HC Deb 21 November 1977 vol 939 cc1075-6
8. Sir Raymond Gower

asked the Secretary of State for Wales what steps he will take to assist local authorities in Wales to increase mortgage advances.

Mr. Alec Jones

The allocations to Welsh authorities for lending in 1977–78 meet all the requests for allocations which have been made to my right hon. and learned Friend. If any other authority wishes to have an increased allocation, we shall be prepared to consider an application.

Sir R. Gower

I thank the Minister for that reply. Will he do his best to ensure that that fact is given the utmost publicity?

Mr. Alec Jones

I assure the hon. Gentleman that at recent meetings that I have had with representatives of every housing authority in Wales I have drawn attention to this fact and, as a result of applications made to me, have been able to transfer moneys from the main block into this lending block.

Mr. D. E. Thomas

The fact that the hon. Gentleman reduced and placed a moratorium on local authority lending last year has meant a far lower take-up of this mortgage facility than there would have been. Will he ensure that his Department will impose no further moratoriums on local authority mortgages by telephone?

Mr. Alec Jones

One has to get this moratorium in perspective. The hon. Gentleman should be aware that it lasted exactly three weeks. In my view, a more likely reason for the low take-up was the high interest rates which prevailed during that period. I believe that the fact that interest rates have now fallen will be of some help, although I accept that local authority interest rates have not fallen as rapidly as building society rates.

Mr. Ioan Evans

Does my hon. Friend agree that, because of the Government's financial policies, the minimum lending rate has come down from 15 per cent. to 5 per cent., so that we can expect building society rates to come down again? Will he do his utmost to encourage building societies to play a greater part, and particularly to give advances for older property?

Mr. Alec Jones

Yes, Sir. We have done this in consultation with building societies. Following negotiations with them, we were able to announce on 1st April this year that the building societies were making an additional £8½ million available this year to purchasers nominated by local authorities.

Mr. Nicholas Edwards

The Minister is clearly aware that the interest rates charged by local authorities are often substantially higher than those charged by the building societies and have not come down anything like as fast, due to the present structure of local government finance and the requirements imposed on it by the Government. Will he undertake that the Government will look urgently at this problem so that local authority interest rates bear some relation to those charged on the commercial market outside?

Mr. Alec Jones

I am sure that the hon. Gentleman appreciates that the local authorities' real interest rate at present reflects the cost of their pooled borrowings. But the housing policy Green Paper proposes legislation, which we hope the House will pass, to enable authorities to charge mortgage interest rates equal to building society rates.