I beg to move, in page 1, line 12, at the end to insert:
and that the rate of interest on such advances made after the passing of the New Towns Act, 1957, shall not exceed three per cent. per annum.
This is an important Amendment, although it raises a matter which was fully debated on the Second Reading of the Bill. A number of detailed arguments were brought forward then, not only by myself but by my hon. Friends. We trust that they have convinced the Government of the sense of this Amendment, and accordingly we are now giving the Government an opportunity to show that they have thought better on the matter. Anxious as I am to hear the Minister say so, I do not propose to repeat the details that were given on Second Reading. I propose merely to summarise the position.
The present position is that we have before us the reports of the development corporations up to the end of March, 1957. At that time the rate of interest on their borrowings was 5½ per cent. and even at that rate of interest every single development corporation mentions the obstacle to its work that is presented by borrowing even at that rate. Since then we have had an almost unprecedented rise in the Bank Rate and a consequent rise in the rates charged to development corporations from 5½ per cent. to 6¾ per cent., and we may take it that the ill effects that the development corporations found by the end of March have since then become, from their point of view, disastrous.
What is happening is that these development corporations were set up to do the social job, among others, of providing communities of all types of people. When they are compelled to borrow, they have no property over which to spread the interest on their borrowings, other than that which they have built in recent years. They have no old properties to fall back Upon.
The result of a high rate of interest is, first of all, that even at the end of March, 1957, they were being compelled to build houses of a lower standard than they wished to build, to cut down their building programmes, to restrict a number of other things that they would have wished to do and, above all, perhaps the most important thing, to charge a rent for these new houses which, notwithstanding such devices as pooling rents, differential rents and the rest of it, resulted in people being unable to come to the towns in question.
It is said that they have housing lists. That was the standard answer from the Government benches during the Second Reading debate. So has every other town in the country, and that is a remarkable tribute to the housing policy, or the lack of it, of this Government. It is no indication whatever that the rates of interest charged to development corporations at present are such as enable them to do their job.
We have in the contrary sense the reports of every one of them. I could quote various instances—Stevenage, for instance, saying to the Minister that this was a matter for his immediate and urgent consideration. This representation was made in the report for the year ending March, 1957. All that the Minister has done about it is, with the rest of the Cabinet, to approve the increase of the Bank Rate; with the rest of the Cabinet—for we must assume common responsibility in these matters—to approve an even higher rate of interest on the borrowings of the people who are doing this public work in the development corporations, and to do nothing whatever to help them in a difficulty which hey now say is cramping and hindering their work.
I quote one more instance, and this time from Wales. According to the Seventh Annual Report of Cwmbran, the demand for houses in the area continues to increase, and the need to find living accommodation for large numbers of additional families is likely to become more acute before long if the expansion of industry in the neighbourhood continues. The report then says that the difficulties of the high rates of interest and the rising costs of building—hon. Members will remember that 70 per cent. of that difficulty even at that time was the higher rates of interest, and it would be a higher proportion now—make it difficult to build houses which will be let at rents within the means of the lower-paid workers within the area.
For how long do the Tory Government, even in the matter of advances to new towns, desire to keep out of what ought to be a representative community the common workers in an industrial area who depend on this new town for their houses? For how long do they propose so to work the financial machinery that, instead of producing a community which should be representative of every class in the country, they deliberately exclude from it the lower-paid workers, the very last people who should be excluded, those who suffer most from the housing difficulties in the countryside which, by and large, are now attributable in great measure to the policy of the Tory Party? For how long do they mean to go on like this?
The Amendment would enable the development corporations to do what they ought to be able to do and to lower their rents to the level which prevails in council houses all over the country. Instead of having to charge exclusive rents between 24s. and 39s., with another 10s. or more for rates, they would be able to charge something like the average council house rent of 14s. If it is said that this is a hidden subsidy, my answer is—to whom is it a subsidy? It is a concession to the development corporations exactly in the same way as the subsidies are a concession to the development corporations. The subsidies have proved insufficient. The reports show it. They are now suffering from the high rate of interest.
Not only would it be a concession to the development corporations but, if the Government persist in their policy about the future of new towns, in the long run the new towns will go to an agency which represents the Government themselves. At the moment, we have advances to Government bodies, nominated by Governments, working for Governments, doing something which is intended to enure ultimately, we would have it, for the benefit of local authorities, and, as the Government would have it, for the benefit of some Government agency or other. What is there wrong even according to Tory principles in allowing this concession? What is right in it is perfectly obvious; it would enable the development corporations to do the job which they all say they are at present finding it increasingly difficult to do and which they will be unable to do without something of this sort.
No one on either side of the Committee could possibly say that I am not interested in new towns. I believe that I have not lost any opportunity during the passage of this and similar Measures—I have in mind the town development legislation and so on—to speak in the House and in Committee in favour of the principle of new towns, the expansion of new towns, and the creation of as many new towns as possible. I ask any hon. Member who doubts that to refer only to the speech which I made last week during the Second Reading debate on this Bill.
New town development has been one of the striking manifestations of post-war progress in this country. People have come from all over the world to study this remarkable new organisation which we have set up, an organisation which is providing for the overspill population, as it is called, from the great urban conurbations, pleasant and spacious livelihood in new surroundings. The purpose and principle behind the new towns is, broadly speaking, accepted on both sides of the Committee.
I should like the Committee to start from the point of view that we all wish the new towns well. We all want to see them successful. We have every sympathy with the development corporations. They are giving a great deal of service, and their members and staffs are devoting much time and effort to ensure the success of the new towns. Naturally, anything which they urge in their annual reports must have the sympathy of the Committee.
We have before us, however, a proposal that the money which the Committee is asked to vote should be allocated, in part, to subsidising further, for that is what it amounts to, the rents of houses in the new towns. The Bill provides for a further £50 million of public money to be devoted to the further expansion of the new towns in Great Britain, increasing in that way the total amount which the Exchequer will have voted for the management and administration of new towns from £250 million to £300 million in all. Nor is this to be the end of the story. The Minister told us in the House last week that it is expected that the new towns will cost, in all, about £375 million in Exchequer advances. Thus, the Government of the day on some future occasion will have to come to the House and ask for a further advance of something like £75 million of Exchequer moneys for the new towns.
I want to see more new towns, but my right hon. Friend the Minister of Housing and Local Government has said very clearly that he and the Government think that an investment of the order of £375 million in new towns is about right—about as much as can be voted by Parliament in the country's present circumstances for the existing new towns. The money which the Committee is voting tonight, and which the House will vote in passing the Bill, should be used for the purposes which were envisaged by the Government in accepting the reports of the development corporations. If a fresh purpose or fresh demand is placed upon the £50 million, there will then be less of the £50 million available for the expected requirements of the new towns.
Already, houses in the new towns are eligible for the higher subsidy rates, being eligible for the higher overspill subsidy. There is no evidence whatsoever of any failure to attract tenants to the houses in the new towns at the present rents. I do not say that I have been to most of the new towns, but I have been to many of them, and I have asked questions of the responsible officials. I have inquired from various reliable sources, and in every case I have found that every one of the new towns is experiencing not the slightest difficulty in finding tenants for their new houses even though some of the rents charged are higher than the local authority rents in the adjoining county districts.
The proposal is that new towns should be given some special privilege or advantage, that, instead of borrowing money at the market rate or at the rate prescribed by the Public Works Loan Board, instead of being tied to the normal Treasury rate of 7 per cent., they should be enabled, by the Amendment, to borrow money at a rate not higher than 3 per cent. The effect of that would he to place new towns, and new towns only, in a special category, insulating them from the effects of the credit squeeze and all that we are trying to do to maintain the value of the £ and to halt inflation.
I am quite certain that every hon. Member has some special cause or interest—it may be a constituency interest and one of the most worthy causes—which would make him dearly love to come down to the House of Commons and make an impassioned speech for the special consideration of that interest, and to urge that because it was such a worthy cause and one which was doing something in the national interest, it should be enabled to borrow money more cheaply. [Interruption.] Does the hon. Member for Edinburgh, East (Mr. Willis) wish to say something?
I did, too. On that occasion, the hon. Member and I agreed much more than we are doing tonight.
If the Amendment is accepted and new towns are enabled to borrow money at 3 per cent., they will be placed in a special class of their own. Alone among the community, they will be insulated against the effects of the credit squeeze, the higher interest rates and the Government's attempts to halt inflation and to establish the value of money. That is not logical and reasonable and it certainly would not be fair to pick out one particular public development corporation as against other activities—as against, in fact, the local authorities themselves—and give it that special privilege. Therefore. I oppose the Amendment. I hope that the Committee will not accept it and will reject the arguments advanced by the hon. and learned Member for Kettering (Mr. Mitchison).
Whenever we are discussing matters like the building of new towns or housing generally, there is always, to use the words of the hon. Member for North Angus and Mearns (Mr. Thornton-Kemsley), every good wish and sympathy for the project on the part of hon. Members opposite, but seldom is there any practical help.
The good sense and sympathy of my hon. Friends is surely proved by the housing achievement of the Government over the last six years. It is much better than the record of the Socialist Government. Deeds speak louder than words.
I should be out of order to pursue that. We are discussing a proposal to advance an additional £50 million to the new towns. As always on these matters, the Government benches express tremendous sympathy and good will, but show no desire to do anything practical to help. That is the attitude of hon. Members opposite, in spite of the fact that every new town corporation, as shown by the recently published reports, complains of the difficulties which it is encountering in doing its job because of the high cost of money and the high building costs.
Is the hon. Member suggesting that the development corporations should be singled out as an exception from the general rule that applies to local authorities, Government Departments and businesses—in fact, to everything?
I hope I am preparing the ground for the application of this principle to all work of this kind by local authorities; but we cannot deal with that on this Bill. We can deal here only with the new town corporations.
I repeat that all the corporations complain very strongly of the difficulties they are facing because of the high cost of interest on their loans for building and construction purposes. Therefore, if the House of Commons wants the new town corporations, towards which hon. Members opposite express such good will and sympathy, really to carry out the purposes contemplated by the House at the passing of the New Towns Act, we must do something more than merely express sympathy. The Amendment is a means of doing it. Three per cent. interest is quite enough.
It is very significant that since the Government came into office there have been about fourteen changes in the rate of interest of the Public Works Loan Board. The changes have all been upwards. The stage has now been reached when it is impossible even for new town corporations quickly to let their more expensive houses.
It has been said that it is possible to find plenty of tenants. I wish that were true. During the last twelve months. I could have put into new towns forty or fifty people from my constituency who urgently needed new housing accommodation and who were willing to go to live and to work in a new town had the rents not been utterly impossible.
