HC Deb 14 January 1976 vol 903 cc372-5
11. Mr. Frank Allaun

asked the Secretary of State for the Environment what further plans he has to help provide mortgages to those would-be house buyers who cannot normally obtain them from the building societies either because they are on low incomes or cannot find the deposit or because the houses involved are old ones.

20. Mr. Sainsbury

asked the Secretary of State for the Environment whether he is satisfied with the success of the transfer of local authority mortgage applicants to building societies.

25. Mr. McCrindle

asked the Secretary of State for the Environment if he is satisfied with the level of building society lending on pre-1918 properties and with the advances made to those of below average earnings.

Mr. Freeson

Building societies already lend on older property and to people with below average earnings. Although the special £100 million exercise was slow to start, the number of mortgages offered in recent weeks has increased substantially. The Building Societies Association has invited the local authority associations to discuss further ways they might help. I welcome this and will keep in close touch with these consultations.

Further, I am considering problems relating to mortgage funds and those at the margin of owner-occupation as part of our housing finance review.

Mr. Allaun

Is the Minister aware of the widespread dissatisfaction with the present building societies' scheme, which provides for the less well-off only £100 million a year, compared with their £5 billion a year total advances? Will he therefore seriously consider requiring the building societies to lend local authorities 10 per cent. of their annual advances, so that the local authorities can themselves provide mortgages to those desperately needing them? Finally, are not the societies morally bound to make this effort? They are bursting with funds. Did they not recently receive from the Government £500 million to help them to keep interest rates down?

Mr. Freeson

A number of questions are covered by that supplementary question. The £500 million loan has long since been repaid. The 10 per cent. of building society funds which my hon. Friend suggests should be made available to local authorities so that they can provide mortgages for older properties to people on lower incomes is about 50 per cent. of what building societies already lend on old properties to those on incomes below the average industrial wage. About 20 per cent. of what they lend out of their £5,500 million already goes in this way.

The principle of lending from building societies to local authorities is a very attractive proposition that would receive sympathy in certain quarters in the building society movement. The difficulty is that it would add to public sector borrowing, which at this stage of financial management is just not on. I accept that the £100 million exercise has been slow to start—it did not start effectively until about October or November on the ground—but I think that it will work out now.

Mr. Sainsbury

Is the Minister aware of the particular difficulties created in areas where there is not only a large amount of older property but much of it has been converted into flats on which the building societies find it difficult to lend? Will he consider ensuring that those local authorities are more generously treated in their allowance for local authority mortgages and whether there are other ways in which he could aid those areas, where, I am glad to say, there is generally not a massive programme of municipalisation?

Mr. Freeson

The last point does not need to be taken, because the scale of both sides of local authority building is not such as to cause a conflict between them, not on the ground anyway. As for problems in particular localities and the building societies' lending policy, I should welcome direct approaches between the local authorities and the building societies allocated to their areas. If the matter is still not resolved by such individual negotiations, I hope that the local authority associations will feel able to raise this sort of matter in the discussions to which I referred.

Mr. Ernest G. Perry

Is the Minister aware that one of the reasons for the enormous numbers of empty properties in inner London is that many local authorities cannot find the funds to purchase them or even lend money on them to would-be buyers and that the building societies in inner London refuse to advance more than 50 per cent. on the price of any house built before 1900? What is he prepared to do about that?

Mr. Freeson

There may be individual cases of this kind, but I must repeat that it is not true as a general proposition that only 50 per cent. loans are available on such properties. Obviously, there can be instances, just as there can be instances of local authorities lending on post-1919 properties, of which there are many in London and around the country. However, if there are problems of this kind in the operation of the scheme, at this stage it is a matter for the discussions, which I have already welcomed, that are to take place between the BSA and the local authority associations.

I take my hon. Friend's point about municipalisation and improvements, but no doubt he will recognise that there has been a holding back of local authority home loans in order that more resources may be available for modernisation, improvements and the purchase of old properties standing empty, to which he and other hon. Members have referred.

Mr. Rossi

Is there any truth in the suggestion that some of the principal beneficiaries of the £100 million scheme are council employees and not the public at large? Will the Minister make inquiries, because if that is true it should be remedied?

Mr. Freeson

I am not aware of any such general situation, although it has been the case in the past that local authority home loan schemes have at times been directed to assisting the housing of key workers. For example, in London until recently teachers were experiencing difficulty because their pay scales gave rise to housing problems. If local authorities have been referring such cases to building societies, I should not find that exceptional or wrong. I have no evidence that special provision has been made in this connection and I do not believe that it has. If the hon. Gentleman would give me case material, I should be glad to examine it.