§ 22. Mr. Walter Johnsonasked the Chancellor of the Exchequer if he will make it a condition of any loans to the building societies that they apply the whole of the loan to the assistance of house purchasers.
§ Mr. DellThe purpose of the loans is to help house purchasers, and the Government are satisfied that the terms under which they have been offered will result in a higher level of mortgage commitments and advances than would otherwise have been the case.
§ Mr. JohnsonIs my right hon. Friend aware that it is reliably reported that by reinvestment the building societies are making a profit each month of £150,000 from the Government's loans which were made for the purpose of keeping down interest rates? Is not that a gross misuse of public funds? What will right hon. Friend do about it?
§ Mr. DellMy hon. Friend should remember that the building societies have to hold some of their funds in authorised liquid assets and that their yield reflects short-term market conditions. He should also remember that the societies are nonprofit-making and that ultimately all their receipts will go to increase the societies' capacity to lend to house purchasers. As I said in my original answer, we are confident that the loans that have been offered will result in a higher level of mortgage commitments and advances than would otherwise have been the case.
§ Mr. DykesWill the right hon. Gentleman now enjoin the building societies to reduce their reserve ratios to provide more money for house building?
§ Mr. DellWe believe that the steps we have taken are enabling the societies to allow more money for house building without their taking action on their reserves.