expects to introduce the provisions of new Clause 1?
§ Mr. Paul Hawkins (Norfolk, South-West)I do not intend to go into who first thought of this scheme. I do not mind either way. I should like to see the option mortgage scheme go well and become more popular than it has been in the past. I was a little astonished to hear mention of the middle band. I wondered whether I had wandered into an agricultural debate, in which we speak about pig middle bands, and so on. I welcome the new Clause, but I feel that it is rigid. All our Amendments and new Clauses are designed to make the scheme far more popular and to bring into the scheme more people than are coming in at present.
I have heard mention of a figure of 6 per cent. as representing those who are taking part in the scheme. I do not know whether that is a static figure, or whether people are entering the scheme at present. I am an estate agent and I am told by my staff that very few people are coming into the scheme at present. There is great difficulty in advising people properly on these matters. It is difficult to tell what will be the future income or circumstances of a young married couple. If they could be told that with a change in circumstances they could opt out of the scheme, it would give them a great deal of encouragement.
From my business experience I can back up the point made by my hon. Friend the Member for North Fylde (Mr. Clegg) that it is practically impossible to give honest accurate advice. The Member of Parliament who is a solicitor, or a land agent, or an insurance broker is in an almost worse position. Constituents who might also be clients expect a good deal of free advice, but often one cannot give accurate advice.
It is necessary to try to set a date, and I hope that the Minister will be able to give an assurance about when the 714 provisions will come into operation. It will be encouraging to many people if they are given that information. People are looking for houses, and those who are thinking of getting married will know that these improvements will be brought in from a certain date. There will be a hold-up on other parts of the Bill if a scheme has to be approved in the months preceding the time when improvements come into effect. I hope that a date will be given for the scheme as soon as possible.
I welcome the option mortgage scheme. I believe that it is a good scheme. There are not nearly enough people in it. I feel that it should be considered as a starter scheme for people who hope to have a better income in five or 10 years' time, and who wish to start as house-owners, since they see how house prices are going, and then wish to come to a decision about their future as they see their way forwards. This is one way forward for people with small incomes. The purpose of new Clause No. 17 is to make it possible, at certain intervals, for people to get out of the scheme when financial circumstances warrant it.
From my personal experience, I believe that the scheme could be much better and could be used by many more people. I hope that the Minister will think carefully about our Amendments and new Clauses which, if accepted would greatly improve the Bill and the scheme.
§ 6.0 p.m.
§ Sir Douglas Glover (Ormskirk)When one of my colleagues—in this case my hon. Friend the Member for Hove (Mr. Maddan)—makes a slight error, it is better that it should be put right by one of his hon. Friends than by the Minister. There was a Money Resolution on the Order Paper today, otherwise this debate would, I presume, be out of order. To that extent, this sloppy Government are in order. That is about the only compliment that I wish to pay them.
I have a great deal of sympathy with the Minister about the new Clause. I sympathise with anybody who takes over a Department from the Secretary of State for Social Services, because he is bound to find the whole place in uproar. I suspect that the object of not putting a date in the new Clause as to when 715 it becomes operative is to cause some embarrassment to my hon. Friend the Member for Worcester (Mr. Peter Walker) when he succeeds to the Minister's office. Unless the Minister is prepared to accept our Amendments, and particularly the one which proposes to insert a date, I do not think that the new Clause is of much value. Perhaps the Minister will instruct the Parliamentary Secretary to say that he will give us a firm date.
A Parliament which is working within a tight monetary control should know what the new Clause would cost. How can we possibly know what a new Clause will cost when there is no percentage figure in it? Presumably the Minister, in tabling the Clause, even at this eleventh hour of the eleventh day of the eleventh month, gave some thought to this point. The Opposition have not been given much chance to work out their sums and to discover what it would cost. Presumably the Minister had some idea of what he intended to insert in an Order, if he brings an Order before the House, to put the Clause into operation.
I hope that the Parliamentary Secretary will say that, on the present level of interest, it is visualised that the option percentage will go up to 2¾ per cent. or to 3 per cent. and that the Government expect to bring this into operation, not 12 months from now, but as soon as the Bill receives the Royal Assent. If that is so, there is no reason why it should not be stated in the Clause.
The Clause is pure whitewash unless the Minister accepts our Amendments, particularly (b) and (c). I should like to know what the result would be of accepting Amendment (d). I gather from what the hon. Member for Hemel Hempstead (Mr. Allason) said that the figure of 4 per cent. would give the option mortgagee an advantage over the person paying the full rate of tax.
§ Mr. LubbockWhat is wrong with that?
§ Sir D. GloverI do not say that there is anything wrong with it, but as the scheme was based on a percentage below it I did not think that the Minister intended it to be above it. What percentage has the Minister in mind? Or is this merely whitewash?
716 If the Minister intends to have an option mortgage scheme which is flexible and, therefore, adjustable as interest rates go up or down, something on the lines suggested in new Clause 17 needs to be done. If the building societies are prepared to operate something like new Clause No. 1 by which they may alter their rates every six or 12 months, there will not be very much more administrative costs for them to allow a chop off and to permit someone to come out of the scheme if their financial circumstances have changed.
I hope that the Minister realises that new Clause No. 17 is part and parcel of the deal proposed in new Clause No. 1. The two go together. If the building societies believe that they can work new Clause No. 1, with all its implications—and there are many implications for the building societies in it—it would not involve much more administrative work for them if they provide a chop-off under new Clause 17 when somebody wishes to change from the scheme to the ordinary system. I hope that the Minister will see the sense of what my hon. Friend the Member for Worcester said and will ask the building societies to consider new Clause No. 17, because they have the idea completely wrong. There should be a time limit. It would probably be right to give them one bite of the cherry after five years, at which time, if their income had increased and it would pay them to do so, they could transfer to the ordinary system.
Were I a solicitor I should have difficulty in advising people which system to adopt. It is perhaps as well that I am not a solicitor, since I might give bad advice to people buying houses. I could recommend only those people who were about 50 years of age to take the option mortgage scheme, since, if their income by that time were not sufficient to attract the standard rate of taxation, it would not be likely to do so in the future, and it would be safe for them to opt for the option mortgage scheme for the rest of their lives.