The hon. Member says that development corporations are having difficulty in letting their houses. Which development corporations? That is certainly not the case in the two new towns which I represent.
I, too, happen to represent a new town and I can give the assurance that that is the case. There are people who are unable to pay the rents of the houses. That is also the case, as the relevant report shows, at Cwmbran. Of course, if the new towns are intended only for people who can afford to pay high rents, I agree entirely with the hon. Member for Hertford (Lord Balniel) that there are such people.
My hon. and learned Friend is much kinder than I am to hon. Members on the Government side. I refuse to be drawn from the point I was making that in my constituency there are scores of families who would gladly have gone to any of the new towns around London had they been able to afford the rents which the new towns are compelled by financial stringency to fix. That is not moonshine; it is actual fact.
That applies so widely that Parliament should agree to let the corporations have the extra money that is coming to them, if they want it, at a lower rate of interest, so that they may be able to build houses which can be let at a lower rent, and to build factories which can be used for industrial occupation at lower rentals. Unless we do something of that kind, the purposes of the new town corporations will be completely stymied. We must help them if they are to carry out to the full all the things that the House of Commons said when we passed the first New Towns Act. They were not merely to house people, but to provide facilities for employment, the necessary social services, clubs, health centres, and so on. The new town corporations are all having very great difficulty, but it is not because they do not wish to do the work. They all have great plans for the extension and improvement of their towns, but all of them are encountering difficulty over the cost of their capital. The Committee would be unfair to the new towns if it did not agree to do something to help, and to reduce the rate to 3 per cent. is a practical sensible and, I think, inevitable way of helping them.
I was a little diffident about intervening because, unlike my hon. Friend the Member for North Angus and Mearns (Mr. Thornton-Kemsley), I did not speak on Second Reading but, having heard the hon. Member for Clapham (Mr. Gibson), I feel more than justified in taking part in the debate. The Committee will have noted the freedom with which the hon. Member wants to throw the taxpayers' money around and to build up special privileges. This comes well from a party that claims not to stand for privilege. As the Committee knows, I normally try to intervene in economic and financial debates, but it seems that we who take an interest in those matters are very delinquent in our duty if discussion of this kind of Amendment is typical of the sort of thing that goes on when we are not on the job.
There was a time when hon. Members took pleasure in saving the taxpayers' money, instead of going to their constituencies and gloating about the higher figure they had managed to squeeze out of the Government of the day. There was a time when we were watchdogs of the public's money, and the public are our constituents.
The right hon. Member for Kettering (Mr. Mitchison) is straying far from the point of the Amendment and I would not tax your forbearance, Sir Gordon, by widening the debate. But if the right hon. Member will spare the time, either in public or in private, I should be delighted to take him up on the point that £30 million were given away—from money brought into the Revenue from the public. That is typical of the attitude of hon. Members opposite and of the Amendment.
We are putting up the ante by £50 million. It does not come from the widow's cruse of the Treasury Benches, because the Treasury has none. It comes from the taxpayer again. I wish that hon. Members opposite, when they propose this kind of Amendment, would consider the fact, and admit it, that the money will come from the taxpayer, who is not the bloated capitalist of Socialist mythology. I could show the right hon. Member for Kettering in my constituency many people who live in their own houses and who are old-age pensioners and I could show him pensioners who are landlords and who will, I hope, benefit from the Rent Act. The Amendment asks us to favour a privileged class—those living in the new towns. On what moral, social or economic grounds can hon. and right hon. Members opposite possibly justify that? They also ask that people in these new towns should be able to contract out of the Government's general monetary measures.
I know perfectly well that hon. and right hon. Members opposite do not agree with the Chancellors monetary measures. They have made that clear on many occasions, but as they have not yet a majority it the Committee and therefore have to put up with these measures I should like to know, within that context, what moral ground they claim for allowing people in new towns to have special treatment compared with people living in older boroughs like the one I represent.
How would hon. and right hon. Members opposite ask me to justify that to my constituents? They may say that this is just a back-door method of attacking the Government's monetary policy, but were we to adopt the Amendment it would not be that at all. It would be creating a little privilege on the side, and I cannot see any moral grounds for it. The hon. Member for Clapham tried to justify the Amendment as being part of his total investment policy. He falls into the common error on his side of the Committee that a curious thing which he calls "social investment" is something quite distinct from other investment. Apparently, while new towns as a social investment are a good thing to support, other investments are something rather wicked with capitalists behind them all. It is absolute nonsense.
Using the hon. Member's term "social investment", I suggest that the new oil refinery at Fawley is more in the national interest than some of his new towns, because by its experts it is earning food for the people, whether they live in the new towns or the old slums. That is a fact which the hon. Member and his hon. Friends are apt to forget. It is no use rising in an economic debate and voicing pious sentiments about the need to earn our way in the world and about more investment in industry and then, on a Bill of this kind, throw all monetary defence and economic policy aside because of so-called social investment. It is arrant nonsense. As for the right hon. Member for Kettering—
I am very much obliged to the hon. Member for Gravesend (Mr. Kirk) for doing what I have long omitted to do, because this kind of mistake happens so often that one would hardly be justified in interrupting an hon. Member every time the mistake is made.
The permanent presence on the Front Bench of the hon. and learned Member for Kettering tempts one not to bother to look into his antecedents but to give him the courtesies which people who sit on the Front Bench have normally earned. It is a sound principle to be generous if one is disagreeing with somebody across the Floor of this Chamber and to pay him superfluous and even exaggerated courtesies.
In moving the Amendment, the hon. and learned Member for Kettering was back in his old assignment with inflation, which we have seen in the proposals he has put forward for the municipalisation of rented property. This is all part of a total programme. I am generous in saying that the hon. and learned Member is on his assignment with inflation, because on reading some of the proposals he seems to me to be much more on an assignment with highway robbery. You will be aware, Sir Gordon, that a onetime President of the United States, Teddy Roosevelt, said that a person who has not had the advantage of a school education may rob a freight car but it takes a man with a university education to steal the entire railroad.
I wonder whether hon. Members opposite, in tabling the Amendment, consulted the right hon. Member for Huyton (Mr. H. Wilson) and the right hon. Member for Battersea, North (Mr. Jay). If we approve the Amendment we are writing in permanently 3½ per cent. as the maximum in the Bill—[HON. MEMBERS: "Three per cent."]—three per cent.; I am sorry, that is even worse. The right hon. Gentleman the Member for Huyton made it perfectly clear in his articles in the Manchester Guardian on inflation, and agreed with me when I took it up with him in this Chamber that should the Labour Party find itself on the Treasury Bench it would be prepared to ues the monetary weapon "ruthlessly."
Therefore, even if we passed the Amendment, we should be tying the hands of the hon. and learned Gentleman's right hon. Friends, if they should ever find themselves in Government. I therefore suggest to the Committee that not only in the interests of the country but even in the interests of the Labour Party itself, we ought to reject this proposal tonight.
I wish those who are represented by Tory Members were here tonight to observe their demeanour and listen to their contributions. I have no doubt that they would be very much moved by the sympathy hon. Members opposite are showing to the difficulties that tenants in the new towns are now suffering as a result of Government policy. I understood that the hon. Member for Eastleigh (Mr. D. Price) was prompted by the speech of my hon. Friend the Member for Clapham (Mr. Gibson) to deliver himself of the oration to which we have just listened. I have never seen an impromptu speech so much studied and so carefully prepared. Page by page it was delivered.
In any case, the hon. Gentleman's contribution to the debate has apparently been on the general theme of economics and not on the great problem of new town development that faces us tonight. The Parliamentary Secretary who has been listening to the observations of his hon. Friends has, I think, indicated his case, and I have been interested in the discomfiture he has experienced as a result of those observations, because I know that the Parliamentary Secretary himself believes in the constitution of the new towns—
If the hon. Gentleman who makes his comments sitting down really had any sympathy with the new town tenants, his observations and interruptions of my hon. Friend the Member for Clapham would not have been put in the way he did put them.
What the hon. Member is really saying is that the inhabitants or would-be inhabitants of the new towns—with whom we have real sympathy—ought to be in a better position to borrow money than the inhabitants of what we might call the old towns. That is a premise that we on this side simply cannot accept. If they must argue in a certain context, we do invite hon. Members opposite to keep-within that context and not keep running out of it.
I was hoping to demonstrate to hon. Members opposite that the new town tenants desire, need and deserve special consideration, and if the hon. Gentleman does not know the policy underlying the Amendment we will try to inform him.
New town development was a grand social conception accepted by all parties in this House. The new town corporations have been entrusted with the momentous task of building up the new towns and, in some cases, of creating a balanced community within them. Unlike the authorities in many urban district and other local government areas, the corporations, in building new towns, have had to put in new sewers, new roads—they have, in fact, had to start from virgin soil.
The result has been that the cost of developing many new towns has far exceeded that incurred by other local authorities. When the Parliamentary Secretary replies, I hope he will tell us whether it is not the fact that the new town corporations have had to face expenditure heavier than that incurred by other authorities. In fact, he may remember that Cwmbran, which I have the honour to represent, is rather different even from the others in that it is really a grand housing estate built for the purpose of manning industries already there. Cwmbran is not in the favourable position of those other new towns which other hon. Gentlemen represent, where, in addition to the rents from houses, they enjoy the rent income derived from industries created in them to build up a balanced community. The other new towns have a great advantage over this one.
As I say, Cwmbran is essentially a housing estate. It has had to develop on terrain which is difficult and expensive. I have, on earlier occasions, made representations to the Ministry about the cost of developing it, and investigations undertaken by the Ministry have established that the cost of development and the rents that they have to charge are in excess of those that can be charged by comparable authorities. Cwmbran is in a most unfavourable position. It is, clear, therefore, that if hon. Gentlemen opposite are to do more than pay lip service to the grand conception of new town development, they really must face the problem of providing additional assistance for development, unless they are to fail in their duty.
I put this to the Parliamentary Secretary. Does he think that any new town, and particularly Cwmbran, will be able to proceed with the development that his Department and he himself would wish in view of the high interest rates now being charged? Hon. Gentlemen opposite, including the hon. Member for Hertford (Lord Balniel), have said that there is no waiting list of tenants in the new towns—
I did not say that. What I did was to point out that in the new town of which I have knowledge—and I am afraid that I have no knowledge of Cwmbran—the development corporation has no difficulty whatsoever in letting any of its houses. That is all I say.
