In the application of Section sixty-seven of the Housing of the Working Classes Act, 1890, to any company established for the purpose of constructing or improving or of facilitating or encouraging the construction or improvement of dwellings for the working classes, which does not trade for profit, or whose constitution forbids the issue of any share or loan capital with interest or dividend exceeding the rate for the time being proscribed by the Treasury, paragraph (d) of Sub-section (2) of the said Section sixty-seven, shall have effect as if the words "seventy-five per cantum" were substituted for the words "one moiety."
I beg to move, "That the Clause be read a Second time."
This Clause, which very clearly expresses its purpose, is intended to enable the Public Works Loan Commissioners to advance up to 75 per cent. of the value of houses to be built in certain cases which are set forth in the Clause. Under the Housing of the Working Classes Act, 1890, the Public Works Loan Commissioners are authorised to advance up to 50 per cent. of the value of the land and dwellings, which are mortgaged, but under the proposal contained in this Clause the Commissioners are authorised to advance up to 75 per cent., on receiving what they consider to be sufficient additional security. The reason for the Clause is that certain proposals have been received by the Ministry of Health, under which private enterprise by companies will come into operation. provided that the necessary capital is forthcoming, and such schemes will not involve the payment of any housing subsidy. Therefore no additional charge is involved on the State by this proposal. There is every reason. to hope that by perfectly legitimate use of national credit there will be quite an appreciable increase in the number of houses which will be built for the people who are particularly in need of them.
The Clause contains the words, "which doc? not trade for profit." I do not exactly know how far that is going to take us. There are societies which do not trade for profit which have built thousands of houses, and have never made an application for public works loans. I want to know whether societies of this kind will be able to participate in the benefits this Clause will give. I observe that these words are not incorporated in Section 67 of the Housing of the Working Classes Act of 1890, and probably in the past that has deterred these organisations from appealing for public works loans. I have in mind one of these organisations, which has built at least 200 houses, and has built a street which is one of the finest in the town. It does not trade for profit. It has never appealed for assistance. Am I to understand that there is a possibility of these co-operative societies. which built houses for the working classes, coming within the scope of this Clause and being able to get assistance from the State, if they desire to borrow, to the extent of 75 per cent. of the approximate value of the houses? If the Clauee is going to allow that to be done, it will be a step in the right direction. Everyone recognises the necessity of assisting those organisations which are going to build houses and which do not trade for profit.
The Clause is rather diflicult to understand, because there is a good deal of reference to previous Acts. Does it apply to companies which have already built houses? Can they ask the Government to advance 75 per cent. of the value of houses they have already built, or does it mean that when they build houses in the future they shall be allowed to borrow 75 per cent. of the cost? It is evident that if they are able to borrow 75 per cent. of the value of houses they have built there is considerable risk to the public funds, because the cost of houses is far in excess of their value at the present time. In that case, 75 per cent. advance on the cost of the houses built would be more than their value to-day. I do not know whether that is the reason the proviso says:
Provided that the Public "Works Loan Commissioners shall, in any such case, require, in addition to a mortgage of any land or dwellings, a further security of such value as they may think fit.
If, on the other hand, it only means that, they can receive these advances on the houses they may build in the future, probably the security will be better, because the cost of building houses has gone down. Even now, however, I do not think it is a very sound commercial proposition to advance 75 per cent. on the houses which are being built at the present time, because probably in a few years we shall be building at a far less price than to-day.
The proposal applies to the future and not to the past. With regard to the security may I draw attention to the last paragraph, which provides that
The Public Works Loans Commissioners shall in any such case require, in addition to a mortgage of any land or dwellings, a further security of such value as they may think fit.
Therefore, there is no question of the value of the house and land being the only security for this advance, and the composition of the Public Works Loans Commission is sufficiently wall known to make
it quite certain that they will deal with this matter on business lines.
I cannot give the hon. Member for Kettering (Mr. Waterson) an answer about the particular association or company which he has in mind without knowing more of its composition, but if it tomes within the description which is very clearly set forth in considerable detail in the new Clause, obviously, their proper course will be to apply to the Public Works Loan Commissioners, who will have power, if this Clause be passed, to consider every application on its merits, and will be bound to carry out the proposals contained in the Clause. Without further information with regard to these matters of detail, it is impossible for mo to say anything further in regard to any hypothetical case. The reason why we put in this Clause is that certain proposals have been made to the Minister of Health which would enable a very considerable number of houses to be built if this additional assistance could be given, and it appears to us that we can give this assistance with ample security of public funds. If the case which my hon. Friend has in mind comes within the definition contained in the Clause, 1 suggest that his friends should submit their scheme to the Public Works Loan Commissioners.
This is really a matter of routine every year. There would be no difficulty if the new Clause had not been added to the Bill. That Clause will be an alleviation of the extremely difficult question of housing. It is purely with a view to assisting in this most difficult matter of housing that we are asking for the Report stage to-night.