I will, with permission, make a statement on decisions the Government have made to stimulate the provision of additional homes.
We have recently taken a number of steps to improve the housing situation. In the public sector, we have undertaken, and are pursuing, discussions with those local housing authorities whose intentions do not appear to match their housing needs. In the private sector, we have improved the option mortgage scheme by increasing the subsidy to home buyers; this took effect on 1st January. The building societies are benefiting from the Save-as-your-Earn scheme, and their spokesmen have predicted that their lending may top £1,700 million this year—about £150 million more than last year. We must all hope that, with an improvement in their financial situation, the building societies, who have been unable to do so in the last year or so, will be able to revert to their traditional practice in the finance of house-construction, and also to make fuller use than they have recently been able to make of the 100 uper cent. mortgage guarantee arrangements under the option mortgage scheme.
In the public and private sector alike, the prospect has already been improved by my announcement of last November that the ceiling for local authority lending in England and Wales had been increased by £45 million for 1970–71—that is, from £55 million in the financial year just closing to £100 million in the coming one. The provision of additional homes to modern standards by conversion or improvement has also been stimulated by the more generous grants for which provision was made in the Housing Act, 1969. In only five months since the passing of the 1969 Act improvement grants approved by local authorities have been about 48,600, that is 4,000 more than in the comparable period a year earlier.
All these measures, taken together with a steadily improving economic situation, should materially improve the prospects. But the improving economy also enables the Government to give a further boost to the enlargement and improvement of our national housing stock.
First, local authority mortgage lending. We have decided still further to increase, to about £155 million, the amounts to be allocated to local authorities in England, Scotland and Wales for the financial year 1970–71—an additional £50 million.
I have started, and will shortly complete, discussions with the local authority associations in England and Wales about the basis on which the increased total should be allocated. My right hon. Friend will be making a similar arrangement for Scotland. There are special purposes which local authorities have a particular interest in serving. They should be able to facilitate, for example, the purchase of houses for owner-occupation by existing council tenants, people on waiting lists, or key workers moving into development areas or intermediate areas. I expect, too, that the generous provisions of the Housing Act, 1969, will produce a demand from people who want to buy houses, and to improve them. In all these classes, there will be people who need a higher percentage advance than a building society would give. In such cases the local authorities, who already make about a fifth of all their advances at 100 per cent. of valuation, can meet that need. In the light of the discussions I have already had with the associations, I am confident that they will be able to increase the proportion of 100 per cent. advances they make.
There is another field of housing activity to which we can give an additional stimulus; that of housing associations and housing societies.
Housing associations have a long and honourable history. Much of their effort is in ways which add to the efforts of the local housing authorities themselves. They have been particularly successful in meeting the needs of people whose means are small and whose needs are special; for example, the elderly and the disabled. With Government encouragement the number of housing associations which specialise in housing the elderly, and are affiliated to the National Federation of Housing Societies, rose from 361 in 1964 to 565 in 1969.
The Housing Subsidies Act, 1967, and the Housing Act, 1969, have greatly enlarged the field of operation of housing associations. By making available to them grants which cover a large part not only of the cost of converting such property, but also the cost of acquisition before conversion, we have given them an opportunity to enter into partnership with the local authorities in the improvement of our older houses. Largely in consequence of this there has been a very considerable upsurge in housing association activity. Six years ago local authority advances to housing associations were running at an annual rate of about £3¼ million a year. The present rate is about £17 million a year. We have fostered and encouraged this increase and we intend that it should go on at an even higher level. There is certainly scope for further expansion of this work in many parts of the country.
We are also anxious to encourage the work of co-ownership housing societies operating under the Housing Corporation. We have therefore made a further allocation of resources to the Corporation. This will enable it to enter into additional commitments of about £10 million. With the participation of building societies we expect that the additional total commitment to housing societies will be at least £20 million in 1970–71.
I believe that these further practical steps will greatly improve the nation's housing prospects, and that they will be welcomed by the House.
Is the right hon. Gentleman aware that we welcome the announcement of additional funds to the Housing Corporation, particularly in view of the very big decline in its programme in the last two years? Is he further aware that we welcome the Government's conversion, evidenced in their statement, that they wish part of the money made available for local authority mortgages to be used for the sale of existing council houses to tenants? Is he aware that having said that, in the view of this side of the House, his statement can be summarised as being far too little far too late? Is he also aware that the money he is now suggesting should be made available for local authority mortgages is £24 million less than the amount made available in 1964?
Does he realise that as a result of a rise in the price of houses—of £1,500 per house—since Labour came into power, to provide the same number of mortgages today as we provided in 1964 he would need not £155 million but £255 million? Finally, is he aware that after his statement today it is clear that a Prime Minister who won the last election by promising 500,000 houses a year, lower prices and cheaper mortgages will go out of power building 140,000 fewer houses than he promised, at much higher prices, and with much dearer mortgages?
I should correct the first remark of the hon. Gentleman. I did not say that this money was being made available to facilitate the sale of council houses. I said it was to be made available to enable people who wished to move out of council houses to buy their own houses. This is a very different thing. The hon. Gentleman quite predictably talked about too little too late. Perhaps he will compare the £131 million in housing subsidies which we gave in the current financial year with the £82 million paid in 1966–67.
This is much more than the increase in prices. As to the general amount made available for home loans, I have every reason to believe that the authorities will find it perfectly possible to meet the priority classes to which I referred in my statement, within the ceiling laid down.