I accept that. Perhaps I misunderstood the noble Lord, and I hope that he will forgive me. But, although his new town corporation has no difficulty in letting houses, will he tell the House the turnover of tenancies within his new town?
I am prepared to tell him that the turnover of new town tenants is greater than will be found among tenants of local authority houses. The reason is that the new town rents are high. It is true that there are people who are desperately anxious to get a house and are, therefore, prepared to pay exceptionally high rents, but they find that they are unable to maintain them. That is the case in my own area. In order to obtain possession of houses, the new town corporation has had to take proceedings against tenants who cannot continue to pay their rent, and I suggest that that is the case in the hon. Gentleman's new town as well.
So when we deal with this problem, I suggest to the Minister that special treatment and special loans at cheap rates of interest should be given to the new town corporations. I ask the Parliamentary Secretary to give weighty consideration to the arguments advanced from this side of the Committee if he desires the new towns to succeed, as I hope and believe he does, unlike some of his hon. Friends, judging from the interruptions. I believe he desires the new towns to develop and prosper. I hope he will realise that they will not be able to do that unless provision such as this Amendment suggests is made by the Government.
The hon. Member for Pontypool (Mr. West) began his speech by saying that the new towns presented essentially social problems. I suggest that one of the main difficulties in arguing or discussing these matters with hon. Members opposite is that when they state that a certain matter is a social problem they automatically assume that thereby they are denying the fact that it is an economic problem as well. We on this side of the House do not believe that it is possible, from the point of view of this House, the point of view of the Exchequer and the money which in Committee or otherwise we vote to it, to divorce social problems from economic problems.
If the hon. Member really meant that nobody else believes that it is possible to divorce social problems from economic problems he would not continually support Amendments made from the opposite side of the House day in and day out to increase Exchequer expenditure without saying a word about where the money is to come from or which tax is to be put up.
The hon. Member for Clapham (Mr. Gibson) began his speech by saying that he thought 3 per cent. was a fair rate of interest. I find the concept of a fair rate of interest completely foreign. To whom is 3 per cent. meant to be fair, and under what conditions? In the days of what is known in the City as "cheap money" when the right hon. Member for Bishop Auckland (Mr. Dalton) was Chancellor, "Daltons"—if I dare mention them—were standing at par. Three per cent. in those days would have been very dear money indeed. I do not think it would be fair money today when the Bank rate is somewhat higher than in the right hon. Gentleman's time. Three per cent. is equally the wrong rate.
The idea of a fair rate of interest is obviously the idea which people happen to desire for an object of their choice at any particular time. It has no permanent validity. There is no such thing as a really fair rate of interest, because in the days of the right hon. Member for Bishop Auckland 3 per cent. would have been too high. Today I think it is fair to say that 3 per cent. is obviously too low. If we give to one section of the populace, be they great or small in numbers, the advantage of privilege of borrowing money from the Government at a lower rate of interest than that at which the Government have to borrow, then we are giving them an extra subsidy. It may be right to give certain members of the community a subsidy on housing, on medicine, or on something else. No one can say that a particular rate of subsidy is necessarily fair when such a rate of subsidy is given to people of entirely differing incomes or entirely differing numbers in family or to people who happen, partly by chance or partly by good luck, to be living in good times.
I would be delighted to follow the hon. Member into this question, which seeems to be almost better suited to the Trustee Savings Bank Bill to be debated next week. But the widow, the orphan, or whoever it may be, does not have to put his or her money into the Trustee Savings Bank or the Post Office Savings Bank. Such a person can get excellent advantages by investing in National Savings Certificates. He can get a higher rate of interest in Defence Bonds, or an even greater return by buying Premium Bonds, which my right hon. Friend the Prime Minister has introduced so successfully as a stimulus to the National Savings movement, and—I am not saying this because I happen to be a stockbroker—he could even buy a unit in a reputable unit trust. The interruption of the hon. Member was a most delightful but very poor one.
A rate of 3 per cent. cannot possibly be considered a fair rate at any time except when it is the rate of interest for a loan of about sixty years. Only then could it be considered fair, because borrowing money depends upon two sorts of people—those who borrow and those who lend. If we believe that it is right to be fair to both sides in any bargain, it is nonsense to suggest that any bargain which is unfair to one side can be considered as a fair bargain, or the rate of interest therein fixed a fair rate.
If we are to accept the argument of the hon. Member for Clapham that 3 per cent. is a fair rate of interest for those who live or will live in the new towns, we must follow his argument, as he said quite logically, and extend the area covered by the 3 per cent. umbrella into many more social services. There are still many people who need houses. Hon. Members opposite are never tired of pointing that out, although they occasionally forget to point out that in six years they provided less than 1 million houses whereas we have provided 1,750,000 in the same period.
I agree that there are still many people who need homes in the new towns and elsewhere and are looking for them as hard as they can. But if the hon. Gentleman proposes that local authorities should borrow at 3 per cent., is he doing so in order to annihilate our suggestion that he is recommending that those who live in new towns should be in a privileged position? The hon. and learned Member for Kettering (Mr. Mitchison) said that the people who lived in new towns should be in a special position because the new towns did not have the residue of houses built in earlier days when interest rates were lower. But the hon. Member for Clapham departed from the advice given by his leader. He said that he thought that over the whole range of social investment the rate should be 3 per cent. If he really believes that it would be interesting to know exactly what is the policy of the Labour Party.
Whatever interest the party opposite may have in these rather bygone figures, does my hon. Friend agree that the people who are to find the money, whether at 3 per cent. or 7 per cent., namely, the savers, are in this country and are not dead?
The point that I was trying to make is that philosophers may be dead but the truths that they taught still have validity. One of those truths is that we cannot borrow money at a rate cheaper than that at which people are willing to lend it. Another is that we cannot get the Labour Front Bench to agree with its supporters on the benches behind it.
There happen to be a number of very desirable objects for which an interest rate of 3 per cent. would be eminently desirable to people who happen to support the objects. I sit not for a constituency in which there is or is proposed to be a new town, but for one in which it is proposed that negotiations should be entered into between one of my borough councils and the London County Council about the possibility of settling about 12,000 people from London within the boundaries of my constituency. I do not know whether those negotiations will prove successful or not, but I am certain that the people who may come out from London, and for whose welfare the ratepayers of Basingstoke will have to make sacrifices, will look—
It is unfair that a particular section of the people who happen to live in a new town should have the benefit of this concealed subsidy. I would prefer my hon. Friend to suggest that those who live in new towns should have a grant or a gift. I would admit that as a way of solving the problems of the new towns, but I object to the idea that it is right to give one section of the populace the opportunity of borrowing from the Government more cheaply than the Government themselves can borrow.
As my hon. Friend the Member for Eastleigh (Mr. D. Price) said, certain types of investments are said to be intrinsically more desirable than others. All investment is desirable, but some investments apparently are more desirable than others. It is right that people should invest money in coal mines, schools and hospitals. It is even more right tonight that we should invest money more cheaply in the new towns, but when a Bill proposes to give money to any other section we can be certain that hon. Members opposite, in their lust for votes, will insist that that money shall be given to that section of the community more cheaply and upon more advantageous terms than would be given to private enterprise.
If we were to give this subsidy to new towns in a concealed manner and not by an open gift, it would cost the taxpayer about Ell million a year. Compared with a Budget of £4,500 million, that is very little, but, even so, it would provide school buildings and make a contribution towards the cost of new hospitals and new roads for speeding the traffic. It is worth considering whether at this time we want to give this subsidy to the new towns in addition to the subsidy which we are already giving to them, because they get the benefit of the overspill grants on their houses.
When this money is provided by the Government it has to come from one of two sources, either from the Budget surplus or from money raised by the Government in the open market. Hon. Members opposite have not suggested that taxation should be increased to meet this extra charge. One can always argue that the odd million here or there does not really matter, but it is a fact that if they expect, or hope, or pray to be the Government in three or four years' time—
If it is three or four months their attitude should be even more responsible. Over the years, there will be a number of very substantial calls on the Exchequer without either hon. Members opposite or my hon. Friends making any proposals to the House which would in-increase expenditure. Only a week or so ago, I spoke in the House about the future deficit which will appear in the National Insurance Fund. It is surely wise for any Government to consider the future commitments it may have before entering into fresh ones. It is always important for any Government in peace-time to have a margin of taxation which they do not at the moment impose, but which could be imposed if necessity made it desirable.
The Leader of the Opposition, in his 1951 Budget, increased Income Tax by 6d. in the £ in order to meet a new necessity, the great new rearmament programme. He could not have done that if Income Tax had been already so high that any such increase would have meant the operation of the law of diminishing returns. Surely it is not right at the present time that we should make all other sections of the community give a concession to one section, which would involve this increased cost to the Exchequer.
There is also the question of the open market. At the moment, we cannot find an immense number of buyers in the open market for a loan floated by the Government. The funding operations of the Government are obviously being conducted with great difficulty. It is against that background that I think hon. Members have been a little less than generous. I was not present at the Second Reading debate on this Bill, but I have read it. They have been a little less than generous to the Minister and the Parliamentary Secretary in their attitude to the new towns. They might well realise that at a time when the Budget surplus is fully operated, at a time when the market does not easily facilitate the flotation of Government loans, the Government have decided to initiate a Bill to provide a further £50 million for the development of the new towns.
I have no doubt that the new towns are dear to the hearts of all hon. Members opposite. In 1946, they brought in a Bill to provide £50 million to get them going. All other Bills on this subject providing more money have been passed by Tory Governments. That, surely, is some indication of which Government deals more effectively with the new towns. A sum of £50 million extra was provided by each of the Acts of 1952, 1953 and 1955, and another £50 million is to be provided by this Bill. I suggest that the Conservative Government have no cause for shame in their record and that they are quite right in refusing to accede, as I hope my hon. Friend will refuse, to the Amendment, which would give an unwarranted concession to one section of Her Majesty's subjects.
It is regrettable that no hon. Member opposite rose to take this opportunity of saying something about this very important Amendment to an important Bill. Perhaps this demonstrates a lack of interest. We have, of course, had a contribution from the hon. Member for Pontypool (Mr. West).
I will deal in due course both with what the hon. Member for Edinburgh, East (Mr. Willis) said last week and with his intervention. First, however, I should like to comment on the speech of the hon. Member for Pontypool. I should be the last person on this side to cross swords with him, because we have only just concluded a very happy tour of several thousand miles which we undertook together. He represents a new town, albeit a small one, and I also represent a new town, which is a very large one. Indeed, the new town which I represent will eventually be the largest of all the new towns. It will probably have a population of 100,000 people. All of them are much concerned about this Bill. I know that they regard it as a good measure, I am sure that they are grateful to the present Government for introducing it, and, for reasons which I will advance later, I am sure that they have grave doubts about the value of the Amendment.
