§ 2.53 p.m.
§ Lord BeswickMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether their attention has been drawn to the increase over the past two years of house prices in the South-East of England, the Financial Times ordinary share index and the higher range of salaries as against the increase in the same period of the retail price index, and whether they have drawn any conclusions.
§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale)Yes, my Lords. However, over the years the relationship between the factors in the noble Lord's Question has not been consistent.
§ Lord BeswickMy Lords, I thank the noble Lord for that Answer. Was he in the House on Monday when his noble friend the Secretary of State for Employment told me that, if we were to have continued economic growth, it was essential to restrain industrial wage costs? May I ask towards what sort of society the Government think this economic growth is leading us, if we are to have restraint on industrial wages and on essential services such as hospitals and education and yet have crude inflation in the stock market, property and top salaries?
§ Lord SkelmersdaleMy Lords, I was not in the House on Monday when my noble friend made that remark. However, I have heard him say that on many occasions. House prices are determined by agreement between private individuals, and no government, including that of the noble Lord, have ever attempted to dictate to ordinary people the price at which they may sell their property.
§ Lord RentonMy Lords, whatever the statistics show about the matters contained in the Question of the noble Lord, Lord Beswick, is the important point not whether at various levels of society the standard of living has risen, fallen or stood still during the past two years?
§ Lord SkelmersdaleMy Lords, because of lower inflation and because of other measures taken by this Government, the standard of living in this country has risen over the last two years. The Question of the noble Lord, Lord Beswick, prompted me to investigate the situation as far back as 1972, which is why I gave my original Answer. That information is contained in a graph which is very complicated, and I shall put it in the Library.
Lord Wallace of CoslanyMy Lords, is the noble Lord aware that I own my own property and I am seriously concerned at its inflated rise in value? Is he further aware that the rise in house prices in the London and outer London areas in the South-East is nothing short of a downright scandal, and that it is affecting very seriously the social life of many people and particularly young people who wish to get 203 married? There is an answer. The Government know the answer, but they fail to take action.
§ Lord SkelmersdaleMy Lords, I cannot agree with the noble Lord. The percentage of mortgage advances made to first-time buyers in the South-East is very close to the average for the country as a whole. In Greater London it is well above the national average. Over the period from the last quarter of 1985 to the third quarter of 1986, 71,220 first-time mortgages were issued. In the rest of the South-East the figure is 126,130.
Lord Wallace of CoslanyMy Lords, that is all very well. How many of those mortgages were granted to young people, the payment for which will depend upon a husband and wife working? If by chance a child comes along, it is an economic disaster. In how many cases have there been defaults on mortgages, with a building society calling a house in?
§ Lord SkelmersdaleMy Lords, as I pointed out earlier, people's affairs are their own. If a husband and wife wish to take the tremendous step—and we know from building society figures that they do—of joining together to own their own home, I cannot see that that is wrong.
§ Lord MellishMy Lords, is the Minister aware that in the area from which I come 97 per cent. of the property is owned by the local authority? When we started building houses for sale in Docklands, people queued up all night to buy them, irrespective of price.
§ Lord SkelmersdaleYes, my Lords. I have heard the noble Lord say that before. That is why the Government's right-to-buy policy has excited so much interest.
§ Lord Dean of BeswickMy Lords, is the Minister aware that one conclusion that can be drawn from the statistics is that it is almost impossible for anyone from the North to move South to take up a fresh job unless the job has a very high salary indeed? That takes into account the fact that over the last two years house prices in the North have risen by 7.7 per cent, compared to a rise in the South-East of 36.8 per cent. The wages earned in the South, when set against the low sale price of houses in the North, would probably not qualify such people for a mortgage.
§ Lord SkelmersdaleMy Lords, apart from the fact that the Question on the Order Paper refers to the South-East, I think that most people would accept that the main determinant of house prices is the real income of house purchasers. I do not think that there is anything either surprising or revolutionary about that.
§ Lord MottistoneMy Lords, is my noble friend aware that when I moved South in 1975 the situation described by the noble Lord, Lord Dean, was exactly the same?
§ Lord SkelmersdaleNo, my Lords. That is a personal circumstance of which I was not aware.
§ Lord StrabolgiMy Lords, is the noble Lord aware that because of the escalating price of housing, the number of people who default on mortgages is rising? Those people cannot keep up with their mortgage payments, which are determined by the price of the house.
§ Lord SkelmersdaleMy Lords, the Building Societies Association has just published figures for the end of 1986 as regards that matter. They indicate that the rising trend of arrears in recent years may be reversing, although I accept that it is too early to be certain that that is a permanent change.
§ Lord Taylor of GryfeMy Lords, does the Minister agree that the circumstances mentioned are a result of the collapse of the regional policy of the Government? Some restoration of a sensible regional policy would prevent the excessive pressure on land and housing in the South-East and would enable us to utilise the infrastructure which is available in the North.
§ Lord SkelmersdaleMy Lords, again I do not think that there is any relationship at all. I do not accept that the Government's regional structure has collapsed in the way in which the noble Lord suggests.
§ Lord BeswickMy Lords, may I ask the noble Lord to return to another aspect of my Question? Does he recall that once upon a time the Top Salaries Review Body dealt with top salaries? Last year that body recommended that the heads of the Civil Service, the defence services and the judiciary should be paid salaries of the order of £60,000 or £70,000 a year. That figure represents only one-fifth of the salaries which are now the going rate for certain people in the City. Is this the sort of society which we wish to build?
§ Lord SkelmersdaleMy Lords, "going rate" is a very wide term. I do not have any comment to make on the Top Salaries Review Body, especially as I know that it determines my salary!
§ Lord Nugent of GuildfordMy Lords, is my noble friend aware that if he took action to restrain the top salaries paid in the City so that the most able men, both young and old, who worked there did not receive top salaries, we should simply lose them, mainly to America and perhaps also to Japan? That earning power would therefore be lost to this country. There could be no more short-sighted a policy than that.
§ Lord SkelmersdaleMy Lords, my noble friend Lord Nugent is absolutely right. We all know the effects of the brain drain and we want to do everything we can to avoid it.
§ Lord Mackie of BenshieMy Lords, will the Minister perhaps confirm that the Government's attitude is that all is well, that there are no problems and that they view the extraordinary rise in house prices with total equanimity?
§ Lord SkelmersdaleMy Lords, for the people in those houses it is clearly a good thing. For those who want to buy them, especially young people and first time buyers, there does not appear to be any problem.
§ Lord Dean of BeswickMy Lords, I am sorry to rise again. Is the Minister aware that his colleague behind him, the noble Lord, Lord Mottistone, is quite wrong? As late as 1982, increases in house prices in the North and in the South-East were almost the same.