That could not be said to a young couple who were getting married. One cannot say to a young couple of 25 that when they had decided which scheme to adopt they may not change it throughout the life of the mortgage. It is, therefore, necessary to have a chopper Clause, such as new Clause 17.
717 This is a depressing debate. We are talking about the problems of young people trying to set up a home and having to pay an interest rate of 8½ per cent. on a mortgage. Increasingly, people cannot undertake the responsibility of buying their homes, and this is under a Government who came in, if not pledged, to bring down the interest rate for mortgages to 3 per cent., conveyed that attitude of mind to a great mass of people.
There is no doubt that many hon. Gentlemen would not today be sitting on the other side of the House were it not for the widely held belief that the right hon. Gentleman's party would ensure that houses could be bought at a cheap rate of interest. Let it for ever stick in their gullets that this is yet another promise which they have failed to implement. This debate is for the purpose of trying to relieve the effects of the broken promises of a discredited Government.
§ 6.15 p.m.
§ Mr. RossiI support my right hon. and hon. Friends on new Clause 17, which gives the right to people who have committed themselves to the mortgage option scheme to opt out if they wish to do so.
It is generally agreed and recognised that the mortgage option scheme has not been the unqualified success that it was hoped it would be. It has not given help to people with low incomes who are seeking to buy their own homes, and has, indeed, lamentably failed. The percentage of people who have taken up this scheme in comparison with the total number of people who have obtained mortgages since the scheme came into operation shows that it is extremely unpopular.
It is unpopular for two reasons. First, people committed to the scheme are committed to it for as long as their mortgage lasts, and they are obliged, when making the election whether or not to opt for the scheme, to try to forecast what their future financial position is likely to be for 15 to 20 years ahead. It is impossible for a young married couple to face life on the pessimistic assumption that for the next 15 or 20 years they will never be in the position of having to pay tax at the standard rate because their income is so low.
718 Young people starting life together look forward to a successful and happy future and, with that mentality, they are unlikely to choose a scheme which presupposes that their income will never rise above a low level. For this reason it has been extremely hard to persuade people that this scheme is appropriate for them.
On the other hand, had there been the opportunity, once their income increased and the scheme ceased to be of benefit to them, for them to pull out of the scheme, it would have been much more popular, much more successful and would have done a great deal of good.
The second reason why the scheme has latterly not been successful is that people who have entered into the scheme have considered that they have been swindled by the Government. This happened last year with the increase in family allowances. People receiving family allowances were taken above the level at which the standard rate of tax becomes payable and, having been given money by the Government they found that they were losing the benefit which they had previously enjoyed under the mortgage option scheme. They were prejudiced, since, being in the mortgage option scheme, they were not entitled to the reliefs enjoyed by standard rate taxpayers who had not gone into the scheme.
Because of the hesitancy of young people to forecast a pessimistic financial future, and because people who had entered the scheme found that they were being swindled, the scheme has been grinding lamentably to a halt. One can, therefore, understand why the Government wish to introduce the new Clause to alleviate some difficulties that have arisen. But not all the difficulties are alleviated, and the scope of the new Clause is very limited. The effect of the new Clause is to admit to the country that the Government's housing policy has lamentably failed.
We have already discussed the way in which interest rates have risen since 1964 because of Government action. New Clause 1 is introduced party to alleviate the hardships caused to people with low incomes who are buying houses. It gives them a modicum of assistance in meeting rising interest charges.
I find it a little disturbing that the new Clause, instead of providing for a fixed level of relief on interest charges such as 719 the 2 per cent. mentioned in the previous legislation, now leaves the Minister in his discretion to alter the levels of relief under the mortgage option scheme, so that adjustments can be made on the 2 per cent. interest rate as and when the Minister wishes. The Minister seems to be presupposing that there is no ceiling to interest rates on mortgages. Where will it end? We are 8½ per cent. today—
§ Mr. CleggDid my hon. Friend see an article in the Building Societies Gazette which asked: "Is this to be the 10 per cent. year?"?
§ Mr. RossiI am grateful to my hon. Friend.
I was about to say that if one borrows from a local authority one has to pay 9⅛ per cent. Building societies are beginning to wonder whether it will be 10 per cent. this year, and I wonder whether 10 per cent. will be the final ceiling. From the way new Clause 1 is presented, with this complete discretion on the part of the Minister to adjust this 2 per cent. whenever he wants, it seems to indicate that there is a fear in his mind that there is no ceiling. Am I right in saying that it is a fear? Perhaps it is the Government's intention that money shall become dearer and dearer and they are getting in early with new Clause 1 to give a certain amount of relief against what they intend shall happen to our future borrowings?
I would like the Parliamentary Secretary, when he replies, to deal with this question of mortgage interest rates. Perhaps he can tell us whether new Clause 1 is framed in this way for that reason—because the Government believe that there is no ceiling to mortgage interest rates. If there is a ceiling perhaps he will be kind enough to tell us what it is. The general fear at the moment is that this continual creep upwards will not cease, certainly in the lifetime of the Labour Government. This is one of the reasons why the country wants to see the Government go, because everyone knows that this creep will not end until they do.
§ Mr. SpeakerOrder. The hon. Gentleman is a little wide of the new Clause.
§ Mr. RossiI had finished my remarks on that point. I hope that the Parliamentary Secretary will be able to answer some of the matters I have raised.
720 The Minister said that one of the important effects of the mortgage option scheme would be to encourage the building of new houses because it would create a demand for houses of a certain kind and people in those houses would want better houses. They would know that a market existed for their present house and would be able to go about buying a new home, thus creating a demand which would be filled by the developers. A little while ago he said that housing starts were poor in the first quarter of this year because of extremely bad weather. I would have thought that as soon as the bad weather ended, coupled with the promises of better deals over interest rates, as envisaged in new Clause 1, there would have been a tremendous upsurge in starts this April. My hon. Friends will not be surprised to know that starts for April were 1,000 down on the number of starts made in April last year.
§ Mr. SpeakerOrder. With respect we are debating not the Housing Bill, but some specific new Clauses.
§ Mr. RossiFor this reason I am urging that the Government reconsider new Clauses 17 and 18, because these improvements to new Clause 1 will make the mortgage option scheme much more attractive. Unless it is made attractive, it will not work. All that we are doing in new Clause 1 is alleviating some of the hardship which is being suffered by those already in the scheme. When they entered it mortgage rates were about 6½ per cent. Now they have risen to 8½ per cent., the relief that they are getting is meaningless. That situation is being mitigated by new Clause 1, but it does not encourage fresh people to enter the scheme, it does not make the scheme successful, which is what the Minister is aiming at.