It is inappropriate for the hon. Member to accuse me of filibustering. I am not so much concerned with whether it is a Parliamentary or un-parliamentary phrase as with the fact that both he and I represent new towns. I see no reason that the new town of Basildon should not have its voice heard in this Chamber.
I know that my hon. Friend will continue to represent that new town.
I agree with the view of the hon. Member for Pontypool that the new towns deserve special treatment. Hon. Members on this as well as on the other side of the Committee agree that they are a kind of social service. It is for that very reason that the new towns have been singled out for special preferential treatment. The subsidy in the new towns averages £32 a year on every house although the subsidy on ordinary council houses outside the new towns, excepting those for slum clearance, is being reduced to nil. Surely £32 a year is special preferential treatment and the new town tenants are grateful for it.
The hon. Member for Pontypool said that although he represented what was really a very large housing estate, there was a considerable turnover in the population of Cwmbran, and there was some dissent when he suggested that that must be the case in other new towns. I am very pleased once again to be able to agree with him and to say that in Basildon there is a large turnover of tenancies. Many people seek to live elsewhere after having stayed for only a comparatively short time.
Indeed, Basildon has been called a transit camp, but that is an exaggeration, because although there are many people who wish to leave—[Interruption.]—I will deal with the hon. Member for Edinburgh, East in due course; he comes last—there are many others who are perfectly satisfied with the existing arrangements and who wished to remain. I must concede that many of those who are seeking to live elsewhere do so because of the high rents. I am not one of those who believes that the only way to reduce high rents is by subsidising them. I am convinced that there are alternative ways—
I have said several times that I will deal with the hon. Member for Edinburgh, East last. If the hon. Member had attended all the debates on new towns he would have already heard me explain in great detail some of the measures I have suggested to enable rents in new towns to be de creased. Unfortunately, he has not always shown a very great interest in the problems of the new towns, although those of us who are interested are very pleased to see him now taking that interest which we hope will continue and be abiding. Perhaps the hon. Member will learn from what we have to say.
I know that the hon. Member for Wellingborough is very good at popping up with odd statistics and sometimes taking people unawares, but the hon. Member ought to realise that there are very many different types of dwelling in Basildon. Some have a high rent of as much as £5 a week, but they are for the so-called middle income groups. There are others with very small rents, those small dwellings built especially for single persons and old-age pensioners. To say that there is such a payment by a new town corporation for that last type of house is a fantastic exaggeration.
The first statistic which the hon. Member for Wellingborough (Mr. Lindgren) thought fit to introduce was a fantastic exaggeration and one which does not apply to all the dwellings of Basildon, although it may apply to some of them. [Interruption.] I have already indicated the order of priority which the hon. Member for Edinburgh. East has in my speech.
The suggestions which I would make to my hon. Friend the Parliamentary Secretary, for reducing the rent, I have already made in the past at great length, and I certainly do not wish to spend much time this evening on repeating those suggestions and taking up the time of the Committee, when I know perfectly well that hon. Members, even if not on the other side, are anxious to make their contribution to this subject.
In spite of this Amendment, the same result could be achieved if some measures were taken towards economy in the new town corporations. I would repeat this evening two of the suggestions I have made in the past. The first is that the administration of most new town corporations is top heavy. Some of us have been to the head offices of these corporations and have seen the offices they occupy, the number of cars standing outside the offices and the number of people going to and from those offices. Of course, we recognise that the building of a new town is a vast enterprise. It must mean the employment of a large number of people on the executive work of building, but the actual building of a new town is done by contractors; it is not done by the new town corporations themselves.
I want to get back to that, but I was suggesting that instead of this Amendment to the Bill the same result could be achieved, namely a reduction in rents, by alternative means and that those means would be inevitably better for the economy and better in the end for the new towns. The second suggestion which I was going to make was in the nature of the houses themselves but, as that may be out of order, I will not repeat that suggestion tonight.
My hon. Friend the hon. Member for Eastleigh (Mr. D. Price) said that the proposal would place the residents in the new towns on a special pedestal of privilege, that we should be conferring upon them something which no other householder enjoys. I should have thought that it would be unfair on all those who do not live in new towns to have to increase still more the subsidy which is already being given to those in the new towns.
Would the hon. Gentleman not agree that if the additional assistance which we are seeking were given to the new towns, it would merely bring the new town tenant into a comparable position with other tenants?
I feel bound to disagree with the hon. Gentleman, because already one is giving to new town tenants preferential treatment in the form of £32 for every house—something which tenants in other housing estates are not given. I do not complain about that; indeed, I agree with it. I think it is a good thing that those who live in new towns should have such a subsidy. I am the last person to oppose such a subsidy, but I contend that that is a sufficient recognition of the difficulties borne by those who live in new towns and those who build them.
I am sorry to interrupt again, but does not the hon. Gentleman agree that when one compares the rent in new towns with comparable rents of local authority houses, the economic rental of the new town houses must of necessity be higher because of the increased site costs and other works which the new town corporations have to undertake?
I agree entirely with the hon. Gentleman when he says that there are increased site costs incurred in the building of roads, the provision of street lighting, drainage, and other expenditure which has to be met by a new town corporation—expenditure of a kind which need not be incurred by an ordinary housing authority building an estate. But that is the very reason why the £32 a year is given to the new town corporations in respect of each house.
This is the last time that I shall interrupt the hon. Gentleman. I am obliged to him for giving way again. Having regard to the fact that he concedes that additional assistance is necessary for the new towns if the £32 subsidy is not adequate to bring the rent of houses in a new town into a comparable position with the rent of local authority houses, does he not agree that additional assisance should be given?
I shall not be deterred by that interruption. I do not want my speech to be prolonged unnecessarily by frivolous interruptions. There are some of us on the Committee who wish to go home tonight, and there are those of us on this side of the Committee who would like to make a contribution to this debate. I am more concerned with the intervention—
On a point of order. I have sat here for a long time, Sir Charles, and I want to ask for the protection of the Chair in order that proceedings in this Committee shall be dealt with according to the ordinary practice of the House of Commons. If you were to ask me, Sir Charles, what my greatest desire at this stage is, I should say that it would be that the disgraceful proceedings of tonight should be televised so that all the nation could see them. [HON. MEMBERS: "Order."] Let hon. Members call me to order; let them carry on, and we shall see what takes place.
The point I am raising is this. It has been my experience oil several occasions, when we have had an exhibition of this kind, that the Chair has been very tolerant, as it has been tonight; but we have been subject to constant repetition—
—which I should have thought should have brought a reply from the Minister long before now. My two points are these. The first, I know, is not your direct responsibility, except in so far as you can guide us, but has not the time arrived when the Minister should reply? Secondly, Sir Charles, have we not been subject to constant repetition, and, if so, should not some guidance be given to the Committee about that?
I have no power over Ministers, of course; I cannot call on them to speak. As regards tedious repetition, the hon. Gentleman knows very well that I have to put up with a great deal of it. I have used the rule, but it is difficult to know when the repetition becomes tedious. Sometimes it becomes tedious more quickly than on other occasions.
I do not want to repeat myself, but a great many interventions have been made. I was trying to deal with the point made a few moments ago by the hon. Member for Pontypool. I agree with him entirely that there are many rents in the new towns which are higher than the average rent in a council house, but one should bear in mind that the new town is essentially a town of mixed population, having people from different walks of life, including those in the middle income groups and people who cannot afford a high rent, together with those who are, in the words of my hon. Friend the Member for Hitchin (Mr. Maddan), from the new industrial aristocracy. Council houses, on the other hand, are intended for those who cannot afford the economic rent for houses elsewhere. Thus, if one is to make a comparison, one should compare like with like.
I know that other hon. Members wish to speak, and I will now turn, as I
promised to do, to what the hon. Member for Edinburgh, East had to say. He did not, I think, make a speech during the Second Reading debate on 28th November, but he made one of his usual interventions. He asked:
What kind of standard is used to judge whether rents are within the compass of ordinary people?"—[OFFICIAL REPORT, 28th November, 1957; Vol. 405, c. 1317.]
Surely, the standard is whether they continue to live in the houses, whether there is a waiting list for them or whether people are seeking homes elsewhere. There is some evidence of that in a few of the new towns, but not nearly enough to justify the Committee in accepting this Amendment whereby one section of society has a privilege denied to everyone else.
It is a good Bill. In my submission, it is a great pity that it should be spoiled by party politics of the worst kind. I hope that the Committee will reject the Amendment and allow the Bill to be passed in its present form.
I have no intention of detaining the Committee very long. No one would be more delighted than myself if the Minister were now to decide after my short remarks to take the advice given him by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) from the back benches opposite and reply to the debate when, perhaps, we could reach a decision.
I had not originally intended to intervene in the debate. When I first saw the Amendment, I regarded it as a perfectly legitimate piece of party political propaganda to try to gain votes in the new towns but I thought that it was something which would not be seriously pursued here. I paid the Labour Party the compliment of believing that it would not seriously subscribe to such economic nonsense as is shown in the Amendment. Hence I came only expecting to see the usual kind of party political fireworks, with every attempt to gain votes in the marginal constituencies of the new towns; instead of which we have been subjected to arguments by hon. Members opposite seriously advancing the suggestion that it is possible to pick out one section of the community for a particular rate of interest.
In my comparatively short political career, I have had representations made to me from constituents and others representing a great variety of interests. Particularly at times of economic crisis, people have often said that they regard their own industry or enterprise as so essential that it should have a favourable rate of interest. Shipping people, for example, have said that shipping is so essential to the export trade that money should be available to shipping at 3 per cent. or lower. Agricultural interests also have said that for similar reasons they should be able to borrow money at a specially cheap rate. My hon. Friend the Member for Leominster (Mr. Baldwin) could say the same thing concerning small farmers. Small farmers are among those who are often especially hard done by, even though their enterprise is particularly necessary for the national wellbeing; but we refuse them preferential treatment in this respect.
It is impossible for anyone in this Committee, of whatever political party, seriously to suggest that one section of the community should get its money at anything other than the prevailing economic rate. To do so would mean opening the flood gates to a large number of demands which would be embarrassing not only to the present Government but equally uncomfortable for the party opposite if and when they ever return to power.
