HC Deb 08 December 1976 vol 922 cc443-6
15. Mr. Frank Allaun

asked the Secretary of State for the Environment if he will make a statement on his discussions with the building societies on making mortgages available to would-be purchasers of older and poorer houses and of houses in districts at present barred by societies and to local authority sponsored applicants for mortgages; and if he will require societies to make 10 per cent. of their advances available to local authorities for the latter to grant mortgages to those unable to obtain society mortgages.

Mr. Shore

I have no power to instruct building societies to make funds available to local authorities. I hope to make an announcement in January about the arrangements for building societies' replacement of local authority lending in 1977–78.

Mr. Allaun

Will my right hon. Friend act on the latest building society statistics, which show that only 6 per cent. of mortgages are going on houses of a value of under £6,000? Is he aware that outside London many older but structurally sound houses are selling at under £3,000, and therefore that the building societies are overlooking the needs of the less affluent section of the population? Will he bring to bear greater influence on the societies?

Mr. Shore

I shall look further into the figure given by my hon. Friend, which is a low one. We have been trying to get the building societies to lend down-market. My information is that in the second quarter of 1975 they lent, on pre-1919 properties, about 17 per cent. of the total of loans. In the coresponding period this year that figure of 17 per cent. rose to 23 per cent. That indicates a move in the right direction, but I am not satisfied that the process has gone far enough.

Mr. Stephen Ross

Is the right hon. Gentleman aware that Liberal Members have considerable sympathy with the present predicament faced by the building societies? Did he read the comments made by the Chairman of the Building Societies Association that next month mortgage rates are likely to rise to over 13 per cent? Is that not unacceptable to many mortgagors? What does the right hon. Gentleman intend to do about the situation?

Mr. Shore

Rates are a matter primarily for the building societies. The dilemma which they and, indeed, all of us face is that if rates continue to be uncompetitive, any holding down will lead to a mortgage famine and to serious hardship for many people who wish to obtain mortgages. That will affect the house building programme. Against that situation, I appreciate the adverse demand effect and the effect on the cost of living of further increases, but judgment has to be made in the light of circumstances.

Mr. Heffer

Is my right hon. Friend aware that his answer to my hon. Friend the Member for Salford, East (Mr. Allaun) will be disappointing to many people, particularly in areas such as Merseyside, which contain many older but good houses that are up for sale? I could take my hon. Friend to many areas where people wish to buy those houses, which are being sold at reasonable prices, but where they cannot obtain mortgages. Will he have further discussions with the building societies so that people can be provided with homes to assist local authorities, such as Liverpool, to get people off housing registers?

Mr. Shore

My hon. Friend, and, indeed, all Labour Members, want to see more money being provided down-market to help poorer people or those on lower incomes to buy their houses, particularly in inner city areas. We shall try to do what we can in this process. I promise the House that I shall make a statement on these matters, because I shall be discussing these problems with the building societies in January.

Mr. Rossi

Does the right hon. Gentleman agree that to bring pressure on the building societies to depart from their traditional policy of not lending to people more than they can afford to repay, or not to lend on properties that are likely to fall in value, would put at risk many small depositors in the building societies, reduce confidence, and possibly dry up the inflow of money? Would the Government not be far better served by implementing the promises which they made to the country in two consecutive General Elections, namely, to make more money available by local authority loans at the lower end of the market?

Mr. Shore

We note the cavalier way in which the hon. Gentleman approaches the subject of public expenditure. We shall try to cost his programme for local authority lending on the scale which he regards as right. On the hon. Gentleman's main point, he is far more traditionalist than the traditional building societies. I am glad to say that the building societies do not take such a rigid and doctrinaire view about their rôle. They are much more forthcoming than the hon. Gentleman seems to think they are or should be.