HC Deb 26 October 1971 vol 823 cc1467-8
25. Mr. Golding

asked the Chancellor of the Exchequer whether he will introduce legislation to give him power to direct building societies to reduce their rate of interest.

36. Mr. Cockeram

asked the Chancellor of the Exchequer what discussions he has recently held with the Building Societies Association on the subject of lowering the rates charges on their mortgage loans; and if he will make a statement.

Mr. Patrick Jenkin

We have had no discussions recently with the Building Societies Association about building society interest rates. These rates are a matter for the societies concerned, not for the Government; they are not an appropriate subject for legislation.

Mr. Golding

Is the hon. Gentleman aware that many owner-occupiers believe that the recent reduction in mortgages was too little and too late and that the Government should intervene to take powers to control the building societies in the public interest?

Mr. Jenkin

All I can say is that I disagree with that view.

Mr. Cockeram

Would my hon. Friend not agree that the building societies' keenness to put up their rates when Bank Rate went up under the Socialist Government has not been matched by a similar enthusiasm to reduce their rates when Bank Rate has come down by 3 per cent. under the Conservative Government?

Mr. Jenkin

It is misleading to try to draw conclusions from the gap between the Bank Rate and the building society rates. Bank Rate is essentially a short-term rate, the rate at which the Bank of England will discount first-class bills, whereas the long-term rate must depend on the rate which the building societies and other borrowers have to pay fur long-term money.

Mr. McCrindle

Would my hon. Friend not agree that one of the quickest ways in which to dry up the present free flow of mortgage funds would be to take the step suggested by the hon. Member for Islington, East (Mr. John Grant)?

Mr. Jenkin

The building societies announced, when they announced the reduction of their lending rates from 8½ per cent. to 8 per cent., a reduction of ¼ per cent. in the rate which they pay on deposits. They remain confident that they will be able to attract sufficient money to finance their lending.