In these circumstances, to argue that anyone who opposes the lending of this money at an artificial rate of interest is against the conception of new towns, is not only wrong, but grossly unfair to Members on this side, who have the interests of new towns just as much at heart as anyone in the Committee. It might equally well be said that my hon. Friend the Member for Leominster is against the interests of farmers in his constituency if he tells them that they cannot have their money at 1 per cent., 2 per cent. or 3 per cent.
If the Amendment were accepted, how would it be implemented? If at any moment money can be borrowed only at 5½ or 7 per cent., to suggest that the Government should lend money at a reduced rate could mean only that it Rust be done by a subsidy. That is what the Amendment means. The Government would be lending money at a rate considerably less than that at which they could borrow. Very often, we hear Members on the benches opposite suggest that the Bank Rate is far too high, but I have never yet heard Members opposite suggest the figure at which the Bank Rate should be fixed. The right hon. Member for Bishop Auckland (Mr. Dalton), who was present a short while ago, had recalled to his memory the time of the glorious song in his heart of 2½ per cent., but I have never yet heard a responsible Labour Party spokesman give a promise that when the Socialists return to power, the Bank Rate will he returned to 2½ per cent.
I notice that the hon. Member is an adviser to some merchant bankers. He knows, I take it, that the banks create the credit which provides the Government with the money. Undoubtedly, there is a certain cost in that. If the money is supplied beneath that cost, it involves a subsidy. Is the hon. Member suggesting that, since the Government have decided not to supply the money, they have no control over the quantity of money which is supplied by the credit they create?
Perhaps the right hon. Member did not understand the point I was making. It has indeed been validated completely by what he has said. If he has an idea that banks have a widow's cruse of money whereas the Government have not he is completely wrong. The banks, like everyone else, have to find the money that they lend to the Government. That money comes entirely from customers' money and customers can get a high interest rate at the moment not only in this country but throughout the world, and banks could not borrow to lend at a lower rate.
My penultimate remark in this context is that if the Opposition accepts the premise that if one lends money at 3 per cent. and one can only borrow it, irrespective of the Bank Rate at several per cent. above that, the Opposition should come out in the open and say what extra taxes it proposes to impose on the community to raise the extra 2 per cent., 3 per cent. or 4 per cent. as the case may be. It is a typical piece of Socialist dishonesty to propose in this Chamber, again and again, measures which involve the Exchequer in large extra expenditure, and never give the unhappy voters any indication of where the money is to be found—
Even if the hon. Member for Torquay (Mr. F. M. Bennett) had been speaking, it would have been perfectly in order for the hon. Member for Stoke-on-Trent, South to move his Motion. There was no need to wait until the hon. Member for Torquay sat down.
I know that, however much we differ from his views, the hon. Member for Stoke-on-Trent, Central (Mr. Ellis Smith) is never discourteous to hon. Members. I was sitting down because I thought that I was about to be interrupted.
As it is, I will not delay the Committee much longer except to summarise the remarks that I have made on an extremely limited front. We as a responsible body in this Committee cannot support a measure which makes economic nonsense. We cannot pick out one section of the community and advance reasons why it should be able to borrow money at an interest rate which does not apply to anyone else. I do not represent a new town, but I am sure that even the new towns themselves would not particularly like such a privilege. People in the new towns are a little sick of being treated as members of experimental social bodies. They want to be perfectly normal members of a perfectly normal town community.
If we adopt the Amendment and give them this privilege we shall not be doing a service to the new towns, because we shall be telling electors in other towns, "You are having to provide extra taxes to give a special privilege to an extremely limited section." If we once opened that door we should be opening it wide to similar demands from every other section of the community. I hope that after the Minister's speech, which I am sure will endorse everything that I have said, we shall dismiss this proposal with the contempt it deserves.
On a point of order, Sir Gordon. Did the previous occupant of the Chair inform you of the many points that we have raised from our own experience, and of the repudiation of Standing Orders by constant repetition? That is my first point. Secondly, did Sir Charles inform you of what has taken place? If so, can we have your advice, based upon the information that you should have received?
I am obliged to my hon. Friend the Member for Exeter (Mr. Dudley Williams) who made a plea for short speeches in this Committee. Having served with my hon. Friend on the proceedings on the Local Government (Promotion of Bills) Bill some six months ago, that now seems to be dangerously like a piece of self-criticism. However, I shall try to take his advice.
We have had a very good-humoured debate, and, in the view of some of us, a surprisingly lengthy one. What always intrigues me here in this Chamber is how so very often hon. Member on both sides seem to find virtue in silence, whereas on other occasions, of which this is certainly one, there seems to be a positive clamour to express varying shades of opinion.
We have had some excellent speeches from this side of the Committee, and I am indeed grateful for the support the Government have had from my hon. Friends. During the earlier part of the debate we had a speech from the hon. Member for Clapham (Mr. Gibson) which, I regret to say, was replete with inexactitudes. For example, he made the observation that since the Government came into office there have been fourteen changes in Bank Rate.
I must point out to him that there have been nine in that time, and not all of them were increases. But if he was referring to the experience of the present and the previous Administration, I would also remind him that of the five changes in Bank Rate which took place between 1952 and 1955, three were reductions. The principal increase, which took place in November, 1952, was, of course, brought about by the economic legacy bequeathed to us by the party opposite.
My hon. Friend the Member for Eastleigh (Mr. D. Price) referred to the articles written by the right hon. Member for Huyton (Mr. H. Wilson) in the Manchester Guardian, in which the right hon. Gentleman made it clear that a future Labour Government would not scruple to use the weapon of the Bank Rate in the economic interests of the country. My hon. Friend pointed out that if we were to accept the proposition embodied in the Amendment, that the new towns should enjoy a preferential rate of interest, that would, in all probability, tie the hands of a future Labour Chancellor of the Exchequer. That is a very ingenious argument, but it is, of course, fallacious, inasmuch as it assumes that the party opposite will be in that position—
In that case, I at once apologise to my hon. Friend. The hon. Member for Pontypool (Mr. West), who, I am sorry to see is not now in his place, suggested that I was grimacing while my hon. Friend was speaking. I apologise both to the hon. Member and to my hon. Friend. I can only say, in mitigation, that that is my normal and habitual expression.
As the Committee knows, this Amendment would fix a ceiling rate of interest of 3 per cent. on the borrowings of the development corporations of the new towns. As the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) said, interest charges are the main element in the housing costs of the new towns, and the obvious purpose of the Amendment is to reduce housing costs, and to enable the corporations to charge rents lower than would otherwise he the case.
The rate of interest which is chargeable to these corporations was increased in September this year from 5¾ per cent. to 6¾ per cent. The Amendment, as I understand it, invites the Committee to discriminate in lending between development corporations and other bodies. I am still not clear why we should be invited to make such a discrimination. I do not believe that there is any justification for treating development corporations any differently from other bodies.
The average annual rate of borrowing by the new town corporations is at present about £32 million a year. If these corporations were to be exempt from the current rate of interest, one might well ask why that exemption should not apply also to other authorities and other bodies. After all, Members on this side of the Committee support Her Majesty's Government in believing that high rates of interest form one of the most important elements in the Government's anti-inflationary policy. If that policy is to be applied, then it must be applied over-all.
Why should the new town corporations be exempted? If it is right to exempt new town corporations, why not also exempt the entire range of local authority housing? If one exempts the whole range of local authority housing no doubt the hon. Member for Fulham (Mr. M. Stewart) and the other educationalists on the opposite side of the Committee would like education as well to be exempted from the application of high interest rates. I am equally sure that the right hon. Member for Huyton would take the argument a stage further and advocate exemption for a great deal of industrial building, except, of course, his cherished petrol pumps, cinemas, and so forth.
It is because the Government, supported by hon. Members on this side of the Committee, want above all to protect the currency and stop inflation that we are not prepared to give our support to the Amendment.
One thing that has been mentioned in the debate and which the Committee should bear in mind is that there is already a subsidy for houses built by the development corporations which amounts to £32 a year per house. If we were to accept the Amendment and give preferential rates of interest to these corporations, it would mean an additional concealed subsidy in addition to the subsidy which is already paid.
There is another point which requires careful consideration. It has been said repeatedly tonight that the present rate of interest paid by these corporations is 6¾ per cent. That is quite true. It is equally true that the average rate of interest which these corporations are paying over their indebtedness as a whole is nothing like 6¾ per cent. It is more like 4½ per cent.
Clearly, the amount of the concealed subsidy would be the amount of the borrowings made by the development corporations at a rate of 3¾ per cent.—in other words, the difference between the current rate of interest and the interest written into the Amendment. It would be a substantial figure.
I have already said that the average annual rate of borrowings is of the order of £35 million a year. The present rate of interest chargeable is 6¾ per cent.; the rate of interest suggested by the hon. and learned Member is 3 per cent., and if he would care to multiply £35 million by 3¾ per cent., he will get the correct answer.
With all the resources available in the Department I expect these multiplication sums to be done by the automatic calculator, or whatever the hon. Member keeps at the Ministry.
Had it been the intention of my right hon. Friend to accept the Amendment there would have been some sense in providing the figure to the Committee but, as I have already indicated, we have no such intention, and the figure is therefore of no importance.
It has been suggested that the rents of houses let by the development corporations are higher than the general level of rents charged by local authorities throughout the country. That is because none of these development corporations has the advantage of owning large numbers of pre-war houses. But it is the fact that although rents are relatively high in the new towns, the corporations still have long waiting lists of applicants who are prepared to accept the offers of houses in the new towns. That is so because of the, amenities and the condition of the houses which have been constructed in the new towns.
I end on this note. The Government's policy of dear money clearly forms part of their policy to protect the currency and put a stop to inflation. If we were to fail in that, housing and many other services would suffer in the process, and we do not intend that to happen. I therefore invite the Committee to reject the Amendment.
We have had a very interesting debate. I opened it with quite a short speech, but we have had such interesting comments from hon. Members opposite that I think the time has come to go rather more thoroughly into the question raised by the Amendment. There seems to have been a little misunderstanding about the matter. I even doubt whether hon. Members opposite have read some of the new town reports about which they have been talking. I therefore propose to deal shortly with some matters of principle and then to examine as best I can what was the position of the new towns as at the end of March, 1957, when these reports were made up.
First, I want to thank those hon. Members opposite who, with such distinction, represent for the moment these new towns, for the speeches that they have made tonight. I can assure them that we shall study those speeches with care and will take the greatest trouble to bring them to the notice of the persons they represent in the new towns. Their contributions to the debate have been very valuable. [HON. MEMBERS: "Hear, hear."] I am glad to hear them applaud. It is quite right that they should. Their views are most interesting and valuable. They illustrate a philosophy which I feel certain will appeal to their constituents, and I am, therefore, helping them by promising them the study and circulation which their speeches deserve.
