HC Deb 07 April 1976 vol 909 cc405-7
5. Mr. Terry Walker

asked the Secretary of State for the Environment what discussions he is having with the Building Societies Association.

Mr. Crosland

My Department maintains regular contacts with the Building Societies Association covering all matters affecting the housing market.

Mr. Walker

Is my right hon. Friend aware that many owner-occupiers are hoping that this week the Building Societies Association will decide to reduce the mortgage interest rate? Has he discussed this matter with the BSA, and is it aware of the present position?

Mr. Crosland

As my hon. Friend implied, the Council of the Building Societies Association is meeting on Friday this week. We have been keeping in close touch with the BSA on this crucial issue. I have no doubt that when it meets it will bear closely in mind the views exchanged in discussions, though at the end of the day the decision is for the BSA.

Mr. Michael Latham

What matters more to the Government now—reducing the mortgage rate or increasing private housing output?

Mr. Crosland

There is no simple alternative. The hon. Gentleman must know, having been involved in the industry before coming to this House, that there are no simple alternatives to choose between, such as the two that he put forward.

Mr. Jay

Is it the Government's wish that the interest rate on mortgage loans should now be reduced?

Mr. Crosland

The Government have made their views known to the Building Societies Association. That was done in the course of the confidential discussions that we had within the joint advisory council. If my hon. Friend will forgive me, I prefer to leave the matter there.

Mr. Welsh

Is the right hon. Gentleman aware of the relatively low level of building society mortgage lending in Scotland, compared with deposits and repayments? What steps is he taking to encourage building societies to lend specifically in Scotland, especially to low income groups?

Mr. Crosland

That question should be addressed to my right hon. Friend the Secretary of State for Scotland. I am not aware of the ratio of building societies in Scotland as compared with England. It is bound to be different, because the proportion of owner-occupiers in Scotland is lower than in England or Wales.

Mr. Frank Allaun

Are not the building societies bursting with funds today? Will the Secretary of State ask the societies to lend 10 per cent. of their annual advances—now totalling £6 billion a year—to the local authorities so that they can grant mortgages to those needing them? Could not that be done at 10½ per cent., particularly as the present £100 million scheme is a flop and as, on average, only one in eight applications by the local authorities is being granted by the societies?

Mr. Crosland

I think that the scheme is going better than that. On the primary point mentioned by my hon. Friend, on which he has introduced a Bill, he will know from past exchanges that I have great sympathy with what he seeks to achieve in this matter. I made it clear at Question Time three weeks ago that the question of the building societies lending at the lower end of the market is now No. 1 priority in housing policy. As the House knows, the Building Societies Association and the local authority associations are in discussion on this matter. They have had three meetings on the subject already and are due to have another this month. I do not propose to take a new initiative until I know the results of that meeting. However, I assure my hon. Friend that I share his anxiety.

Mr. McCrindle

There is no doubt a very strong case for reducing the mortgage lending rate, but does not the Minister agree that all the predictions are that general interest rates will begin to rise again in the autumn? To that extent, would it not be better if he could recommend to the societies that any reduction should be restricted to ½ per cent., so that we shall not have the rate put down now only to have it put up again in the autumn?

Mr. Crosland

These are all interesting reflections and speculations, on which we may all have our own views, but on the question of what the Government have or have not said to the societies I am afraid that I must rest where I stood in previous replies.