My hon. Friend the Member for Hemel Hempstead (Mr. Allason) said that the original mortgage option scheme came from this side of the House, and that hon. Gentlemen opposite stole our clothes while we were bathing at a conference. They tried to tailor that clothing to themselves and they made a poor sartorial job, because they do not fit anyone. I urge the Minister, if he is really concerned to have a mortgage option scheme that will be clear and worth while to those whom he is seeking to encourage to buy 721 houses, those at the lower end of the income bracket, but who have hopes of rising financially, seriously to consider new Clause 17. It is not impractical. I am sure that the building societies could operate it if he took the trouble to consult them and tried to work out a scheme with them.
§ Mr. Graham Page (Crosby)In moving the new Clause the Minister did little more than explain what was written on the Notice Paper. During the debate, and as a result of the Amendments and new Clauses which we have tabled, it must have been perfectly clear to the Minister and his hon. Friends what sort of points were troubling us, what sort of difficulties we found in accepting new Clause 1 without some of our Amendments. I would have hoped that as those difficulties became abundantly clear, the Parliamentary Secretary might have caught your eye, Mr. Speaker, and tried to intervene to tell us what would happen. He will only have himself to blame if, during his winding-up speech, we seek to interrupt him to find out a little more.
All that I can do is to repeat, without tedious repetition I hope, the difficulties put by my hon. Friends. Looking at this and other new Clauses on the Notice Paper tabled by the Government and at some of the Amendments which we have already added to the Bill, I have come to think of this Bill not as the Housing Bill, but as the Housing (Miscellaneous Repentances) Bill. So many mistakes of the Government are being brought forward for correction—and not full correction at that, merely meagre attempts to correct errors, not going the whole way and correcting them properly.
This is an example of a situation when pressure from the Opposition, in debate, at Question Time and throughout the country has resulted in the Government being forced to surrender. I am not sure whether the surrender was genuine, or whether it was merely found to be a useful announcement to make in a housing debate we had a few days ago, when the Government were in difficulties and wanted to throw out something to the Press. In fact, they are not doing anything about it at the moment. They are not correcting the anomalies and the dissatisfaction with the option mortgage scheme. This is not 722 an unconditional surrender to the pressure that we brought, and it has taken a long time to get even as far as this.
6.30 p.m.
Even now, there is not an amendment of the law. There is merely power being taken to amend it at some time in the future. We have had no indication from the Minister as to when it will happen. He is taking the powers. The only indication that he has given is that he will use them as soon as practicable. That was his answer to a Parliamentary Question recently. That is a nice way of escaping responsibility.
Having the new Clause on the Notice Paper only at this stage, we are threatened that there are further discussions going on and there may be further Amendments in another place. We may be left with the final Clause to go into the Bill and be able to discuss it only when we consider Lords Amendments. That is not the right way to treat the House on legislation of this importance on a point which is not new. It was put before the public as long ago as 1965 by my right hon. and hon. Friends. The proposition for option mortgages could have been brought into operation as early as 1966. Certainly, it could have been brought into operation in a proper form in the Housing Subsidies Act, 1967.
To see where the defects are, perhaps I might recollect the purpose of the option mortgage. It was that mortgage interest can be deducted from taxable income. However, if a person has not full taxable income from which to deduct it, he does not get any benefit from the deduction. If the mortgagor is not liable to tax or pays at less than the standard rate, he does not benefit from the deduction, and he is given as the equivalent of that benefit a 2 per cent. reduction in the interest that he is called upon to pay. Since that 2 per cent. was fixed in the Housing Subsidies Act, 1967, interest rates have risen by 2 per cent., and so he is back to square one.
The right hon. Gentleman said that, according to his figures, they had risen from 6¾ per cent. to 8½ per cent. When the Housing Subsidies Bill was introduced, the figure was 6½ per cent., and the increase has been a full 2 per cent., which was supposed to be the benefit that the mortgagor would get if he was not 723 a standard rate taxpayer. In this Bill, the Government are trying to put that right and put the mortgagor back to where they hoped he was in 1967.
We are asking what is the rate of interest to be substituted for that 2 per cent., and when. When are we to learn the rate, and when is it to come into operation? When does the Minister intend to make an Order, and from what date does he intend to make it operational?
I have referred to the 2 per cent. increase in mortgage interest rates, and a probing Amendment has been tabled to try to discover what rate of interest the Minister has in mind. It seemed a rough and ready calculation to say that, if the interest rate has gone up by 2 per cent., it has nullified the original 2 per cent. benefit, so the 2 per cent. must be doubled and called 4 per cent.
My hon. Friend the Member for Hemel Hempstead (Mr. Allason) gave some carefully calculated figures which have given the Minister a very good lead as to what the percentage should be. My hon. Friend said that, to put the mortgagor right for this year, the Order should be to increase the 2 per cent. to 3½ per cent., and then, from April 1970, the mortgagor would be back in his position of benefit if the rates were increased by 2¾ per cent.
What are to be the figures? I do not think that the Minister should say in this vague way, "I want an Order to make whatever percentage I think fit". That may be all right for the future. We do not know how mortgage interest rates will fluctuate in the future, but, at present, we have a definite increase from the originally concentrated 6½ per cent. to 8½ per cent. What will the Minister do about this factual circumstance at the present time? We are happy to give him the power to adjust this in future as interest rates may change, but we want to know what is to be the figure now.
Many of my hon. Friends asked when the Order would be made and from what date it would operate. Is it to be retrospective for those who have suffered already? It is essential that we should have a firm undertaking from the Government that they will bring in the Order at least before the end of the year. That is giving a long time for further negotiations 724 and for the Bill to be put through, and I think that we are being very ungenerous to mortgagors in letting the Government have such a long time in which to make up their mind. But at least they should make up their mind before the end of the year and bring in the Order by then. If they intend to assure us that they will bring in the Order before the end of the year, let it be stated in the Bill so that it becomes law when the Bill receives the Royal Assent.
Those are our points on the amount of interest which is to be stated in the Order and the date when the Order shall come in.