I am sure that they will not grudge me a little time. They have taken some. Let us proceed to go into this matter with a little care and attention. The speech of the Parliamentary Secretary was a trifle short and, at points, almost curt. Let us begin by examining the principles at stake. I agree that the Government have got the country into a sad financial mess; that their Election promises about keeping down the cost of living and, indeed, reducing it, have very obviously not been fulfilled, and that, as part of a belated policy, they are now trying to do something or other to deal with inflation somehow. After all, there will be a General Election one of these days. That point has been repeatedly made by Government supporters.
I concede that the Government at long last are trying to do something, not very effectively and rather late in the clay, about some of the promises that the Tory Party made at the last Election. It is against that background that we have to consider the position of the new towns. I should be out of order if I went into financial questions, but I noticed some financial generalisations from the Government benches which attracted my attention. It would be very pleasant to have a long discussion on them.
When we get to the ordered atmosphere of the Finance Bill it is the practice of Chancellors of the Exchequer, when dealing with a serious Amendment, to give information about the cost of it. I was distressed that the report of the Ministry of Housing and Local Government was apparently unable to do this. It only presented us with an exceedingly complicated multiplication sum. I have long taken the view that the Ministry keeps somewhere in its recesses a mathematician of great eminence who is required for the purpose of the Exchequer equalisation grant, and so on. I was disappointed that the Ministry had not turned this gentlemen on to do the sum.
Be that as it may, we can take it as certain that if we increase the rate of interest for borrowing by these corporations the money will go somewhere. In borrowing, the money goes to the development corporation from the Treasury. If we reduce the rate of interest for the borrowing of the development corporations, some money passes, this time a lower one, from the Treasury to the development corporation. This is said to be a hidden subsidy. That is a fascinating proposition. I had a suspicion that some Government supporters who used that phrase, including the Parliamentary Secretary, had not considered who was being subsidised and for what purpose. The Parliamentary Secretary is rather accustomed to using the phrase because he has used it on and off about all sorts of things. I touched on this question in opening, and before we come to the detailed examination, as I hope to do, of the difficulties of the corporation, I might examine the questions whether it is hidden and whether it is a subsidy.
It is obvious that if the change in the rate of interest constitutes something different, then the fact that there is a high rate of interest is not widely known. I wonder whether that really is the case. The figures are published and orders are made, but I have a suspicion from time to time that some of the inhabitants of the new towns think that there is some connection between the high rate of interest charged by the Government and the very high rates that they have to pay. Being quite intelligent people, they reach the conclusion that if that rate of interest were reduced the rates that they have to pay would be reduced too. I cannot see that there is anything very hidden in that.
I thank the hon. and learned Gentleman for helping us so much to understand this matter. Could he just make an elementary point clear to me? If we let a man live in a house at less than the economic rent, who pays the difference?
I should like to do what I can to help the hon. Member for Morecambe and Lonsdale (Sir I. Fraser), but a little later on in my speech, perhaps in about twenty minutes' time. It will cone in then. For the moment, let me keep to the one point I was elaborating: Is it really hidden?
It is quite true that the people who live in the new towns, even those who vote for the Tory Party, do not always quite understand matters like the effect of rates of interest on their rents. I think it is up to us—hon. Members opposite have been doing their best to help tonight—to publicise the facts of the matter so that if there were any danger of these things, which after all are open to knowledge, being hidden, they should be open to discussion in Parliament. As I said, constituents of hon. Members opposite will read with great interest the speeches that they have made in support of the proposition that rents ought to be very high in new towns. That after all is the proposition they were supporting. I feel certain that those who pay the rents will show a due amount of gratitude for the words those hon. Members expressed tonight.
The next question is, is it a subsidy? This involves some very interesting philosophical questions. At first sight one would not think that if money was loaned by the Treasury to a development corporation an alteration in the rate of interest charged for that purpose could constitute a subsidy. It seems to me that it can only do so if one is prepared to examine whether there is or is not a true rate for the Treasury itself to get its money. When we consider how the Treasury does get its money we come to some questions which I am afraid will take me a few minutes to develop, but which are related to the question of whether this is a subsidy.
At first sight we all agree that it is merely the rate of interest paid on a loan. Is it the case that the Treasury always borrows any money it loans to development corporations? Is it the case that if it does borrow it borrows from sources which themselves borrow from somewhere else? If they do borrow from somewhere else, does that source in its turn borrow from some other place? In the long and last resort what is it—I am glad to see that the hon. Member for Eastleigh (Mr. D. Price) wants to ask a question. He is a financial expert. Is he going to ask one? I thought I saw him moving uneasily.
I am very glad to hear that it was only one of the hon. Member's usual uneasy motions. I trust I shall not agitate him into too much movement tonight. I would be indeed sorry to do so as he might find sleep or absence preferable.
Let us consider again what is the real, the economic, rate of interest corresponding to the economic rent of which we have heard something tonight. I think we have to start by recollecting that the change in the rates of interest of which we are complaining is entirely due to the Government themselves. That is to say, it is Government policy which has caused the rise in a rate of interest, which was always under 3 per cent. when the Labour Government were in, to its present level for the purposes of borrowing by new towns of 6¾ per cent. The Government have changed the rates of interest with bewildering frequency. If we look at the accounts of the new towns we find the different rates at which the new towns have had to borrow. It is now 6¾ per cent. and the particular jump of which I was most complaining was a jump from about 5¾ per cent. at the time when the period of these Reports came to an end to its present level.
That is not the whole story. They have risen for a number of years and we find in every one of them, not only a steady rise, but constant changes in the rate at which they borrowed. Some of these new town corporations set out these figures in detail and others do not, but I think that the general principle is clear from any of the reports. If we look at the figures for Aycliffe we find that they are interesting. We are considering whether there is a subsidy, that is to say whether there is some rate of interest below which a loan becomes a subsidy in some form or another.
For Aycliffe we begin with the period under one Labour Government or another up to 1951 during which the rate of interest was 3 per cent. We then find that the rate rose to 3¾ per cent. The frequency of these changes is remarkable. Between 8th November and 8th February, 1952, the rate was 3¾ per cent. For a very short period between 9th February and 31st March it was 4¾ per cent. In 1953 and until 19th October, 1954, it was 4¾ per cent. From 20th October, 1954, to 3rd June, 1955, it was 4 per cent. Later it was 3¾ per cent. and from 1st March to 8th July, 1956, it was 4 per cent. Then there was quite a short period from 9th July to 12th August at 4¼ per cent., and another period from 13th August to 6th September at 4½ per cent. There was a period at 5 per cent. from 7th September to 16th January. We then have the figures continuing to the end of the period to which these reports relate.
It appears to me that if we are to consider the question of a hidden subsidy, we see that the true rate of interest, any variation from which in a given direction would constitute a subsidy, was itself varying with extraordinary frequency for these short periods to which I have been referring. I am, of course, still on the general principles. I should have thought, in the circumstances, that it was quite unreal to describe as a subsidy the lending of money at a certain rate.
I would go this far with right hon. and hon. Members opposite—that it may be that they have introduced what they regard as some reality into the conception of the astronomical rates of interest which are ruling at present as a result of their policy and that, having regard to it, we must consider the question whether it is right and proper and serves a good social purpose that money should be lent at a lower rate than that prevalent for other purposes.
So much for Aycliffe, but before I leave the question entirely I should like to take the next development corporation in this book, which is Basildon, and look for a moment at the figures. I am sure that right hon. and hon. Members opposite who treated us to such interesting speeches, collectively at some length, will not grudge me an hour or so to develop the matter. [HON. MEMBERS: "Hear, hear."] I hope that I may have a hearing for these matters. I am very glad of applause—indeed, I welcome it very much—but we are engaged on a most serious matter which affects considerable sums of public money and a large proportion of the population of the country, and it is right that we should examine it, even on this Amendment, with close attention.
The hon. and learned Member says that we are dealing with a lot of public money. Recently he objected to this being called a subsidy. Will he explain how public money used in this sense is anything other than a subsidy?
I have not reached that part of my speech and I will develop the matter more fully later, but, if I may anticipate for a moment, it is public money both in the hands of the lender and in the hands of the borrower. That seems to me to constitute a real difficulty when one is considering whether this is a subsidy, but I am very glad to have provoked the hon. Member for Eastleigh beyond his usual mere uneasiness, because it is interesting to have his financial views—he told us he was a financial expert—on a matter of this sort. Let us continue for a moment. I am taking this only as an instance. There are several reports to which we shall have to refer later.
To take Basildon as an instance; I want to consider whether there can, in the circumstances, be said to be a subsidy. I will not go right back, because one does not want to take up time unduly and there are many considerations to digest. We may note that while the Labour Party was in office and the new towns were started, they had to pay only 3 per cent. After that, their rates of interest increased to 4¼ per cent. Does the hon. Member for Galloway (Mr. Mackie) wish to interrupt?
I am much indebted to the hon. Member. I appreciate that. I trust that his hon. Friend will be able to resist what is, no doubt, an almost overpowering temptation.
I do not think that we need go through the reports in very great detail—[HON. MEMBERS: "Go on."] The position is that a sum of about £16 million has been advanced to the Basildon Development Coropration, which differs from the other corporations in that some of its rates of interest are slightly different from theirs. With the assistance of the uneasy Member opposite, I want to look merely at the financial aspect of the matter to see whether there is any question of a hidden subsidy.
I come to the question which has interested several hon. Members opposite and which has interested me: if it is a hidden subsidy, exactly how does it work? I have already said—and I would not for the world repeat myself—that it is money advanced from the Treasury to the development corporation. It results in the construction of a number of factories in the new towns, in public works and, lastly, in the type of new town development with which we are particularly concerned tonight, housing.
Does not my hon. and learned Friend agree that the debate is getting somewhat out of joint? He is referring to Basildon, but the hon. Member for Billericay (Mr. Body) who represents Basildon is not present. Would it not be more desirable for my hon. and learned Friend to direct his attention to those new towns which are represented by Members who are present and who would appreciate and answer his points? Otherwise, I fear that the debate might become somewhat unreal.
The hon. and learned Member, very learned tonight, would keep the debate topical, as his hon. Friend the Member for Greenock (Dr. J. Dickson Mabon) suggested, if he referred to the new town of Cwmbran in South Wales, because I see that the hon. Member for Pontypool (Mr. West) who represents that new town and who sits on the hon. and learned Member's side of the House has already gone home.
