§ 2. Mr. McCrindle
asked the Chancellor of the Exchequer what recent discussions he has held with the Building Societies Association.
§ Mr. McCrindle
The minimum lending rate has fallen substantially and ample funds continue to flow into the building societies. Has the Paymaster-General any sympathy with the view that it might not be entirely out of place for some reduction in the lending rate to be forthcoming from the building societies? If he will not go that far, will he consider discussing with the building societies the possibility, in case anything untoward should happen in the Budget which would make the building societies change their minds thereafter, of reducing the lending rate to first-time borrowers?
§ Mr. Dell
The hon. Gentleman will be aware that the minimum lending rate has fallen substantially below the building societies borrowing rate only since the turn of the year. It may be that the building societies are waiting to take a firmer view of the trend of interest rates before taking a decision on their lending rate.
1511 The scheme in relation to first-time borrowers has aroused some interest, but the situation is being considered in the housing finance review.
§ Mr. Dell
The building societies' lending rate has been stable for some time, despite movements in the minimum lending rate. I repeat that it is only since the turn of the year that there has been a fall in the minimum lending rate as compared with the lending rate of the building societies. I am sure that at present the building societies are thinking carefully about this situation.
§ Mr. Michael Latham
Rather than holding out any hope to his hon. Friends, will the Paymaster-General confirm that it is the principal object of the Government's home ownership policy that the building societies should have enough money to lend to finance private house building so that they can raise the number of starts at least to the level of 1972?
§ Mr. Cant
I do not introduce any note of pessimism and I bear in mind that the building societies are massive short-term and medium-term lenders to the Government. However, is it not a fact that the amount building societies lend will increase to £6.1 billion but that their receipts are declining? Is not my right hon. Friend the Chancellor of the Exchequer a little worried about the fate of his public sector borrowing requirement this year?
§ Sir G. Howe
Is not the huge scale of the borrowing requirement one of the 1512 reasons for the necessity to maintain such high interest rates? Will it not be one of the many favourable consequences to come from a reduction of the Government's borrowing requirement that in the end we might be able to move back to a world of lower interest rates, to building societies as well as to everyone else?