Amendment (e) is to leave out paragraph (c) of the new Clause. That paragraph seeks to give the Minister the power to juggle with the interest rates. Taking a simple example from the present rate of interest, he would be entitled to say, "The recommended Building Societies' Association rate at the moment is 8½ per cent., but I do not think that building societies ought to be charging that. I say that it should be 6½ per cent., and you will have your 2 per cent. knocked off that fictitious rate".
I am highly suspicious of giving the Minister power to do that. It seems to me to be coming very close to dictating to building societies that they shall charge only a certain rate of interest decided by the Government. I am aware that that is the policy adopted in the United States for American building societies, but I am sure that neither the Government nor my right hon. and hon. Friends would like building societies here to conduct their business as American building societies do.
They are apt to give advances with Green Shield stamps, and all sorts of benefits like that, and their advertising is very vulgar. That may be the way that Government-controlled American building societies are run, but I do not want to see that sort of system operated here. It really means leaving the building societies to a commercial decision on what is the right interest to charge to borrowers so as to attract in the money that borrowers want, and not having them dictated to by the Minister.
New Clause 17 deals with the option out of the option mortgage scheme. This is necessary because there is dissatisfaction with the scheme as it now stands in 725 three respects. This dissatisfaction is brought about first by Government action on taxation. Several of my hon. Friends have mentioned that the recent family allowance increase put the calculations of mortgagors out altogether. Many of them found they were quite wrong and, in fact, were losing by having entered the scheme. Yet they could not get out of it without paying off the mortgage and taking out another one; and there are many building societies who do not grant remortgages, so that it would be impossible to put the matter right in that way.
The second dissatisfaction with the scheme is the rate of interest which building societies are obliged to charge now. The increase in the rate of interest has deprived the non-standard taxpayer mortgagor of the benefit he would have had. The third dissatisfaction arises out of the fact that the mortgagor himself may increase his income. Surely, this is the whole point of the option mortgage. It is there to assist young married couples to buy houses. These are just the people whose incomes will increase fairly quickly. If the man is any good at all in his job he will hope to get an increase in his wage or salary over the coming years. He cannot judge at that stage whether the increase will take him above the scale on taxation; and if he is successful in getting a big enough increase he finds that he is unsuccessful and has failed in choosing the option mortgage. He really must be given the chance to opt out. The Government are at, the moment, I understand, supporting a Private Member's Bill to opt out of marriage, but they are refusing us the right to opt out of a mortgage.
In the past, we have perhaps put forward this scheme in a rather vague way, saying the mortgagor really ought to be allowed to get in and out of a mortgage. We have put new Clause 17 on and Notice Paper in a very definite form, a form which is acceptable to the building societies. Computerisation will be no obstruction to this. Most building societies are now on or about to go on to computer, but the change in data at a specific time would not create any difficulty in carrying out this operation. In fact, new Clause 1 would be far more difficult to carry out by the building societies than would our proposals in new Clause 17.
726 I suppose that I ought to declare an interest, Mr. Speaker, but I am at the moment wearing my building society tie so perhaps the Minister will recognise that I am a director of a building society and am speaking with some knowledge of how a building society can and will operate. In this respect, I could not agree with my hon. Friend the Member for North Fylde (Mr. Clegg), who suggested a regional variation. I believe that we should find it rather too difficult to operate that, but I am sure that there will be no insuperable difficulty in working the fixed period of option. It needs careful administration, but it could be worked.
In new Clause 18 we are suggesting, by a simple little Amendment—one can realise what it is about only by the title of the Clause—the unlinking of the 100 per cent. mortgage from the option scheme. As one of my hon. Friends, I believe the Member for Poole (Mr. Murton), has said, there is this distinction between the option scheme and the 100 per cent. mortgage. The option scheme is of advantage to the person who has little income. The 100 per cent. mortgage is of advantage to the person who has little capital. Very frequently they are not the same person, so this really should be unlinked. Section 30 of the Housing Subsidies Act, 1967, does not mention 100 per cent. mortgages at all. It merely speaks of mortgages of a greater amount than would normally be granted.
As matters are operating at the moment I want to pay a very sincere tribute to the insurance companies who are issuing the mortgage guarantee policies. These are operating extremely well up to 95 per cent. For a comparatively small premium the insurance company guarantees the advance above 75 per cent. so that building societies can advance 95 per cent. and feel that their investors' money is guaranteed for that 20 per cent. between 75 and 95 per cent. By this great help by the insurance companies over the past year or two literally many thousands of young married couples have been able to get houses where they would not have been able to do so otherwise. I pay that tribute to the insurance companies for their assistance with those mortgage guarantee policies.
But this is no credit to the Government, because this has been done quite outside 727 Section 30 of the Housing Subsidies Act, 1967. It could have gone up to 100 per cent. had that section been unlinked from option mortgages; and in certain cases there are borrowers who are prohibited from buying their houses by that small 5 per cent. of deposit, because of their heavy expenses in other fields like furnishing the house, moving, and so on.
I am not one of those who believe that the default in mortgages increases if there is an advance of 95 or 100 per cent.; and again I speak from experience of studying the defaults week by week in a building society. I can assure the House that only very infrequently does a 95 per cent. borrower default. Practically nine out of 10 of the defaulters on any building society list are those who wish to take advantage of inflation and remortgage their house. Strangely enough, they are the people who default, but it does not follow that if a building society lends 95 or 100 per cent., provided that it is within the person's means to pay the instalments, one gets defaulting in that way.
A person is not irresponsible just because he has borrowed all the money to buy his house. In some cases it makes people far more responsible. It makes them feel a responsibility towards the person who has enabled them to get into their house in that way. But with the unlinking of the 100 per cent. mortgage from the option mortgage there will be quite a number of cases where the difference between the 95 per cent. which the insurance companies and building societies are operating at the moment and the 100 per cent. would be of very great benefit. This is not a political matter. It is not of any very great expense to the Government. I do not believe that this would cost the Exchequer one penny. It would be very extraordinary if the Government had to come to the assistance of the insurance companies to make this operate. This is a simple Amendment which ought to be accepted at once.