I referred to that in a previous speech, and so did my hon. Friend the Member for Pontypool. I am afraid that the hon. Member was not here. I thought that I would postpone my reference to it for a short time until we had dealt with some other aspects of the questions raised in the debate.
We have reached the conclusion that a hidden subsidy is due for erecting certain buildings and that those buildings are at present the property of the development corporation. They will, of course, remain the property of the development corporations for some time, and then they will become, if we on this side of the Committee have our way, the property of the local authorities. That was indeed the course which hon. Members opposite at one time urged fervently in the name of democracy, but some other consideration, financial perhaps, I do not know what it is, has moved them now to suggest that these new towns should ultimately go back to the agency which is representing the Government.
What I find very hard to understand is this. How can there be said to be a subsidy from the Government to the development corporations which have no other financial existence than that dependent on their borrowings from the Government; and yet again, if hon. Members opposite are to have their way, how can there be said to be a hidden or other subsidy in the expenditure of money borrowed from the Treasury on property which is going at the end of the day to become the property of a Government agency?
We are all aware, because we were told so by the Minister without Portfolio in another place, that the object of this Government agency is to sell this property. It seems to me perfectly conceivable in business matters—and in this I would always bow to hon. Members opposite, although I have some experience myself—for a company which was embarking on a commercial venture and using a subsidiary company for the purpose to lend money to that subsidiary company at an abnormally low rate of interest and expect to be recouped from it at the end of the day.
That is what I am trying to answer, but I am afraid that it takes me a little time to make it clear. The hon. Member must have some patience with me if I do it slowly; I am doing my best.
To return to the case that I was putting, supposing we have a company which has a subsidiary company and it lends money to that subsidiary company and the subsidiary company uses it on the development of a large piece of land, five miles of fertile land—and the right hon. Member may remember what happened to Kublai Khan when he was doing a little bit of town planning; I suppose he squared the Minister of Agriculture about it—is it a subsidy that the company lends to its subsidiary company at a lower rate of interest with the intention that the subsidiary company should ultimately sell the property at a profit? I cannot see it. It seems to me that there might well be a sound case for it in the new towns as there may be in the hypothetical case I was putting earlier. Again I come to the conclusion that the use of the phrase "hidden subsidy" really has complete unreality in it and does not, in fact, represent the true condition of affairs.
The next question is this. Even if it were a hidden subsidy, or to put it in different terms, whether or not it is a hidden subsidy, is there any good reason for allowing a rate of interest lower than the usual rate of interest in these particular dealings with new towns? That, of course, it seems to me, is a social question. I heard one hon. Member opposite who found it impossible to draw a line between investment and social investment. I fully appreciate his difficulty. It is one which has always haunted the Tory Party. It seemed to them inconceivable that investment could have a social purpose or any purpose than a profitable one. It is for that reason that they found it so difficult to understand the conception of a social investment.
Let me ask them to consider what is the nature of these new towns. I hope to be able to persuade them in the course of the next half hour or so that they really are a social investment. Having done that, we shall then, I hope, have to consider the effect which these high rates of interest are having and the corresponding effect which the rate of interest proposed by the Amendment would have on the development of that social experiment.
The social experiment, as I understand it, had two original purposes or, rather, two aspects of what was perhaps fundamentally the same purpose. I would ask hon. Members to bear constantly in mind that all I am going to describe now was done when the rate of borrowing was 3 per cent. First of all, these new towns were built round about London for the purpose of relieving the surplus population that London was unable to house. They were, of course, an investment in a sense, but it seems to me that the purpose of doing that clearly is a social purpose and it is not really inappropriate to call that a social investment.
That went on for some time, and then they were used for another purpose. They were used to house and to make communities for industrial populations in places where there were some special difficulties. If I may mention Scotland, but only for a moment, Glenrothes was connected with mining. In the same way, Corby, which I represent, was connected with iron and steel. Cwmbran had the industrial and social purpose to which I referred in the last short speech that I made at the beginning of the debate and which I would not for a moment wish to repeat now. Therefore, I will say no more about Cwmbran than that. Aycliffe again is closely connected with a trading corporation.
That batch of new towns was not intended primarily for the relief of housing difficulties in the big towns but for the solution of the problem relating to industrial settlement of a special kind. That went on for a fairly long period. Corby was actually the last of the new towns. I think I am right in saying that that was in 1950, towards the end of the period of the Labour Government. Then further efforts were made to deal with the problem of surplus population. East Kilbride, for instance, was built in Scotland, and we all know how difficult is the housing problem of Glasgow. Further additions were made to the new towns built around London. That was one purpose of these new towns.
There was another purpose which seems to me to illustrate even more clearly the social character of the investment, and that further purpose was to create in these places not merely a collection of housing estates, as one of them, complaining of Tory policy, now says it is—that is Basildon; and I am referring to the evidence given to the right hon. Gentleman's adviser on these matters before the Public Accounts Committee—but a new town that would house people of all types and conditions of income.
I have some observations to make on this matter, and they again involve the question of the social investment. We are being asked, of course, to provide money under the Clause for the further extension of the new towns. We may be obliged to provide it at a somewhat high rate of interest, and it is, therefore, expedient to see what the effects of that high rate of interest are on the social experiment which we have to consider.
In an earlier debate on the Amendment which the Committee has just negatived, I referred to the social character of the experiment, first in relation to the population of our conurbations, London and others, which the building of the new towns was intended to relieve. Since I am very anxious not to repeat myself even in a different part of the discussion, I feel that it would be quite wrong to repeat those observations now, and I trust that they remain sufficiently fresh in the memory of hon. Members. But I have not been able fully to develop the question of the community life in these new towns, and for that, of course, we depend on their reports.
The reason this arises in connection with the Bill is that we are asked to provide new money for them with the knowledge that that money is being lent, at present, at 6¾ per cent., the Committee having just rejected an Amendment that it should be lent at a lower rate. It seems to me that, before we pass this Clause, we ought to consider first of all, what is the object of the new towns, and, secondly, whether the money provided on those terms, which are the current terms, is likely to enable them to carry out their social purpose.
I can state the community purpose, if I may so describe it, quite shortly. It is, of course, to provide factories, to provide houses, to provide the services required for that purpose, and to make the people who come to live and work in the place a community representative, broadly speaking, of all types of people and ranges of income in the country.
My hon. and learned Friend referred to Aycliffe, which happens to be in my constituency. I wonder whether he is aware that, owing to the interest charges now imposed on this new town corporation, we are finding that nearly all the people there have to go out to work in order to meet the high rents in the new town.
I am most grateful to my hon. Friend for bringing up to date the information which is found in the Aycliffe Report, which does show, as his statement confirms, how unlikely it is that the money provided under these terms which we are being asked to vote for in the Clause will enable the development corporations to carry out the duties which the Act of 1946 put upon them.
Incidentally, will not the provision of this money, as the passing of the Clause would allow, subject to the next Clause being passed, create more social harm than social good? If those are the terms prevalent in Aycliffe—and Aycliffe, though perhaps the worst case, is not exceptional—the question then arises whether it is worth while for people to move to these new towns.
Grateful though I am to my hon. Friends for their continued attention, I think it fair to warn them that I may go on for quite a long time and that I never suffer from draughts in my back, if I may put it that way.
Turning for a moment to the question whether this money will prevent the development corporations from carrying out the social purpose enjoined upon them by the New Towns Act—I refer now to the community purpose—I begin, as is right, with Aycliffe. On page 5 of the Tenth Annual Report of the Aycliffe Development Corporation, I find the following passage:
Almost the whole of the Corporation's capital expenditure has been devoted to the satisfaction of what may be termed broadly social needs in a county where these have suffered gravely and have accumulated over the last half century.
I am sure my hon. Friend will agree with that and that even hon. Members opposite will agree that as a statement of history, that is fairly accurate. That is Aycliffe.
Now, we come to the expenditure which, by passing the Clause, we are being asked to continue. The report continues:
This reflection might well be the justification for the enlightened policy of Parliament in relation to housing subsidies during the last decade.
I pause there for a moment to remind hon. Members opposite of the complete inconsistency of saying that when money is lent at a specially low rate of interest, it is any different from giving a housing subsidy, and to remind them that a housing subsidy is itself specially given to new towns.
The Aycliffe Development Corporation states:
The alternative could be an increase in rents of approximately 13s. per week and this in a region accustomed to abnormally low rents.
In those circumstances, it becomes rather doubtful whether the granting of further money will help the statutory purpose and the social purpose of these new towns.
The report continues:
The inflationary sequel to this"—
I suppose it may be said that by granting further money, if that was the result up to the end of March, 1957, we may, contrary to the Government's professed policy, only be increasing the existing inflation—
seems unquestionable and entirely divorced from political argument or ideology.
The Aycliffe Development Corporation seems to regard it as quite true—even truer on that account—but inflationary in this respect. To continue the report:
However, with the help of the subsidy and by the prosecution of a sound and consistent rent policy … the Revenue account does show a small surplus, and with normal luck this state of affairs should continue.
This, hon. Members will remember, is in respect of the previous money, and not at the rate of interest which is to apply to the money we are now being asked to continue in the new towns.
I want to read another passage from the Aycliffe Corporation's Report and then proceed to some of the other new town reports. The Aycliffe Corporation says on page 6 that:
It will be noted that during the year the tempo of house-building was appreciably reduced. This was the Corporation's contribution to the Ministry's expressed wish for financial relief, but in any case it was not thought prudent to borrow more than was strictly necessary and to pay 5¾ per cent for the privilege.
At the moment we are being asked to contribute towards Aycliffe and other development corporations an additional sum of new money at a higher rate of interest from their point of view than that which was prevalent at the time that this report was written. Therefore, it seems exceedingly doubtful whether further advances on this line will assist Aycliffe to perform its statutory duty.
Still on Aycliffe, I quote from the report:
It was the Corporation's hope that the new rents could be stabilised for at least three years, and in spite of further increases in the rate of interest and in wages during the year, this aim may still be achieved due to the stowing down of housebuilding during the year in consequence of the 'cuts' made in capital expenditure. The recent reduction of one-quarter per cent. in the rate of interest was very welcome and it is hoped that this is a forerunner of still further decreases.
That was written in the summer. The report goes on to the end of March, 1957, and, so far from having further decreases, the corporation has had further increases.
