HC Deb 05 May 1970 vol 801 cc176-7
7 and 8. Mr. Clegg

asked the Minister of Housing and Local Government (1) in how many housing authorities the rate of interest paid on loans for house-building is now in excess of 4 per cent.;

(2) what is now the effective average rate of interest paid by local authorities on loans for house-building.

65. Mr. Graham Page

asked the Minister of Housing and Local Government what recent representations he has received from local authorities as to the cost of borrowing for their housing programmes.

Mr. Freeson

I do not have the precise interest rates paid by individual authorities. A number of authorities have made representations to my right hon. Friend about the effect on their loan pool rates of financing old house-building debt at higher current rates of interest and of the representative rate of interest being fixed on the basis of the previous year's borrowing. This arrangement may, however, reduce this year's effective borrowing rate for new housing.

Mr. Clegg

Are the higher interest rates over 4 per cent. suffered mostly by those authorities with the worse housing problems?

Mr. Freeson

The hon. Gentleman is making a mistake which seems to be common on the other side of the House. The effective borrowing rate for any local authority building houses is 4 per cent. on completion of the dwellings.

Mr. Frank Allaun

Would my hon. Friend agree that the 4 per cent. loan to councils is the biggest boon for housing that this country has ever known? However, could he back-date it to the date of commencement of the building rather than completion, as this would make a considerable difference and prevent the excuses made by the Conservative Party that they are having to pay more than 4 per cent.?

Mr. Freeson

As my hon. Friend knows, this point has been put by him and one or two other hon. Members to my right hon. Friend a number of times recently. My right hon. Friend has considered it, but it is not felt that this is possible. I welcome my hon. Friend's point in underlining what I have just said. I hope that it will be accepted clearly on the other side of the House that this is the position—there is an effective 4 per cent. borrowing rate. Indeed, for some local authorities, for example, Birmingham, one of the major housing authorities in the country, this year the effective borrowing rate will be even less than 4 per cent.

Mr. Rossi

Would the hon. Gentleman not agree that to suggest that the local authorities are getting a subsidy of anything above 4 per cent. interest is misleading, because there is an ever-widening gap between the representative rate and the actual rate and that some authorities today are having to borrow at 6 and 7 per cent.?

Mr. Freeson

I am afraid that the hon. Gentleman is misleading the House and himself. He should not pay too much attention to the farrago of mistakes which his hon. Friend the Member for Crosby (Mr. Graham Page) published in The Times only last week in connection with this subject. The effective rate of interest is 4 per cent. The only gap in time is between one year and the immediately preceding year. As I have said, if interest rates vary in some cases, it can produce a lower rate; I have given one example this year.