This afternoon the Opposition have been proved right in what we said about the option mortgage scheme—that it was failing, that it was flagging, that it did not have all the popularity it ought to have. We are gratified that the Government have seen that our arguments were 728 correct, but we are sorry that they have not gone all the way to make the scheme popular. We ask them to believe not only that we were right in saying that the scheme was flagging, but that we were right in saying how it could be put right. We are being generous to the Government this afternoon: we are offering them a grain of popularity, and probably a bit more than a grain, if only they will accept the Amendments and our new Clauses.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)The hon. Member for Ormskirk (Sir D. Glover), with that great penetration he has of being able to size up a debate without patiently listening to every word of it, came into the Chamber and said that it had been an extremely depressing debate. I think that that was because there had been a succession of speeches from Opposition Members all bewailing their coldness because we had stolen their clothes, all saying that what we were doing was most important and necessary, and yet, at the same time, trying to think of Amendments upon which, with good consciences, they could have Divisions.
The scheme has not been a failure. The take-up rate has remained fairly steady at 10 per cent. Nor has the rising rate of interest substantially diminished the amount of the loans. The amount of money going into the building societies has increased and the number of applications for mortgages has increased. It is too early to say whether this is a permanent change, and I do not want to be complacent about it but there is no doubt that that is the present situation.
Hon. Members on both sides of the House have fairly said that those who will be hit most are those with moderate incomes, those who do not get the advantage of tax relief. This is all common ground. The Government have, therefore, taken this chance as quickly as they could to introduce the Clause. I sympathise with those who say that it is a large amount to swallow on Report, but it would have been irresponsible to do what the hon. Member for Worcester (Mr. Peter Walker) suggested and produce an ad hoc Bill, because the time devoted to such a Bill could well have meant that it could not be brought into operation.
§ Mr. Peter WalkerWhat stopped the Government from bringing in a Bill in, say, February or March, so that it would have been on the Statute Book by now?
§ Mr. MacCollAs the hon. Gentleman well knows, parliamentary time is short and we have to make sure that we use it to the best effect. This opportunity was available to us. We have not tried to duck it, as was hinted. We have wanted to make this change and we took this opportunity to do so.
The form it has taken is that it is an authority to my right hon. Friend to lay an Order—a series of Orders, because this will not be a once-for-all operation—adjusting the 2 per cent. to the changes in the rates of interest. It takes that form because it would be unwise in a Bill to make a completely firm provision and to try to anticipate movements of rates of interest. The sensible way is to take powers, and that is what we are doing.
My right hon. Friend cannot anticipate when he will get these powers, because he does not know when the Bill will be passed, but as soon as he has them he intends to finish negotiations with the building societies, finish his consultations, get the Order into suitable form and lay it before the House. That will be the commitment of expenditure. There is nothing in the new Clause as such which causes expenditure. The expenditure will come when the Order is made.
I have been asked about the cost. I make my purely personal estimate, for we do not know what is to come, but in the first year the cost will be about £1 million and in a full year about £2½ million to £3 million. But that depends on rates of interest and on tax changes and we cannot be certain about those.
It was suggested that we should have a fixed date. This was a weakness of the 1967 legislation, for once it had been laid down in a Statute the date could not be altered. I do not believe that hon. Members opposite pressed us to do so at the time, but it might have been as well to put these powers outside that Statute. It is desirable to have flexibility to prepare Orders and my right hon. Friend intends to do so as quickly as he can—this is not in any sense a delaying action. There would be no point in using the date of the end of the year. It 730 is possible that we shall not have the Bill by then, although I hope that hon. Members opposite will co-operate to ensure that we do.
§ Mr. Graham PageAssuming that the parliamentary timetable will allow the Bill to receive the Royal Assent by the end of July, will the Parliamentary Secretary give us an assurance that the Order will be ready for publication on the date of the Royal Assent? This would not be unusual; it has been done with many Bills.
§ Mr. MacCollThe difficulty about doing that is the importance of consulting the lending agencies. There is no point in producing an Order which they regard as unworkable and not meeting their needs. The whole point of doing it this way is that we shall be able to discuss it with them and produce something which meets their difficulties. My right hon. Friend would hope to have it as soon as possible, but it would be unwise of him to bind himself to any date.
The Amendment to subsection (4)(c) of the new Clause suggests that we are trying to juggle with interest rates. That is not the point. We are trying to make certain that we know what the representative rate of interest is so that we can consider the current rates of interest being negotiated by lending agencies and not only the rate of interest which may go up. We do not want to have a two-tier system with one rate for the option mortgagor and one for mortgagors with ordinary contracts with building societies. This is a permissive provision and it may not be necessary to implement it, but it is a valuable and desirable safeguard of public money.
7.0 p.m.
The difficulty with new Clause 17 is that though we would welcome an extension of opting in and opting out—no point of great principle is involved—the lending agencies have said, and continue to say, that they find it impossible to do this without a great increase in costs. The building societies, which get criticised on account of administrative costs, are understandably rather sensitive about this matter.
The draft of the 1967 Measure was absolutely rigid, and we tried, as we had 731 undertaken, between the Committee stage and Report, to do something about it. All we were able to achieve was a hardship Clause which enabled someone suffering hardship to opt into the scheme, but not to opt out of it. We will certainly see whether there is a way round this difficulty. My right hon. Friend has not just looked at the matter in order to get an excuse. We want a solution, and we will keep in touch with the building societies.
Many hon. Members have told us about their professional experience. The hon. Member for Orpington (Mr. Lubbock) is a distinguished engineer, but I sometimes find to my own discomfort that I am more attracted to his political opinions that I am to his technical knowledge. I thought that he was wrong in his remarks about computers. In my experience of them as a consumer, I find that they tend to be extremely rigid. Once they have a programme, they are very reluctant to change it. I doubt whether this picture of being able to dash the figures off on the computer altogether fits the facts, or will resolve the problem. However, if there is a possibility of getting it done in that way, my right hon. Friend will be very glad to consider it.
§ Mr. Julius Silverman (Birmingham, Aston)Can my hon. Friend give any estimate of the number of transfers from option mortgages to ordinary mortgages or from ordinary mortgages to option mortgages that are likely to take place?
§ Mr. MacCollIt would be very difficult to do so. The numbers will obviously depend on tax changes and changes in earnings. It would be a difficult projection to make, but we will explore the possibility in our discussions.