If a rise in the Aycliffe rents, as the corporation indicated, would make its job impossible, it is perfectly clear that further advances at the rate of interest at present prevalent and at the rate, in view of the Committee's decision tonight, we must take to apply for the future, will certainly not help the corporation to carry out its duty as a new town corporation. It is because of the rate of interest that the Committee has just accepted that I feel very doubtful indeed whether we ought to accept the Clause, having regard to the difficulties which it will cause to the new town corporations.
Let us proceed from Aycliffe and examine the position in some of the other corporations. The Basildon Corporation, for instance, says at the beginning of its report that it has been a year of considerable difficulty:
due mainly to higher loan charges and rising costs. This Corporation have unfortunately met the high interest rates at the peak of their industrial development, when the industrial progress has demanded a heavy housing programme. While every endeavour has been made to maintain high standards of construction and design, it cannot be denied that the financial situation has demanded economies in detail, which cannot be welcomed in view of the long-term nature of New Town development.
The corporation is saying that the long-term nature of new town development, which is the purpose for which it exists, is being hindered rather than helped by advances of further sums of money at the rates of interest which at present apply, and continue to apply to those advances which we are now asked to sanction.
So much for Basildon. I want to make this point perfectly clear, so let us take Corby and the development corporation which I represent. The corporation's rather short report says:
Rising costs of building, due mainly to increases in interest rates, have continued to cause anxiety, and rents of dwellings now being built are inevitably higher than of those built in earlier years.
Of course, this is the result of the dealings of the Government with the previous advances made under this Act. In those circumstances, one wonders whether we are really right to pass this Clause, and to make further advances on the same lines with what appears likely to be an even worse result. After all, these reports were written at a time when the rate of interest was lower that it is now.
Turning to Crawley, we find, again, the same sort of difficulty. The Crawley Corporation says, and this, of course, is with reference to the money which was advanced in the past and which we are asked to advance in addition now in increasing sums:
Whilst high interest rates generally tend to curtail or postpone capital investment, a Development Corporation at the peak of its programme is inevitably committed by the impetus arising from investment completed and in progress. To this extent higher interest rates must have an inflationary tendency.
Of course they have an inflationary tendency, and one wonders in those circumstances whether the Government are really following out their own policy when they insist, as they do, on charging these high rates of interest in respect of the money that we are now asked to advance. Cwmbran I referred to in the short speech I made earlier, and as I am very anxious not to repeat myself in any way, I think that we might leave Cwmbran out on this occasion.
Let us consider what is happening in Harlow. This is exactly the same thing, and makes one wonder whether we are right to pass this Clause. At the end of its report, the Harlow Development Corporation
… regrets that when rates are high it is obliged to borrow for 60 years and would welcome discretion to follow normal commercial practice and borrow for short periods when rates are unfavourable.
That follows the statement that the corporation has had difficulty with higher interest rates and, of course, again raises the question whether, assuming, as appears to be the case, that further money is required for the development of new towns, it is really advisable that the money should be advanced under the provisions of the 1946 Act, or whether the Government might not consider reviewing their whole financial policy in relation to the new towns and make advances on wholly different terms. Indeed, one development corporation that I shall come to in a minute or two does make a suggestion of that sort.
Having dealt with Harlow we come to a point—again relevant, it seems to me, as to whether we should sanction these advances—in the report of the Hemel Hempstead Development Corporation. It points out the extreme difficulty of the loan burden in relation to the amenities which it would like to provide for the town, and, speaking more generally, says that:
The effect of higher interest rates on borrowed money and the general rises in building costs which contributed to the problems of the year, will be more noticeable in 1957–58 and 1958–59, when construction put into the
programme during 1956–57 will become available for occupation.
That, of course, is a difficulty, and it is a difficulty relating to the additional advances with which we are called upon to deal tonight. That report goes on to say:
Higher costs produce problems of design, it rents of dwellings are to be economic"—
and I think that there, "economic" means economic in relation to the rate of interest charged—
and yet remain within the reach of the residents for whom they are built.
The Corporation points out that it did its best to make economies, but finally it was decided
… to delay a number of schemes and to accept a lower figure of completions for the ensuing two years.
Having regard to that sort of thing, there arises in connection with the passing of this Clause a further question—whether all this money is actually to be spent by the development corporations. I earnestly hope it is, because they require to spend it, but, having regard to the high rates of interest, it is very difficult for them to make the fullest use of it. So much for Hemel Hempstead.
I turn for a moment to Peterlee. This development corporation is in a slightly different position. It is in the North of England and caters for a level and type of population different from that of some of the new towns round London. Here again—this relates to the advances that we propose to sanction tonight—we find this:
The impact of high interest rates in Peter-lee is particularly noticeable in the light of the low level of rents charged in the surrounding district, combined with the tradition of free or extremely cheap housing.
That is to say, when we get a Tory Government advancing money to development corporations, the result is rents which compare very unfavourably with those which have prevailed in council houses and others previously.
These hopeful people add
The Corporation is pleased to note however that recent trends indicate the possibility of an early return to lower rates of interest, the effect of which will enable the Corporation to return to a normal housing programme, at the same time giving a further impetus to ancillary development, particularly in the fields of commerce and industry.
They were too hopeful. Clearly, that report was written before the rise in the Bank Rate and the rise in the rate of advances to these people was put into force.
Lastly on this point we come to Stevenage. There is a passage in which the Stevenage Development Corporation regards the whole problem of finances as one for the Minister's "immediate and earnest consideration." I referred to this passage during the Second Reading, and, anxious as I am at all costs to avoid any repetition, I should not like to repeat it again, but I earnestly trust that the right hon. Gentleman, having now had a further opportunity of considering the matter, has given it further consideration, if not "immediate consideration," for the report was written very many months ago and the corporation wants a national policy aimed at the reduction of interest rates and costs. That is just the national policy which the Tory Party promised at the General Election and which the Government have not carried out. So much for that part of the Stevenage report.
At the end of the report it is put even more succinctly:
The whole question of the financing of this great social and economic experiment of the New Town"—
not just Stevenage—
in the corporation's view, needs re-examining. Until this is done one sees but little hope of stabilising, certainly not of reducing, rents; and high rent levels appear to the Corporation to constitute the most dangerous threat to the prosperity of the town.
That is nearly but not quite the last of the reports, and perhaps we may accept that as a conclusion. I cannot expect the right hon. Gentleman to reply at any great length to the numerous points that I have raised. I regret that the exigencies of the situation and the feeling that I must not become too tedious to the Committee prevent my going on, as in many ways I should have liked to do, for another two or three hours. It is a fascinating subject. I have done this only out of gratitude and in return for the very valuable contributions that we have had from some back benchers opposite. I could not resist—without, I hope, any undue arrogance—a certain feeling that some of them needed a little bit of a
lesson. I have been endeavouring to give it.
I am indebted to my hon. and learned Friend the Member for Kettering (Mr. Mitchison) for drawing the attention of the Committee to that new town in my constituency, Newton Aycliffe. I am very disturbed because of the action the Minister has taken affecting the new towns. It indicates what is to happen to the new towns in the next year or two.
Because of the high interest rates restrictions are placed on the development corporation, and because of those the corporation has had to take action which will result in many people not having the opportunity to take up residence there who are most desirous of doing so. The corporation will not be able to carry out the housing programme which was expected to be carried out because of the demand for houses from the people desiring to go to live there.
My hon. and learned Friend referred to the trading estate in the area. The new town was set up in the first place to provide accommodation for the employees going to work on that trading estate. People from all parts of the country, from the east, south and west, have come into that new town, and many have had to leave again, and to return to the places from which they came, because of the high rents which have been charged because of the high interest rates. Distress has been caused—and I share it—by the population limitation of 11,500 the Minister has imposed upon the corporation, with all the loss of opportunity it means for the area, and for the people who want to go to live there, and I hope sincerely the right hon. Gentleman will have second thoughts upon the matter.
On the trading estates are firms which are starting new policies whereby they hope to increase their production. For instance, there a firm which expects to set up new engineering works there, which will absorb between 300 and 500 extra workpeople. They look to the development corporation for houses to live in, but because of the Government's policy and the high interest rates those houses will not be there for the people of those firms on that trading estate who want to develop their production and enter, or increase their business in, the export market and so give us all benefit of the labour and skill of their workpeople.
I sincerely hope the facts and arguments which have been brought out tonight by my hon. and learned Friend about Newton Aycliffe will be fully considered by the Minister. I hope the Minister especially in the light of his visit to Newton Aycliffe, will have further thoughts about that areas's circumstances.
He cannot find a better site or a better area of development than that among all the new towns built in this country. He can choose anywhere he likes: he will not find a better sited town than that, or one which has been better developed. I hope he will bear in mind that the young residents, young married people, find it hard to meet the high charges for rents made necessary because of the high interest rates. He ought also to consider the social facilities there, and those provided by other local authorities in rural districts and municipalities. In view of what has happened and the points that have been brought up, I repeat the hope that the Minister will have second thoughts about the new town which he had the privilege of visiting.
I am glad to have the opportunity of saying a word in reply to the hon. Member for Sedgefield (Mr. Slater) about the new town of Newton Aycliffe, in which he naturally has a special interest. I had an extremely happy day there recently, and I congratulate him and his constituency on having such a delightful new town. I can assure him that the one thing that I want to do is to contribute anything I can towards the success of Newton Aycliffe and the happiness of the people living there. When I visited it nobody made representations to me about any large percentage of the people who had come there finding it necessary to leave again owing to the high rents; indeed, one of the satisfactory features about the new towns is that in spite of the doubts which were expressed in the early days as to whether people wanted this kind of new town development, the proportion of people who for one reason or another have left the new towns after arriving there has been astonishingly small.
I have said that I think that the development corporation should stop building when the population of its new town has passed the population figure of 11,000. I assure the hon. Member that I shall take account of what he said, because I certainly want to ensure that Newton Aycliffe is a successful community and a good sort of community for people to live in. He and I are at one on that point.
I was beginning to think that the hon. and learned Member for Kettering (Mr. Mitchison) was making a rule that his speeches in the House or in Committee must never fall short of sixty-six minutes. At any rate, I trust that at the moment there is no great issue between us, because the Clause enables the new towns to proceed beyond the point when advances towards new town development will reach the figure of £250 million. Most fortunately, for a number of years there has been unanimity between the parties that this new town development should go on, at any rate until the existing towns are completed.
The question that we are now discussing is not what the rate of interest should be but whether the Clause should pass. If it does not stand part of the Bill, as the hon. and learned Member realises, new town development will come to an untimely conclusion not far on in 1958. I believe that he would regret that as much as everybody else, and I hope that he will therefore decide not to divide the. Committee.