Does the right hon. Gentleman appreciate that this statement may be an attempt to make an honest man of the Prime Minister and his promises? [Laughter.] Does he appreciate that his statement makes no reference to S.E.T., which is increasing the cost of housing, particularly for newlyweds, by an extra £200 a house? Does he realise that this statement will be looked upon as hypocrisy? Will he approach the Chancellor in an attempt to remove this stupid tax?
I very much deplore the way in which the hon. Gentleman refers to my right hon. Friend. That kind of remark and the general hilarity that characterised its reception by hon. Gentlemen opposite tends to detract from the seriousness of the housing situation. I would suggest two pieces of reading for the hon. Gentleman: one is the Reddaway Report and the other is the open letter to the right hon. Member for Enfield, West (Mr. Iain Macleod) which appeared in The Times a few weeks ago.
While very much welcoming this further sign of the increasing financial strength of the country, may I ask my right hon. Friend if he will give an assurance that every effort will be made to concentrate these extra funds on relatively lower-priced housing where the need is perhaps greatest? Will he also ensure that there is the utmost flexibility in the movement of funds from authorities which are not prepared to use them to those which are?
I have had discussions with the local authority associations on this. I shall be consulting them further, but it is my intention that the money should be made available for special priority classes. I would hope to instil as much as flexibility as possible into the way that the money is allocated.
Is the right hon. Gentleman aware that, although he speaks about local authorities now being able to increase the proportion of 100 per cent. advances that they make, in many cases local authorities do not make even one-fifth of their advances of 100 per cent. loans, particularly in connection with the purchase of older property? Will he do something to ease the difficulties of many people in obtaining a house in this way? Furthermore, when he speaks about the steadily improving economic situation materially improving the prospects, does he realise that it will still be impossible for most modest income families to be able, even with 100 per cent. mortgages, to purchase a house until the Government give them some real help with repayments?
There has been substantial help already, through the option mortgage scheme. I am aware of what the hon. Gentleman said about many local authorities not giving 100 per cent. advances, but I am sure that it is the wish of most local authorities to do so. I have reason to believe that local authorities will be prepared to increase the proportion of 100 per cent. advances that they make and I very much hope that the understanding which I have with them will produce the result that both the hon. Gentleman and I want.
While welcoming the fact that more money is to be made available for house purchase, may I ask my right hon. Friend to confirm that for the lower income group families, not able to take advantage of the option mortgage scheme, it is Bank Rate which is the really prohibitive factor? Is he aware that he ought to make respresentations to the Chancellor to deal with this? Does he further appreciate that the proposals he has made go no way at all towards increasing the number of houses built for rent, which is what the country needs? Does he realise that this does not deal with the local authority sector? Will he be making another statement tomorrow telling us what he proposes to do about that?
To answer my hon. Friend's first question, about interest rates, she will know from previous exchanges that we have had in the House that these largely reflect world conditions. I know that my hon. Friend will have welcomed the recent reduction in Bank Rate, reflecting the improvement in our economic position.
To answer her second question, about local authority building to let, my immediate objective is to end the log jam which at present exists in the private sector market. We are engaged in discussions with the local authorities and also with the Housing Programme Working Party about stepping up the general public sector building programme. We would welcome help not only from my hon. Friends but from hon. Gentlemen opposite to make sure that every local authority in a priority area is building to capacity.
When the right hon. Gentleman a moment ago advised my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) to read the Reddaway Report, was he referring to Appendix A of that document, in which Professor Reddaway reprinted an article he wrote in 1966 in which he said, in effect, that it would be folly to put S.E.T. on building?
Is my right hon. Friend aware that any step and every measure to increase owner-occupation is certainly to be welcomed? However, would he agree that this should be the first of a a number of new steps to extend owner-occupation? As the Minister responsible for housing, will he press the case, in the Cabinet and elsewhere, for 100 per cent. mortgage advances to be extended, remembering that there are many families, particularly in Greater London, who cannot be assisted without 100 per cent. mortgage advances?
Housing policy is inevitably a developing policy and I absolutely agree with my hon. Friend about the desirability of 100 per cent. mortgages for people in greatest need. The steps that we have taken should make it more readily possible to extend 100 per cent. mortgage guarantees both through building societies and local authorities.
As unemployment in the construction industries in the North-West is no less than 19 per cent. of the total unemployment in the region, may I ask the right hon. Gentleman to give an indication of how the measures which he has announced are likely to lower that unemployment level?
Yes, Sir. To a considerable extent they will make it much easier to sell old houses, thus generally easing the housing market. They will also have a substantial effect on new house building. I hope, as I said, that hon. Gentlemen opposite will help to encourage local authorities, including those in the North-West, to increase their public housing programmes.
I thank my right hon. Friend for his statement and for the remarks he made about discriminating in favour of areas in most urgent need. Will he bear in mind that West Ham is in that category because of the difficulties of Ronan Point, and will he give special help in view of that? How many extra houses does he anticipate this new arrangement is likely to bring into the pipeline in, say, the next 12 or 18 months, or in any given period?
The answer to the last part of my hon. Friend's supplementary question is that it depends very much on the extent to which the money that is made available is used for the purchase or sale of older houses and the extent to which it is directed towards new house building. A great deal depends on the exact time at which the initial steps are taken on the part of purchasers, building societies and local authorities.
To answer the first part, about West Ham, my hon. Friend has had an opportunity to put this issue to the House on a number of occasions. He will be aware that the offer which I originally made has been increased, from 40 per cent. to 50 per cent., but I am afraid that I cannot hold out any hope of special consideration being given to his constituency.