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 Sir Herbert Butcher Sir Herbert Butcher , Holland with Boston 12:00 am, 29th April 1965

The right hon. Gentleman the Minister resumed his seat to a round of cheers from his hon. Friends. He put the best possible gloss on an extremely poor case.

Before proceeding further, in accordance with the custom of the House, I declare my interest as a director of a building society and also a director of a company engaged in building houses for sale, although I believe that that is already fairly common knowledge.

I return to the speech of the right hon. Gentleman. I particularly draw the attention of the House to two remarks he made. One was, "This week I have started talking to the building societies" and a little later he said, "Talks have only just begun." What an approach there must have been in October, November, December and January, when the financial crisis was upon us and the Government did not talk to the building societies and the building industry at that time! Surely the hon. Gentleman should have some forecast, some sense of events to come, and be able to deal with them. Building societies were well aware that there was trouble lying ahead because, as he said, it was in January, despite the rebukes from the Chancellor of the Exchequer, that they indicated they would not be able to loan so much money.

Twice in his speech today the right hon. Gentleman has drawn attention to the fact that the loans by the building societies during the first quarter of this year were higher than in previous years. He ought to know the reason, but apparently he does not, and I feel it my duty to explain it to him. It is the practice that when a developing builder wishes to erect houses for sale he goes to a reputable building society, shows the plan, indicates the price and interests the building society in supporting it. That is done over a period of two or three years, in many cases, and between well-established builders and reputable building societies these arrangements are honoured to the full. It is because of these arrangements that the amount of money loaned by the building societies during the first quarter of the year was so substantial.

A further thing which the right hon. Gentleman ought to know is that there is a period of delay between the issue of an offer by a building society and the completion of the purchase by the solicitors acting on behalf of the purchaser. What does that mean for the period in which we are now engaged, when the money is very short for building societies? Much of their income from the public is already hypothecated. Some promises have been made to old-established connections for building new houses and offers to finance existing houses have been agreed between the society and the respective borrower which will be implemented in the near future.

I noticed that the right hon. Gentleman, despite all his skill, the advantages of a great public school and a great university, had nothing with which to cheer the young couple, the young couple who voted for him in October and who are now married. Soon there will be a baby and soon they will be wanting a bigger house than they will be able to think about if the Government go on at the present rate of progress. The Government have fully disrupted the building industry. The right hon. Gentleman shakes his head, but perhaps he will examine the case by putting these points to builders whom, I understand, he is to meet in the next few months.

The position is this. Building developments move forward stage by stage. The usual thing is that the roads and the sewers are put in and then a gang of men start building foundations. On to these foundations the bricklayer puts his bricks. As the house goes up, other trades come in. Due to the difficulty which purchasers are experiencing in securing finance, builders are stopping this orderly progression and are diverting all the labour to finishing off completed houses, because they believe that there are two places in which a building site can be left—first, at the foundation level, where the risks of vandalism are very slight; and, secondly, at the completed stage where the houses can be properly looked after, a show-house be available, and of which, when the money is available, the purchaser can secure immediate possession. Thus, all the various trades are now getting completely out of step. Despite the Minister's speech and despite the promises, nothing has been done. All the fine talk we heard this afternoon will not help one girl or one fellow to move into the home they want.

Where is the 3 per cent. interest rate which was talked about in Boston and in Spalding by the First Secretary of State and Secretary of State for Economic Affairs? It is more than double that now.

Let us examine what should be done. It is not a question of the building societies enduring a temporary difficulty. The fact is that the people of this country do not believe that the Government intended to keep the promises they made. The Government were out for vote-catching and, as the Minister said, this promise attracted thousands of votes. That is on the record. Thousands of people will curse themselves for believing the promises which were made then.

The Minister talked about orderly planning. The orderly planning we have seen since the Minister took office in October has had these results. It is more difficult for the people to whom he promised a loan at a low rate of interest to get any loan at all, even at a high rate of interest. Despite the promises and the pledges of increased house building, fewer houses will be built. The right hon. Gentleman told us that no one builder whom he asked could give him a figure. Of course no one builder could. Let him ask the officials in his box under the Gallery for advice as to the number they expect. I believe that they will certainly accept a figure of 50,000 to 60,000.

What is needed is this. It is necessary to insert and bring to the help of the people about the same amount of money for about the same number of houses as was available last year. The flood gates should not be opened so that there is any amount of money coming forward, because that would increase prices all the way round. On the other hand, money should not be limited without proper attention being given to the number of advances on which it should be made.

I believe that there are four steps which ought to be considered, and at least one of which it is essential that the Government should take. The first is the point made by my right hon. Friend the Member for Bexley (Mr. Heath), a restarting of the House Purchase and Housing Act. That would help people living in the older houses, on the one hand, to sell their houses and move into something better, if they so desire. It would also help others who have not previously been house owners to start in a modest way with a rate of repayment which they can well afford.

However, if because it was a jolly good Act introduced by the Tories the Minister has political prejudices against revising it, let him bring in one of his own. The doctrine is already instituted as to how it can be worked. Recovery from the Treasury worked perfectly well. Let the Minister bring in a House Purchase (Young Persons) Act, and suggest that it is to be available only on similar terms for young people who have been married since the date of the election. That might help a bit. Why not do it?

If the Minister says that it would mean legislation, I ask him to appreciate that, as a White Paper to be issued tomorrow is to be debated next Thursday, it is possible for business to be arranged with remarkable dispatch. If that can be done by one side of the House of Commons, what can be done by both sides?

Thirdly, if the Minister does not like that, he might introduce a Bill assisting people who have never purchased houses of their own before. I think that this would probably be the least satisfactory of the schemes.

I think that the right thing to do would be to enable the building societies to go to the bank as a bank of last resort and borrow from the bank a sufficient sum of money to enable them to advance the same amount of sterling in 1965 as they advanced in 1964. It would be right, I think, to couple with that a requirement that at least the same number of houses should be financed. My right hon. Friend the Member for Bexley suggested that legislation might be required. He may be right. My own feeling is that the building societies are entitled to borrow from the banks.