HC Deb 23 May 1972 vol 837 cc1206-8
10. Mr. Ashton

asked the Chancellor of the Exchequer whether he will now seek powers to control the rate of lending by building societies in view of the rise in house prices.

Mr. Patrick Jenkin

No, Sir.

Mr. Ashton

Is the hon. Gentleman aware that the building societies have condoned price increases of 22 per cent. on houses? Is it not time we had a cooling-off period in house price increases? Is he saying that he does not care about the small savers, pensioners and young couples trying to save for deposits with building societies? Why not step in and protect these people from inflation?

Mr. Jenkin

I remind the hon. Gentleman of what we have done through the ending of mortgage stamp duty last year, taking 96 per cent. of house purchases out of stamp duty this year, the Lord Chancellor's announcement of the ending of scale fees of solicitors for conveyancing, and the wide range of measures announced on 27th April by my right hon. Friend the Secretary of State for the Environment.

Mr. McCrindle

Does not my hon. Friend recall that, when there was a mortgage famine during the Labour Government's term of office, there was no appreciable drop in the price of houses? Is not the only solution to the situation to which the hon. Member for Bassetlaw (Mr. Ashton) has drawn attention a combination of consumer resistance and the freeing of more land? Is not this exactly what the Government are doing? Would not the building societies be well advised to pay no attention to this attempt to interfere with their lending freedom? Is not the Question a cover for the Opposition's intention to nationalise the building societies as soon as possible and should not they be more forthcoming about their intentions?

Mr. Jenkin

I agree with a great deal of what my hon. Friend has said. I agree also with the answer given to the hon. Member for Bassetlaw yesterday by the chief general manager of the Halifax Building Society, at its meeting yesterday, which the hon. Member attended. Mr. Potter then told the hon. Gentleman that building societies have a duty to hold a balance, and the balance lies between encouraging the building of new houses, which means having adequate funds available if builders are not to lose confidence, and meeting reasonable demands on reasonable terms without adding to inflation by unduly stretching lending policies to chase house prices. I believe that the building societies should hold a balance, and that they are doing so.

Mr. Frank Allaun

Is the hon. Gentleman aware that many of us on this side do not want such powers of control because those on lower incomes would lose any chance at all of getting a house? Second, would he agree that the main cause of the increased pressure to buy is the Government's higher rents policy?

Mr. Jenkin

We have always recognised that, if fair rents were paid by those who can afford to pay them, they would realise the advantage of home ownership. That is why we give tax relief on mortgage interest for those who buy their own houses. I am grateful to the hon. Gentleman far the support expressed in the first part of his supplementary question. I am sure that it is right.

Mr. Nigel Fisher

Would my hon. Friend agree that tampering with the supply of credit will not resolve the problem, which can be met only by an increase in the number of new houses?

Mr. Jenkin

My hon. Friend is absolutely right. By extending the range of spending on which tax relief on interest can be allowed, we are, as my hon. Friend the Minister of State pointed out in our debate on this matter, widening the range where people may spend money that they have borrowed. This, too, will reduce pressure on land, which was the only area left by the Labour Government in their 1969 reform.

Mr. Joel Barnett

In reply to my hon. Friend the Member for Salford, East (Mr. Frank Allaun), was the hon. Gentleman implying that it is Government policy to increase rents to such an extent for council tenants that they will be deliberately forced to buying their own houses?

Mr. Jenkin

I said nothing of the sort. I shall repeat what I said, though if I do not state it in exactly the same words, I hope that the hon. Gentleman will forgive me. If tenants who can afford fair rents reach the point of paying them, they will realise that they would be better off if they bought their own houses.