Building Societies

HC Deb 29 November 1973 vol 865 cc564-6

4. Mr. Charles R. Morris

asked the Chancellor of the Exchequer if he will make further financial support available to building societies, in view of increases in lending rates ; and if he will make a statement.

Mr. Higgins

No, Sir.

Mr. Morris

Is the hon. Gentleman aware that thousands of owner-occupiers burdened by ever-increasing mortgage interest rates fail to understand why the Government were able to find £15 million to keep mortgage interest rates down to 10 per cent. but seem to remain completely impervious to the fact that interest rates are rising to 11–11½ per cent. and even higher? Will the non. Gentleman consider imposing a levy on bank profits to stabilise or lower mortgage interest payments?

Mr. Higgins

The £15 million temporary bridging grant was described as such right from the start. As my right hon. Friend the Chancellor has made clear, it has never been the Government's purpose to embark upon long-term subsidisation of mortgage rates. Other proposals have been put forward more recently. The second part of the hon. Gentleman's question raises much broader matters of economic management which are not directly related to the Question.

Mr. William Clark

Will my hon. Friend ask my right hon. Friend the Chancellor to consider changing the fiscal regulations affecting building societies so that pension funds may be encouraged to invest in building societies? The trouble is that the societies are borrowing short and lending long. If we could get them into the pension funds, they would borrow long and lend long.

Mr. Higgins

That raises much broader questions, but I take careful note of what my hon. Friend has said.

Mr. Loughlin

Is the hon. Gentleman aware that it is now authentically stated that one must earn £4,350 a year to afford a £10,000 mortgage? As £10,000 is quickly becoming the average price of a new house, does not the hon. Gentleman think that it would be better for the Government to give financial assistance to the building societies so that people could afford to buy houses?

Mr. Higgins

I do not agree with the hon. Gentleman's figures, but I cannot helpfully add to what I have already said.

Mr. Farr

Will my hon. Friend try to recognise that there is a great deal of hardship for home buyers? Will he consider trying in some way to insulate the rate for first-time home buyers from world lending rates?

Mr. Higgins

There is great difficulty in isolating mortgage rates from the effect of interest rates in general, including world interest rates. My right hon. Friend the Prime Minister referred to the position of first-time home buyers in a recent debate.

Mr. Joel Barnett

Does the hon. Gentleman think that the £15 million the Chancellor spent at the time of the council elections was money well invested? Does the Chancellor still intend to pursue the policy which the Prime Minister suggested, and which the building societies and young married couples do not like, of allowing those couples to pay less now and more just at the time when they want to pay less?

Mr. Higgins

I had some difficulty in following the hon. Gentleman's last sentence, and therefore I have difficulty in answering it precisely. It was made clear on what basis the original temporary bridging grant was made. There have been further discussions about measures which, I hope, will stabilise the flow of mortgage funds. My right hon. Friend the Prime Minister set out the proposal concerning first-time home buyers in a speech some time ago.