HC Deb 11 January 1978 vol 941 cc1639-41
1. Mr. Wakeham

asked the Secretary of State for the Environment what resources he intends to allocate to local authorities for loans for house purchase and improvement in 1978–79.

The Secretary of State for the Environment (Mr. Peter Shore)

A sum of £255 million will be available to local authorities in England in 1978–79 both for lending and for improvement grants. Virement provisions will allow authorities to adjust expenditure in each category to suit local needs. The building societies have agreed to provide an additional £267 million under the support lending scheme.

Mr. Wakeham

Does the Minister agree that the number of local authority loans indicates a substantial cut on the 1974 –75 figures, which is in breach of the Labour Party manifesto of October 1974 and, more importantly, must affect very harshly the poorest members of our society who look to the local authorities for such loans?

Mr. Shore

The figures in 1974 were exceptional—indeed, they were a record in terms of local authority mortgage lending. They were record figures for the simple reason that there was a mortgage famine affecting the building societies as a result of the failure of the general management of monetary and fiscal policy in this country.

The situation today is that the building societies, which are the principal source of lending, have about twice as much money to lend as they had available in 1974.

Mr. Crawshaw

Is my right hon. Friend satisfied that he has the balance of his figures right in this case? Is he aware that many people on local authority housing lists will be forced to accept local authority housing if they do not get the opportunity of obtaining a local authority housing loan? Does he appreciate that if people can get a local authority housing loan it is not only to their benefit but, in the long run, better for the finances of the local and central authorities?

Mr. Shore

It is a matter of priorities. If I had several hundred million pounds more available for housing expenditure I should like to see some part of it made available to local councils for borrowing. The fact is that we have had to make a choice in housing allocation. I have allocated money primarily to encourage resource expenditure rather than financing, because I believe that there is a vast alternative source of finance in the building societies. Through the building society mortgage support scheme, which we have increased by another £100 million this year, there is an additional source of funds available to people who would normally apply to local authorities.

Mr. Rossi

Since the right hon. Gentleman feels that it is unfair to compare the 1974–75 figures with the figures that he has just announced, would he like to compare and comment on the comparison with the 1972–73 and 1973–74 figures, because those are also relevant? Also, would he like to remind the House of the Labour Party manifesto promise at the last General Election on the subject of local authority loans?

Mr. Shore

The Labour Party, in facing the election, was conscious of the enormous shortage and drying-up of building society funds—hence, as I said, the massive increase in mortgage lending in 1974–75, which was absolutely necessary.

Of course, the hon. Gentleman is right. The current figures for local authority direct lending are lower than they were in 1972–73. Indeed, they are lower than they have been for some years past. But I ask the hon. Gentleman and his colleagues to take account of the fact that we have this substantial addition from the building societies under the support lending scheme.

Mr. Frank Allaun

Will the Secretary of State sanction a massive increase in improvement grants, first, because the system is labour-intensive, and, secondly, because it can be started far more quickly than new house building and can, therefore, relieve unemployment? Is my right hon. Friend aware that many councils, such as Manchester, have bought up a large number of old houses with a view to improving them and that now, because the improvement grants have been cut off, those houses have to be left empty and unimproved?

Mr. Shore

I think that my hon. Friend will be the first to acknowledge and recognise—the figures have only just been released—that the North-West, Manchester in particular, has had a substantial increase this year in its housing expenditure allocation. There will be a marked increase in its favour in 1978–79. As for the way in which that money should be spent, I must point out that under the new block system it is possible for Manchester to aggregate both direct lending and private improvement grant money and to switch from one to the other if it thinks that that is the right thing to do. Improvement grants for local authority dwellings have also been increased.