HC Deb 12 April 1978 vol 947 cc1370-1
4. Mr. Newton

asked the Secretary of State for the Environment what discussions he had with the building societies prior to their decision to reduce mortgage lending by 10 per cent. a month between 1st April and 1st June 1978.

Mr. Shore

I personally met representatives of the Building Societies Association to discuss house prices and mortgage lending, and of course my Department is in regular contact with the association on this and other issues.

Mr. Newton

Is the right hon. Gentleman aware that inquiries that I have made in my own area confirm that the first casualties of this policy have been the very people—the potential first-time buyers—that the right hon. Gentleman claims to be trying to help through other policies, and that large numbers of them are now unable to get the mortgages that they would like? What will he do about this, to reintroduce some consistency into his policies?

Mr. Shore

I find that a remarkable question. I can think of no way in which the interests of first-time purchasers would be more damaged than by allowing just the kind of house price boom that we had in 1972–73. I remind the hon. Gentleman that the arrangements to regulate or generally to even out the flow of building society lending in respect of prices through the joint advisory committee of the Government and the building societies was introduced very late in the day by the hon. Member for Birmingham, Hall Green (Mr. Eyre) in the last few months of the last Conservative Government.

Mr. George Rodgers

When my right hon. Friend meets representatives of the building societies, will he tell them that he sees no necessity at all for any increase in lending rates as a consequence of the Budget?

Mr. Shore

I do not see any need for a change in building society lending rates as a result of the Chancellor's movement on MLR. However, the House knows that minimum lending rate and building society rates bear a very inexact relationship to each other. We have had many more movements of MLR than of building society rates in recent years.

Mr. Stephen Ross

Is the right hon. Gentleman aware that the construction industry as a whole believes that the building societies' action has had a steadying influence on the increase in house prices?

Mr. Tebbit

That is not true.

Mr. Ross

Yes, it is: I have just been talking to representatives of the industry.

Is the right hon. Gentleman, aware, however, that it need not be extended, and that it should finish at the end of July?

Mr. Shore

I believe that no one in the House would wish to see an unnecessary explosion of house prices. I hope that our measures will have a steadying effect. It is a moderate cut-back, and of course we shall review the situation with the building societies towards the end of the second quarter.