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 Mrs Lena Jeger Mrs Lena Jeger , Holborn and St Pancras South 12:00 am, 29th April 1965

This side of the Committee should be greatly indebted to the Opposition for having given my right hon. Friend the Minister the opportunity of putting before the House of Commons and the country his comprehensive and thorough approach to the housing problem. What has bedevilled the housing situation for generations is the way in which the needs of the people of this country for homes of their own have been approached in an attitude of splinter—of differentiation—between one set of people and another, between the owner-occupier, the council tenant and the tenant of a private landlord.

I believe that this problem is much simpler and much less serious than is often supposed. We are still spending not much more than 3 per cent. of our national income on housing. It is absolutely absurd for a talented and prosperous nation like ours to be unable to provide for the simplest and most basic human need, which is a home to live in. We have run into unnecessary difficulties in the past because of the separateness of these approaches. I hope that my right hon. Friend will be very radical in preparing his long-term plans. For instance, I do not see the logic of allowing Income Tax relief on mortgage repayments, which helps the millionaire buying a mansion, whereas the postman who is buying a semi-detached house and who has three or four children and who is, therefore, not in the Income Tax bracket at all is not assisted in any way. I hope that the Government will give attention to this aspect.

If we are to make money at low interest rates available for housing, it is very important that my right hon. Friend should turn his able and agile mind to the possibility of some control of the prices of houses. It would be absolutely useless and would defeat the purpose which we have in mind if we made available to a young married couple or a middle-aged couple a sum of money at a reduced rate of interest and reduced cost of assistance from public funds if the only result was that the price of the house which last year would have been £4,000 went up to £6,000. How is their budget helped if the interest is reduced but the capital sum is increased? It is worth reminding the House that the price of new houses has gone up since 1956 by 55 per cent. I thought that this was an impossibly high figure, but as I am quoting from the Bulletin of the Building Societies' Association I must be correct in passing this figure on to the House.

I know the opinion of many hon. Member opposite that it is scarcity of houses which has led to the increase in their cost, but I do not think that we can let the needs of so many of our people fall a victim to the jungle of supply and demand without any regulation. Nor do I think that this is necessarily true, because I find from the same impeccable source that in 1964 the cost of new housing went up by 8 per cent. compared with 7 per cent. in 1963, although more houses were built in 1964 than were built in 1963. I believe that the people's need for housing is so infinite that it will be generations before any equation between supply and demand could make a real impact on this difficult problem.

I was specially interested in reading in the Evening News last night about some houses in Brighton the price of which has been reduced by £1,250. The reason for it is a dearth of money available for mortgage. The Evening News said: Ways must be found to make more money available to the young, would-be buyer to enable the housing drive to continue full pelt. To turn slightly aside from my main argument, I do not suppose that the builder who cut his price by £1,250 has come to great harm or suffered serious loss. I should like to know what profit was left to him after that cut.

We distort the whole problem as long as we allow completely uncontrolled profiteering to go on in this important sector. I serve notice on my right hon. Friend that I should be rather grieved if we made public money available without accompanying it by some system of control, otherwise the increased availability of mortgages would force up prices and nobody except the builder would be any better off in the long run.

This question of interest rates which we have to consider, particularly today in relation to the owner-occupier, is tremendously relevant to local authority building and to the private sector because reduction in one sector obviously affects the demand elsewhere. I have found that there are great advantages in using local authorities for making mortgage arrangements. The local authority which I know best is able to put the services of a surveyor, a valuer and solicitors in the town clerk's department to help people to carry out what can be the very expensive process of house-purchase more economically than when they make ordinary arrangements. I would hope that my right hon. Friend would be looking at the whole subject of housing finance in its widest aspect. Obviously the housing subsidies play a part in this and it would be only fair for people who want to buy their own homes to be helped similarly.

I am sure that it would be more helpful to local authorities, as well as to private builders and those who wanted to buy their houses privately, if cheap money were made available even if subsidies as well as Income Tax reliefs on mortgages were abolished. At the moment in the borough which I know best subsidies are working out at less than the interest which the council has to pay to moneylenders. I see from the Report of the Municipal Treasurers that this is the pattern for the whole country. This seems to me to be a piece of most absurd book-keeping which I hope will be reviewed.

I am haunted by a remark made at the 1963 annual conference of the Royal Institute of British Architects by the city architect of Sheffield who set out the economics of a modest three-bedroomed house bought for £2,500 at 6 per cent. interest over 60 years. The result was 53 per cent. for interest payments, 17 per cent. for cost of building, 3 per cent. for land—it must be cheap in Sheffield—15 per cent. for rates and 12 per cent. for maintenance. The Sheffield city architect's comment was: This poor little house is itself answerable for only 17 per cent. of its cost. I submit to my right hon. Friend that while we are basing our housing programme in any centre on this sort of arithmetic we shall not get any sense into the housing drive.

It is very easy to exaggerate the difficulties, but I believe that we can deal with them. I want to see the local authorities used much more fully. It has to be said that if we believe that housing is a social service which has to be supplied to our people over its widest range then obviously separate arrangements must he made for housing finance. Much of the comment in the Press which has referred to the possibility of a reduction in the Bank Rate as a major way of helping is irrelevant. I am not the only one to think this. I come back to the invaluable document from the Building Societies' Association. In February the Association's chairman said: To lead borrowers to expect a reduction in mortgage rates should there be a reduction in Bank rate is both dangerous and false, because there is not the slightest hope that their rates could be reduced on such a change, unless, by chance, it coincided in time with a considerable upsurge in the flow of savings … This is of no comfort to those who are seeking a home of their own. This is why I am confident that my right hon. Friend, by making these special and different arrangements which will take housing finance out of the generality of the money market, will make a fundamental and lasting contribution towards solving what is in itself a simple, basic and elementary question.