§ 3.39 p.m.
§ LORD ABERDAREMy Lords, may I at this point, by leave of the House, repeat a Statement which has been made in another place by my right honourable friend the Secretary of State for the Environment, about the level of local authority mortgage lending for house purchases in the year 1971–72.
As the House knows, the Government attach a very high priority to the extension of home ownership. In pursuit of this aim, my right honourable friend the Secretary of State for the Environment is engaged in talks with the building societies who undertake the great bulk of mortgage lending. Their facilities are already very comprehensive but my right honourable friend is considering with them how these could be improved. There are, however, important areas of mortgage demand which may not be wholly met under normal building society practice. Here local authorities, with their special knowledge of local conditions and individual needs, can make a contribution yielding social dividends out of all proportion to the capital involved.
The previous Administration sought to limit local authority mortgage lending by putting a series of money ceilings on the finance available. At one point, indeed, in 1969–70, their limit for England and Wales sank as low as £30 million.
My right honourable friend has concluded that the extension of home ownership will best be served by abolishing the money ceilings. At the same time, he is asking the local authorities to limit their lending to categories of borrowers who might not qualify for a building society loan or who are otherwise in need. The principal categories would be: homeless people, and those living in overcrowded conditions or conditions otherwise detrimental to health; people displaced by slum clearance or, indeed, other development; people who want to buy older and smaller homes unlikely to attract a commercial mortgage advance; people high on the authority's waiting list; existing tenants of the local authority; members of self-build groups; people who wish to buy larger property 926 with a view to letting a part of it in areas where there is overcrowding; people who want to buy a house in or around a development area or in an overspill receiving area. He would also consider proposals by local authorities to lend to other categories of people whose needs in the area concerned seem of broadly the same priority.
His officials have discussed these proposals with the local authority associations, who I am advised regard these as a considerable step forward. They see no difficulty in arranging with the Department to keep a running check on the capital expenditure involved. Special arrangements are under discussion with the Greater London Council, since they and the London borough councils lend within the same area.
My right honourable friends the Secretaries of State for Scotland and Wales have authorised me to say that they are proposing to proceed on similar lines.
§ LORD GREENWOOD OF ROSSENDALEMy Lords, is the Minister aware that we on this side of the House welcome the Statement that he has just made, and congratulate the Government on having inherited an economy strong enough to enable them to get rid of the money ceiling on home loans and, indeed, to go even better than the £155 million which we were able to agree last year? And the noble Lord's reference to £30 million is in fact grossly misleading. Is he also aware that we naturally very much welcome his reference to the building society movement, which has such a vital role to play in the nation's housing programme?
I should like to put four specific questions. Is this a real increase, or is it simply a paper increase? Is it not a fact that a number of local authorities were very much under-spent on last year's allocation? Secondly, how much does this increase the overall amount available for mortgages? Thirdly, are not the categories that he has read out almost precisely the same as those recommended by the Labour Government to the local authorities? Fourthly, as this makes no contribution, of course, in the local authority housing field, could he tell us when the comprehensive statement on housing finance which has been promised to us will be made available?
§ LORD OGMOREMy Lords, I thank the noble Lord for repeating this Statement made by his right honourable friend in another place. Before I ask him one or two questions, may I declare my interest? I am a deputy chairman of a medium-sized building society, and as this Statement affects building societies it is necessary for me to declare that interest. My Lords, we on the Liberal Benches agree with the Statement made; we approve the Government's plans in this respect; we consider that it is essential to encourage home ownership, and that this is probably the best way of doing it. There are, however, one or two points that I should like to make.
First, the plan announced in the Statement will cater largely, of course, for the urban population, especially in England, and more particularly the great conurbations of the South-East and of the Midlands. But it does not necessarily take into account the special needs of my own country, Wales, or of the Highlands of Scotland, or indeed of some rural parts of England, particularly the Western and South-Western counties. I am wondering—and I should be glad if the noble Lord, Lord Aberdare, would look into this point—whether in fact the various categories that he has mentioned cover the isolated rural areas. There may be, not many but a certain number of people in the rural areas who will not fall within these categories but who, because of the isolation of the houses they wish to purchase, and because of the age of those houses, will not be able to get a local government grant or mortgage, and similarly will not be able to get a building society mortgage.
