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Housing (Home Loans)

Part of Class Vi – in the House of Commons at 12:00 am on 29th April 1965.

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Photo of Mr Edward Heath Mr Edward Heath , Bexley 12:00 am, 29th April 1965

The right hon. Gentleman's Tory predecessors did not have to deal with this situation. We have made it our business, as the right hon. Gentleman could not, to get the best information possible. I will give it to the right hon. Gentleman now.

We obtained it in respect of county and non-county boroughs, which are the major organisations concerned, and of which there are 358 altogether. We have managed to get information concerning 283 of them—more than three-quarters of them—of which 242 had home loan schemes. That shows how many such schemes have developed during the 13 years of Tory rule. We discovered that, in the North, 14 major authorities had stopped schemes altogether; in the Midlands and East Anglia, 16 authorities had stopped; in the South, 13 had stopped; and in Wales, three had stopped. This excludes entirely the urban and rural district councils, which were included in the right hon. Gentleman's figures, which he gained from the Press.

The right hon. Gentleman said that there were 1,200 local authorities altogether, and then gave figures from the Press. Many have reduced the percentage of the mortgage. Interest rates have been increased by 165 of those major authorities. On the average, the rates being charged range between 6¾ per cent. and 7¼ per cent., with a few at 7½ per cent. Yet the Chancellor of the Exchequer had the audacity to rebuke the building societies for increasing their rate.

Let us look particularly at the two largest authorities—London and Birmingham, which are both Labour controlled. In mid-January, London put its rate up from 6½ per cent. to 7¼ per cent. One London borough put it up to 7½ per cent. In Birmingham, a very interesting situation arises. In a party political broadcast on 8th May, 1963, the Prime Minister said: We shall also encourage popular schemes such as that in Birmingham, where the Labour Council are building houses for sale, and are giving 100 per cent. mortgages with low interest rates. What is the position now? Since the Government of the right hon. Gentleman came to power, Birmingham's Labour Council has restricted all mortgages to a ceiling of 85 per cent. and has put interest rates up from 6 per cent. to a new peak of 6¾ per cent. That is what has happened in Birmingham. It had to happen because of the present situation. Yet this was cited by the Prime Minister as the one he wanted to copy.

Look at the building materials industry as the third part of the picture. The industry is anxious. It depends to a very large extent on "starts", and these are now diminishing. The Minister of Public Building and Works—I do not see the right hon. Gentleman here today—has urged the brickmaking industry to increase its output of bricks in 1965 by 600 million to 8,400 million, an increase of 8 per cent. He has constantly urged the industry to increase investment in plant and has constantly given the impression that it would be an ever-expanding industry. On 18th February, at a contractors' luncheon club, the right hon. Gentleman said—I thought slightly peevishly— I keep listening to or reading public statements of the leaders of the industry expressing fears about the future and seeking reassurances from the Government. Frankly, I am getting a little bit tired of this. Since then the right hon. Gentleman has not said a word. He now realises the position.

All this is due to the policies of the Government, not to the 15 per cent. surcharge—though we know that has added an increased cost to houses—but to the two Budgets, the Bank Rate and the credit squeeze. The Chancellor of the Exchequer and his right hon. Friend the First Secretary of State said in a White Paper that the surcharge was to deal with the balance of payments problem and that no further action was required. All the rest of this position flowed from the crisis of confidence for which the Prime Minister said his own Government was responsible. There was a crisis of confidence; the Bank Rate and the credit squeeze followed. Yet still confusion reigns.

On 20th January the Minister of Housing and Local Government said: It should be a matter of weeks and not months before we can hope that the 7 per cent. Bank Rate is over. That was over three months ago. Does not his right hon. Friend the Chancellor of the Exchequer tell him what is going on, and the facts of economic life?