Building Societies Association (Hansard, 10 May 1978)

§ 13. Mr. Michael Latham
asked the Secretary of State for the Environment whether he will make a statement on his latest discussions with the Building Societies Association.

§ 15. Mr. McCrindle
asked the Secretary of State for the Environment if he plans to meet the chairman of the Building Societies Association in the near future.

§ Mr. Shore
I last met representatives of the Building Societies Association on 9th March and I informed the House of the outcome in my answer to my hon. Friend the Member for Leeds, West (Mr. Dean) on 10th March.
The Government and the BSA do, of course, have regular discussions in the Joint Advisory Committee on Mortgage Finance.
I am ready to meet the chairman of the association whenever the need arises.

§ Mr. Latham
As interest rates are now once again moving inexorably up, will the right hon. Gentleman confirm that the building societies would be legally entitled to take any decisions they thought appropriate regarding their own interest rate structure, both for mortgages and for investment?

§ Mr. Shore
The building societies have the legal right to make adjustments to their mortgage rates, but they take acccunt, as indeed they should, of longer-term, or at least medium-term, interest rate movements and not all the much more frequent and often much stronger movements of the MLR. We are making it easier for them to take a longer-term view by encouraging them to have stabilisation funds.

§ Mr. McCrindle
Has not the time arrived when the Secretary of State should withdraw his request to the building societies to place restrictions on their mortgage lending to first-time buyers and others? Is it not nonsensical that building societies are pressing upon existing borrowers additional loans for repairs and maintenance while being obliged to refuse mortgages to people who wish to buy houses for the first time?

§ Mr. Shore
What would be nonsensical would be to allow a flood of building society money to chase up the prices of housing generally and thus make it particularly difficult for first-time purchasers and people of modest means to obtain their houses.

§ Mr. Joseph Dean
Will my right hon. Friend press the building societies further to make more of their funds available within the red-lined zones in some of the larger cities? There is a grave shortage of funds available for that purpose. If he does not adopt that course, will he consider the alternative of trying to make more funds available for local authorities to advance those loans themselves?

§ Mr. Shore
On the issue of red-lining, we have had many conversations with building societies and with local authorities, which can play their part. There has been considerable progress in identifying the problems in certain inner city areas. I am at least hopeful that the £300 million which has been lodged by the building societies for support lending—that is to say, for nominees of local authorities—will be much more successful this year than was the earlier scheme of last year.

§ Mr. Sainsbury
Does the Secretary of State accept that it would be much more helpful to people seeking to buy a home if he were to repeal the Community Land Act and thus increase the supply of land 1176 and of homes for sale, rather than act to restrict the supply of funds to enable people to purchase the homes?

§ Mr. Shore
That is a frivolous intervention.

§ Mr. Blenkinsop
Is my right hon. Friend aware that the building societies have now established an appeal procedure to enable some of the cases of possible red-lining to be examined with more care?

§ Mr. Shore
I am grateful to my hon. Friend for bringing that to the attention of the House, as it is important. I am fully aware that this is an appeal arrangement, as it were, still within the compass of the building societies themselves. Nevertheless, they have agreed to set up an appeal tribunal whose members will include right hon. and hon. Members from both sides of the House. Therefore, there will be a far greater sense of fairness in particular cases than there has been in the past.

§ Mr. Heseltine
Does the right hon. Gentleman realise that if he really thinks that his reply to my hon. Friend the Member for Hove (Mr. Sainsbury) was accurate, it shows how little he understands the harm that the Community Land Act has done to the whole housing movement? In respect of the conversations that he could have with the building societies, does he understand that until he makes clear his attitude to the building societies' special deposits after the end of June he is injecting uncertainty into the house building programme, and that since house prices have increased by 16 per cent. over the last 12 months, anyway, his proposals have an element of slamming the stable door after the horse has bolted?

§ Mr. Shore
That is not at all what we intend to do. We have a continuous exchange with the building societies, of course. What I announced in March, in answer to the Question to which I referred earlier, was for the coming quarter, that is to say, for the next three months. Of course we shall look at the situation again. I have no desire to retain any limitations on the building societies' lending programme, any more than they have—just as soon as we are satisfied that we are not feeding inflation in house prices.