HC Deb 10 November 1977 vol 938 cc834-5
5. Mr. MacFarquhar

asked the Chancellor of the Exchequer if he will meet the Chairman of the Building Societies Association to discuss the relationship between building societies' interest rates and interest rates generally.

Mr. Joel Barnett

The Government maintain regular contacts with the Building Societies Association.

Mr. MacFarquhar

Does my right hon. Friend know that, according to the building societies' estimates, their net financial intake this year will go up by 78 per cent. but their net monetary outgoings will go up only by about 8 per cent? Does he agree that this vast difference suggests that the disparity between minimum lending rate and the mortgage rate is far greater than is either usual or advisable? Will he take steps to advise the building societies to bring their rates down again?

Mr. Barnett

That is a matter for the building societies. However, in reply to my hon. Friend, I would say that of course I am aware of the figures. These can change very rapidly. The important factor is the inflow of funds to the building societies. That is important both to the construction industry and to prospective purchasers of houses.

Mr. McCrindle

I accept that the Building Societies Association's policy on these matters may be somewhat cumbersome, but is it not abundantly clear that it is quite impossible for the building societies to react with sufficient speed to the many and varied changes of interest rates that have taken place over the past year? Will the Minister press for an annual review of the lending and borrowing rates of building societies, to the advantage of both the borrower and the investor?

Mr. Barnett

I am rather surprised that the hon. Gentleman does not appreciate the fact that we now have a much lower minimum lending rate than we had when his party was last in government. To imagine that this can be reviewed just once a year is quite incredible.