HC Deb 16 March 1977 vol 928 cc373-5
6. Mr. George Rodgers

asked the Secretary of State for the Environment what evidence he has that building societies are withholding mortgages from properties in the inner areas of towns and cities.

Mr. Freeson

Cases have been referred to the Department in respect of a small number of towns. These have been resolved or are still being examined in the context of replacement lending. I hope to see a steady improvement through developing local liaison between building societies and local authorities in the context of renewal strategies.

Mr. Rodgers

Would my right hon. Friend agree that the system of drawing a line round inner town or inner city zones and the refusal to provide mortgage facilities amount to an appalling state of affairs? Not only does this deprive those at the lower end of the income scale of the opportunity to purchase older-type property, but it frustrates the general desire for urban renewal.

Mr. Freeson

I accept what my hon. Friend says. Indeed, I would go further. I shall not go into the matter in detail, but I believe that the way out of this situation lies in much closer liaison— this is already being developed in some areas—between local authorities and local levels in the building society movement, so that much greater information is available from the local authorities to the building societies about their intentions in terms of prospective housing action areas, general improvement areas and the like. Much of this problem has shown itself to be evident in terms of the red-lining.

Mr. Budgen

Will the Minister confirm that the principal objective of building societies is to safeguard the investments of those who deposit money with them and not to go in for social engineering?

Mr. Freeson

I do not for a moment suggest that building societies should go in for social engineering, but I am glad to say that in the recent past—and I hope that this will happen in the future—more and more members of the building society movement have become involved in the social consequences of their housing policies. The figures I gave earlier suggest that the movement is becoming effective in the areas to which they are prepared to lend money.

Mr. Frank Allaun

Is not the catastrophic reduction in the number of mortgages hitting the poorer families? Is it not a fact that many local authorities have little confidence in the new scheme put forward by the building societies because the authorities regard the old one as a complete flop? I can name local authorities where only one-quarter of the mortgages promised have been granted to the people who need them. In the circumstances, therefore, is not a requirement from the Government to the building societies desirable?

Mr. Freeson

In certain detailed respects my hon. Friend is correct, but I reject his general denunciation of the arrangements. The figure of lending under the old scheme—the £100 million scheme as it came to be known—climbed to £132 million. It was not a failure. The money was lent at an increased rate in the latter months of the scheme. The new arrangements will involve an allocation—not a general undertaking—of specific funds at local level to particular local authorities amounting to £176 million. It is no use ignoring these facts, because this is what we want to see happening in the older areas. There is an increased rate of lending which must be encouraged still further by the building societies down-market. We wish to see that happening, and we intend to encourage it in co-operation with the Building Societies Association.