The other question I wish to ask is whether the Government will look very closely at a problem which is not dealt with by this Statement to-day; namely, the problem of the young couple intending to be married who are not able to meet the requirements of the building society mortgage and who will not come under the provisions of to-day's Statement. It is our policy, the policy of all Parties, to encourage home ownership, but there is a gap in the case of the young married couple who cannot put up the essential part of the advance which is necessary before they can get a mortgage. In spite of option mortgages—a 928 30-year term; a 95 per cent. advance—there are still quite a number of reputable young people who have not the capacity to meet those terms. Apart from those two points, as I have said, I welcome the Statement.
§ LORD ABERDAREMy Lords, I am very grateful to both noble Lords for giving this Statement a general welcome. The noble Lord, Lord Greenwood of Rossendale, asked me four rather rapid questions. I have forgotten one, but perhaps he will remind me. So far as the question of whether this is a real increase is concerned, I think I can assure him that it is a real increase because, as he rightly says, while certain local authorities were under-spent before, when each was given a budget amount, there were certain other local authorities that could have used more had they not been restricted by the amount allocated to them. By this process, those who can best use the money for the purpose will do so. I cannot give the noble Lord the figure for the out-turn for 1970–71. Unfortunately, local authority returns have been delayed by the postal strike.
So far as the categories are concerned, I readily acknowledge that they are in general based on the priority categories established by the previous Government. There are some slight alterations—for example, to take account of the Housing Act 1969—but if the noble Lord would like to see a copy of the priority groups concerned I will certainly send him one. He asked me about the comprehensive statement on finance. I am sorry; I cannot commit myself any further. He also asked me another question—
§ LORD GREENWOOD OF ROSSENDALEThat was it.
§ LORD ABERDAREI am much obliged. I should also like to thank the noble Lord, Lord Ogmore. He drew attention to the fact that there might be people in country areas to whom these categories would not apply. I would say that this is specifically why my right honourable friend will consider proposals by local authorities to lend to other categories of people whose needs in the area concerned seem of broadly the same priority. This is intended to cover the very point that the noble Lord was making. I certainly also take note very 929 sincerely of his remarks about the problem of young married couples.
§ LORD ROYLEMy Lords, in the first place, may I make a similar declaration to that made by the noble Lord, Lord Ogmore? Perhaps it is my stupidity, but will the noble Lord make it more clear exactly what will be expected of the building societies? Is it a question of just providing money, helping local authorities, or is it a question of direct loans to the categories which the noble Lord has mentioned? My other question is this: have the Government considered the possibility of giving some guarantees to building societies? I can assure him, in asking that question, that the losses which are entailed are, as a rule, very small indeed, and it might well be that a guarantee from the Government of any loan, or many loans, would be an incentive to the building societies to be more active in this kind of lending.
§ LORD ABERDAREMy Lords, I certainly take note of what the noble Lord, Lord Royle, has said, because I know that he speaks with great authority. My right honourable friend is at present discussing with the building societies how they can best help in this field, but the Statement refers specifically to mortgage loans from local authorities.
§ LORD BROOKE OF CUMNORMy Lords, I congratulate my noble friend on this helpful announcement. Can he give an assurance that the local authorities will be left free to carry out this policy without an elaborate machinery of control imposed by the Department of the Environment?
§ LORD ABERDAREYes, my Lords; I can give that assurance. There are the categories which local authorities are asked to stick to; although they can make representations to widen those categories if necessary. There is one other point which has been made to the local authorities. It is to ask them to determine and notify to the Department a limit of individual advance appropriate to their area.
§ LORD DAVIES OF LEEKMy Lords, since I have in my hand the White Paper on public expenditure (I will not read out the figures) may I ask whether this amount is extra to the forecast of public expenditure for 1969–70?
§ LORD ABERDAREMy Lords, it is a mortgage loan; it is not expenditure.
§ LORD DAVIES OF LEEKMy Lords, we will leave it at that.