HC Deb 23 July 1975 vol 896 cc533-6
8. Mr. Michael Morris

asked the Secretary of State for the Environment if he is satisfied with the effectiveness of his agreement with the building societies on making up his cut-back on local authority mortgages.

Mr Crosland

Yes, Sir. Good progress is being made with the assessment of needs and priorities, and we shall shortly begin discussions with local representatives nominated by the Building Societies' Association, as a result of which individual local authorities will be put in touch with building societies.

Mr. Morris

Would it not have been preferable to undertake an assessment of the needs and priorities before taking a decision? Is the Secretary of State aware that there are thousands of young couples who want to purchase old property whose primary source of mortgage finance was the local authority, and the situation today is that those young couples have nowhere to go for the money?

Mr. Crosland

The hon. Member is repeating what is becoming a very popular and common fallacy—that local authorities and building societies operate in totally different areas. It becomes clearer and clearer from our investigations that there is a substantial overlap between the types of property on which a local authority will lend and those on which a building society will lend. In spite of our switch of£100 million away from local authority mortgages, we have left the figure for local authority lending this year at a level which is about equal to the average figure for the four or five years preceding 1973–74, which was the period of the acute building society mortgage famine.

Mrs. Ann Taylor

When considering this problem will my right hon. Friend pay special attention to areas such as Bolton and the North-West, where there is a great amount of older property? Despite what he says, many building societies will not lend on that type of property. Therefore, many young couples find it impossible to buy a house because of the present restriction on lending. Will my right hon. Friend pay special attention to areas such as the North-West, where this problem is so severe?

Mr. Crosland

I absolutely take my hon. Friend's point that there are areas where, because of the age of the property, the problem is more severe than it is elsewhere. I strongly urge my hon. Friend—she may have already done so—to make sure that her local authority has been in touch with the regional officers of my Department to make clear the needs and priorities. I hope that the building societies will go some way to satisfy them. This is an important point, which is not generally understood. The area of overlap between local authority and building society lending is much greater than is sometimes supposed. People speak as though all local authority lending were on properties which building societies would not touch. That is not the case.

Sir D. Walker-Smith

Does the Minister adhere to the pessimistic view which he took on 11th June, as can be seen from the Official Report at col. 406, as to the unlikelihood of his being able to help those 50 or so local authorities whose mortgage rates are over 11 per cent.? Is he able to say whether the Government may be able to find some way of helping these people and the hard-pressed mortgagors?

Mr. Crosland

I regret that, unlike my right hon. Friend the Prime Minister, I do not have a total recall of all my speeches over the past 25 years or so, but I recall the gist of what I said on that occasion.

I regret that I have not found a solution to this problem which would not involve additional Government expenditure in this direction, which would have to take place at the cost of some other, and in my view more crucial, part of the housing programme.

Mr. Stephen Ross

Does the Minister consider that building societies, which are at present reluctant to do this, could take over some of these mortgages under which people are paying over 14 per cent? The building societies should be prepared to take over some of those at the 11 per cent. rate.

Mr. Crosland

Any local authority which, as a result of the switch of£100 million, will be engaged in conversations first with our regional officers and later with the building societies, may draw the hon. Gentleman's suggestion to the attention of the building societies with which it is negotiating.

Mr. Tomlinson

Is the Minister aware that those of my constituents who have consulted me about this cut-back of£100 million will be faced with homelessness or other consequences at far greater cost to public funds? Does he realise that his action will hit those in our community who can least afford to be hit?

Mr. Crosland

There is nothing I enjoy less than making the cut of£100 million in local authority lending for house purchase. I had to decide whether it was right to do that, so as to increase by£100 million the amount of money available for council house improvements, and municipalisation. In terms of priorities, I am sure that this is right, at a time when building societies are comparatively flush with funds, even though they will not take up every hard case of the sort to which my hon. Friend referred.

Mr. Raison

I beg the Secretary of State to think again about this matter, to listen to the representations he has received from both sides of the House, and to recognise that it was a mistake to switch the money from these mortgages to municipalisation.

Mr. Crosland

I think that if the huge majority of my hon. Friends who naturally and rightly dislike any cut in local authority lending were faced with a choice between priorities, they would back the choice which I made.