I do not want to sound indifferent to the seriousness of the problem, but hon. Members have talked a great deal about the need to encourage the young mortgagor and the importance, therefore, of his having an option to leave the scheme when his circumstances improve. It is interesting to see how short the average period of a mortgage is. The average mortage lasts for about 10 or 15 years, and not for the full 25.
§ Mr. CleggThe Parliamentary Secretary is quite right in saying that the 732 average period is short. That is so in certain areas, but in the North people tend to stay in houses for much longer. In the South, there is more movement.
§ Mr. MacCollThey are a restless lot in the South, I know.
The real point is that this option is very valuable for the first house purchase. It often happens that when people find themselves established in their careers and in the district in which they will stay for the rest of their lives they want to move to another house, but have the advantage of not needing the option in that case. This is not as serious a problem as the debate might have implied.
There is no difference between us on the subject of the guarantee. We ought to concentrate our resources on the people who have the lowest means. The option mortgage is a test of whether people need help, and it is those people whom one wants to assist with the guarantee. I believe that this view is taken by the insurance organisations. People who do not get any benefit from the mortgage are not so much in need of the guarantee. They can negotiate their own arrangements with an insurance agency.
§ Mr. Graham PageWill the Parliamentary Secretary bear in mind the family of which the bread-winner is aged about 30 or 35 years? He has got to the peak of his work and has a steady wage from then on, but he has not been able to save any capital to put down as a deposit. He gets no help here at all. Young people are thought of, and so are the old people, the pensioners, but the man of about 30 or 35 who has not been able to save is the man whom we should like to help with the 100 per cent. mortgage.
§ Mr. MacCollThat is an important case, but I do not think that it is as essential to help that person as it is the option mortgagor.
There is no question here of the Opposition being able to say that they wanted to do this, but that we have "pinched" their clothes. It is something which the last Government categorically and explicitly refused to do. Hon. Members have been reminiscing—the hon. Member for Crosby did not do so, although he was wearing his old building society tie 733 —about the dear old days of the Standing Committee on the earlier Measure, but I remind them of how they excelled themselves in mocking us for saying then exactly what they are saying now.
They said "This is just a Socialist stunt. They will not do it. They will get power to make the Order, but will never actually make the Order." That is just what they have been saying today—that we have no intention of making the Order. But we made that Order at the earliest possible date. That is an indication of my right hon. Friend's sincerity, and of his intention to exercise
§ as quickly as he can the powers given by the new Clause.
§ Question put and agreed to.
§ Clause read a Second time.
§
Amendment proposed to the proposed Clause: In line 4, leave out 'May' and insert:
'shall before 31st December 1969.'—[Mr. Peter Walker.]
§ Question put, That the Amendment be made:—
§ The House divided: Ayes 77, Noes 142.
735| Division No. 230.] | AYES | [7.9 p.m. |
| Allason, James (Hemel Hempstead) | Goodhart, Philip | Nott, John |
| Astor, John | Goodhew, Victor | Osborn, John (Hallam) |
| Atkins, Humphrey (M't'n & M'd'n) | Grieve, Percy | Page, Graham (Crosby) |
| Bessell, Peter | Griffiths, Eldon (Bury St. Edmunds) | Pardoe, John |
| Biggs-Davison, John | Gurden, Harold | Pym, Francis |
| Boardman, Tom (Leicester, S. W.) | Hall, John (Wycombe) | Renton, Rt. Hn. Sir David |
| Body, Richard | Hawkins, Paul | Ridley, Hn. Nicholas |
| Boyd-Carpenter, Rt. Hn. John | Heald, Rt. Hn. Sir Lionel | Rossi, Hugh (Hornsey) |
| Brewis, John | Hill, J. E. B. | Russell, Sir Ronald |
| Brinton, Sir Tatton | Holland, Philip | Sharples, Richard |
| Brown, Sir Edward (Bath) | Hunt, John | Silvester, Frederick |
| Bullus, Sir Eric | Hutchison, Michael Clark | Taylor, Sir Charles (Eastbourne) |
| Campbell, B. (Oldham, W.) | Irvine, Bryant Godman (Rye) | Taylor, Frank (Moss Side) |
| Carlisle, Mark | Kaberry, Sir Donald | Thatcher, Mrs. Margaret |
| Carr, Rt. Hn. Robert | Kershaw, Anthony | Vaughan-Morgan, Rt. Hn. Sir John |
| Clegg, Walter | Kirk, Peter | Walker, Peter (Worcester) |
| Cordle, John | Knight, Mrs. Jill | Walker-Smith, Rt. Hn. Sir Derek |
| Costain, A. P. | Legge-Bourke, Sir Harry | Walters, Dennis |
| Crowder, F. P. | Lubbock, Eric | Weatherill, Bernard |
| Davidson, James (Aberdeenshire, W.) | McNair-Wilson, Michael | Whitelaw, Rt. Hn. William |
| Dean, Paul | McNair-Wilson, Patrick (New Forest) | Wiggin, A. W. |
| Doughty, Charles | Maddan, Martin | Wilson, Geoffrey (Truro) |
| Drayson, G. B. | Maxwell-Hyslop, R. J. | Worsley, Marcus |
| Errington, Sir Eric | Maydon, Lt.-Cmdr. S. L. C. | |
| Eyre, Reginald | Mills, Stratton (Belfast, N.) | TELLERS FOR THE AYES: |
| Fortescue, Tim | Morgan-Giles, Rear-Adm. | Mr. Anthony Grant and |
| Glover, Sir Douglas | Murton, Oscar | Mr. Timothy Kitson. |
| NOES | ||
| Allaun, Frank (Salford, E.) | Dobson, Ray | Hattersley, Roy |
| Alldritt, Walter | Dunn, James A. | Hooley, Frank |
| Anderson, Donald | Dunwoody, Mrs. Gwyneth (Exeter) | Houghton, Rt. Hn. Douglas |
| Archer, Peter | Dunwoody, Dr. John (F'th & C'b'e) | Howie, W. |
| Atkinson, Norman (Tottenham) | Eadie, Alex | Hoy, James |
| Bidwell, Sydney | Edelman, Maurice | Huckfield, Leslie |
| Bishop, E. S. | Edwards, Robert (Bilston) | Hughes, Hector (Aberdeen, N.) |
| Blackburn, F. | Edwards, William (Merioneth) | Hunter, Adam |
| Blenkinsop, Arthur | Ellis, John | Hynd, John |
| Booth, Albert | Evans, Ioan L. (Birm'h'm, Yardley) | Jackson, Peter M. (High Peak) |
| Boston, Terence | Finch, Harold | Janner, Sir Barnett |
| Bottomley, Rt. Hn. Arthur | Fitch, Alan (Wigan) | Jay, Rt. Hn. Douglas |
| Boyden, James | Fitt, Gerard (Belfast, W.) | Johnson, Carol (Lewisham, S.) |
| Broughton, Dr. A. D. D. | Fletcher, Rt. Hn. Sir Eric (Islington, E.) | Johnson, James (K'ston-on-Hull, W). |
| Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) | ||
| Brown, R. w. (Shoreditch & F'bury) | Fowler, Gerry | Kelley, Richard |
| Buchan, Norman | Fraser, John (Norwood) | Kerr, Mrs. Anne (R'ter & Chatham) |
| Butler, Herbert (Hackney, C.) | Freeson, Reginald | Kerr, Russell (Feltham) |
| Butler, Mrs. Joyce (Wood Green) | Gardner, Tony | Lawson, George |
| Carmichael, Neil | Gray, Dr. Hugh (Yarmouth) | Leadbitter, Ted |
| Carter-Jones, Lewis | Greenwood, Rt. Hn. Anthony | Lee, John (Reading) |
| Corbet, Mrs. Freda | Gregory, Arnold | Lestor, Miss Joan |
| Crawshaw, Richard | Grey, Charles (Durham) | Lewis, Arthur (W. Ham, N.) |
| Davies, Ednyfed Hudson (Conway) | Griffiths, Eddie (Brightside) | Lyons, Edward (Bradford, E.) |
| Davies, Dr. Ernest (Stratford) | Hamilton, William Fife, W.) | Mabon, Dr. J. Dickson |
| de Freitas, Rt. Hn. Sir Geoffrey | Hannan, William | McBride, Neil |
| Delargy, Hugh | Harper, Joseph | McCann, John |
| Dempsey, James | Harrison, Walter (Wakefield) | MacColl, James |
| Macdonald, A. H. | Moyle, Roland | Rowlands, E. |
| McKay, Mrs. Margaret | Murray, Albert | Ryan, John |
| Mackintosh, John P. | Newens, Stan | Shore, Rt. Hn. Peter (Stepney) |
| Maclennan, Robert | Noel-Baker, Rt. Hn. Philip | Silkin, Rt. Hn. S. C. (Dulwich) |
| McMillan, Tom (Glasgow, C.) | Norwood, Christopher | Silverman, Julius |
| McNamara, J. Kevin | Oakes, Gordon | Skeffington, Arthur |
| MacPherson, Malcolm | Orbach, Maurice | Steele, Thomas (Dunbartonshire, W.) |
| Mallalieu, E. L. (Brigg) | Oswald, Thomas | Thomas, Rt. Hn. George |
| Mallalieu, J. P. W. (Huddersfield, E.) | Owen, Will (Morpeth) | Tinn, James |
| Manuel, Archie | Palmer, Arthur | Tuck, Raphael |
| Marks, Kenneth | Pannell, Rt. Hn. Charles | Wallace, George |
| Marsh, Rt. Hn. Richard | Parkyn, Brian (Bedford) | Weitzman, David |
| Mason, Rt. Hn. Roy | Pavitt, Laurence | Wellbeloved, James |
| Mayhew, Christopher | Peart, Rt. Hn. Fred | Wells, William (Walsall, N.) |
| Mellish, Rt. Hn. Robert | Perry, George H. (Nottingham, S.) | Witlock, William |
| Mendelson, John | Prentice, Rt. Hn. R. E. | Williams, Alan Lee (Hornchurch) |
| Mikardo, Ian | Price, Christopher (Perry Barr) | Winnick, David |
| Millan, Bruce | Robertson, John (Paisley) | |
| Molloy, William | Robinson, Rt. Hn. Kenneth (St. P'c'as) | TELLERS FOR THE NOES: |
| Morgan, Elyttan (Cardiganshire) | Rodgers, William (Stockton) | Dr. M. S. Miller and |
| Morris, Alfred (Wythenshawe) | Rogers, George (Kensington, N.) | Mr. Ernest G. Perry. |
| Morris, Charles R. (Openshaw) |
§ Amendment proposed to the proposed Clause: In line 17, leave out paragraph (c).—[Mr. Peter Walker.]
736§ Question put, That the Amendment be made:
§ The House divided: Ayes 77, Noes 146.
737| Division No. 231.] | AYES | [7.17 p.m. |
| Allason, James (Hemel Hempstead) | Grant, Anthony | Nott, John |
| Astor, John | Grieve, Percy | Osborn, John (Hallam) |
| Biggs-Davison, John | Griffiths, Eldon (Bury St. Edmunds) | Page, Graham (Crosby) |
| Boardman, Tom (Leicester, S. W.) | Gurden, Harold | Pym, Francis |
| Body, Richard | Hall, John (Wycombe) | Renton, Rt. Hn. Sir David |
| Boyd-Carpenter, Rt. Hn. John | Hawkins, Paul | Ridley, Hn. Nicholas |
| Brewis, John | Heald, Rt. Hn. Sir Lionel | Rossi, Hugh (Hornsey) |
| Brinton, Sir Tatton | Hill, J. E. B. | Russell, Sir Ronald |
| Brown, Sir Edward (Bath) | Holland, Philip | Sharples, Richard |
| Bullus, Sir Eric | Hornby, Richard | Silvester, Frederick |
| Campbell, B. (Oldham, W.) | Hunt, John | Taylor, Sir Charles (Eastbourne) |
| Carlisle, Mark | Hutchison, Michael Clark | Taylor, Frank (Moss Side) |
| Carr, Rt. Hn. Robert | Irvine, Bryant Godman (Rye) | Thatcher, Mrs. Margaret |
| Clegg, Walter | Kaberry, Sir Donald | Turton, Rt. Hn. R. H. |
| Cordle John | Kershaw, Anthony | Vaughan-Morgan, Rt. Hn. Sir John |
| Costain, A. P. | Kirk, Peter | Walker, Peter (Worcester) |
| Crowder, F. P. | Kitson, Timothy | Walker-Smith, Rt. Hn. Sir Derek |
| Dean, Paul | Knight, Mrs. Jill | Walters, Dennis |
| Dodds-Parker, Douglas | Legge-Bourke, Sir Harry | Whitelaw, Rt. Hn. William |
| Doughty, Charles | McNair-Wilson, Michael | Wiggin, A. W. |
| Drayson, G. B. | McNair-Wilson, Patrick (New Forest) | Wilson, Geoffrey (Truro) |
| Errington, Sir Eric | Maddan, Martin | Worsley, Marcus |
| Eyre, Reginald | Maxwell-Hyslop R. J. | Wright, Esmond |
| Fortescue, Tim | Maydon, Lt.-Cmdr, S. L. C. | |
| Glover, Sir Douglas | Mills, Stratton (Belfast, N.) | TELLERS FOR THE AYES: |
| Goodhart, Philip | Morgan-Giles, Rear-Adm. | Mr. Bernard Weatherill and |
| Goodhew, Victor | Morton, Oscar | Mr. Humphrey Atkins. |
| NOES | ||
| Allaun, Frank (Salford E.) | Corbet, Mrs. Freda | Fowler, Gerry |
| Alldritt, Walter | Crawshaw, Richard | Fraser, John (Norwood) |
| Anderson, Donald | Davidson, James (Aberdeenshire, W.) | Freeson, Reginald |
| Archer, Peter | Davies, Dr. Ernest (Stretford) | Gardner, Tony |
| Atkinson, Norman (Tottenham) | de Freitas, Rt. Hn. Sir Geoffrey | Gray, Dr. Hugh (Yarmouth) |
| Bessell, Peter | Delargy, Hugh | Greenwood, Rt. Hn. Anthony |
| Bidwell, Sydney | Dempsey, James | Gregory, Arnold |
| Bishop, E. S. | Dobson, Ray | Crey, Charles (Durham) |
| Blackburn, F. | Dunn, James A. | Griffiths, Eddie (Brightside) |
| Blenkinsop, Arthur | Dunwoody, Mrs. Gwyneth (Exeter) | Hamilton, William (Fife, W.) |
| Booth, Albert | Dunwoody, Dr. John (F'th & C'b'e) | Harman, William |
| Boston, Terence | Eadie, Alex | Harper, Joseph |
| Bottomley, Rt. Hn. John | Edelman, Maurice | Harrison, Walter (Wakefield) |
| Boy den, James | Edwards, Robert (Bilston) | Hatterstey, Roy |
| Broughton, Dr. A. D. D. | Edwards, William (Merioneth) | Hooley, Frank |
| Brown, R. W. (Shoreditch & F'bury) | Ellis, John | Houghton, Rt. Hn. Douglas |
| Buchan, Norman | Evans, Ioan L. (Birm'h'm, Yardley) | Howie, W. |
| Butler, Herbert (Hackney, C.) | Finch, Harold | Hoy, James |
| Butler, Mrs. Joyce (Wood Green) | Fitch, Alan (Wigan) | Huckfield, Leslie |
| Carmichael, Neil | Fitt, Gerard (Belfast, W.) | Hughes, Hector (Aberdeen, N.) |
| Cartor-Jones, Lewis | Fletcher, Rt. Hn. Sir Eric (Islington, E.) | Hunter, Adam |
| Hynd, John | Mallalieu, E. L. (Brigg) | Pavitt, Laurence |
| Jackson, Peter M. (High Peak) | Mallalieu, J. P. W. (Huddersfield, E.) | Peart, Rt. Hn. Fred |
| Janner, Sir Barnett | Manuel, Archie | Perry, George H. (Nottingham, S.) |
| Jay, Rt. Hn. Douglas | Marks, Kenneth | Prentice, Rt. Hn. R. E. |
| Johnson, Carol (Lewisham, S.) | Marquand, David | Price, Christopher (Perry Barr) |
| Johnson, James (K'ston-on-Hull, W.) | Marsh, Rt. Hn. Richard | Robertson John (Paisley) |
| Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) | Mason, Rt. Hn. Roy | Robinson, Rt. Hn. Kenneth (St. P'c'as) |
| Kelley, Richard | Mayhew, Christopher | Rodgers, William (Stockton) |
| Kerr, Mrs. Anne (R'ter & Chatham) | Mellish, Rt. Hn. Robert | Rogers, George (Kensington, N.) |
| Kerr, Russell (Feltham) | Mendelson, John | Rowlands, E. |
| Lawson, George | Mikardo, Ian | Ryan, John |
| Leadbitter, Ted | Millan, Bruce | Shore, Rt. Hn. Peter (Stepney) |
| Lee, John (Reading) | Mottoy, William | Silkin, Hn. S. C. (Dulwich) |
| Lestor, Mist Joan | Morgan, Elystan (Cardiganshire) | Silverman, Julius |
| Lewis, Arthur (W. Ham, N.) | Morris, Alfred (Wythenshawe) | Skeffington, Arthur |
| Lubbock, Eric | Morris, Charles R. (Openshaw) | Steele, Thomas (Dunbartonshire, W.) |
| Lyon, Alexander W. (York) | Moyle, Roland | Thomas, Rt. Hn. George |
| Lyons, Edward (Bradford, E.) | Murray, Albert | Tinn, James |
| Mabon, Dr. J. Dickson | Newens, Stan | Tuck, Raphael |
| McBride, Neil | Noel-Baker, Rt. Hn. Philip | Wallace, George |
| McCann, John | Norwood, Christopher | Weitzman, David |
| MacColl, James | Orbach, Maurice | Wells, William (Walsall, N.) |
| Macdorcald, A. H. | Oswald, Thomas | Whitlock, William |
| McKay, Mrs. Margaret | Owen, Will (Morpeth) | Williams, Alan Lee (Hornchurch) |
| Mackintosh, John P. | Page, Derek (King's Lynn) | Winnick, David |
| Maclennan, Robert | Palmer, Arthur | |
| McMillan, Tom (Glasgow, C.) | Pannell, Rt. Hn. Charles | TELLERS FOR THE NOES: |
| McNamara, J. Kevin | Pardoe, John | Mr. Ernest G. Perry and |
| MacPherson, Malcolm | Parkyn, Brian (Bedford) | Dr. M. S. Miller. |
§ Clause added to the Bill.