All shares went down because of the Government's mishandling of the economy in the last six months. On 7th March The Times headline said:
Charge for hoarding will not hurt speculators.
It can say that again. The article commented:
An unexpectedly lenient statement from the Chancellor on profits from land and property was greeted by widespread gains in the property sector of the Stock Market last night.
As the charge will be levied only from the time of the Secretary of State's announcement where planning permission has been given, few speculators will be caught. It will certainly not fulfil the White Paper's specific promise to curb disproportionately high profits. It will not make any more land available for housing. Above all, it will not produce one more house, nor will it affect the price of any houses. It is a pathetic little effort to deal with nothing more than a vast national scandal.
The Budget does nothing to restrict the profit from deals in residential blocks of flats or the abuse of improvement grants in London and elsewhere by speculators and break-up operators. In the past two years there have been in London and in other large cities sustained, voracious and utterly immoral campaigns by gentlemen who extort profit from the housing shortage—profit the like of which has never been seen before in the property market.
The Chancellor of the Exchequer and my right hon. Friend the Leader of the Opposition were right when they referred to the situation as offensive. Working-class communities in London are being dispossessed by the uncontrolled use of improvement grants. London Property Letter No. 20 described Brixton as a Klondyke because of the fortunes waiting to be made from improving old properties. An estate agents' list for improved properties in the Barnsbury area of Islington shows the effect of "improvement" on house prices. The average price in that area in 1966 was £7,000. In 1967 it was £8,380. In 1971 it was £14,545 and in 1972 it was £22,500. Each reoccupation of a dwelling in Barnsbury or Canonbury replaces two families.
To the land speculator and the improvement grant operator we must now add the break-up market operator. For example, a block of 138 flats was purchased for £750,000 and £40,000 was spent on dolling them up. They were then broken up and sold at a profit of £250,000.
The First National Finance Corporation sold its flat portfolio at a profit of £24 million because it was getting embarrassed by the whole flat-owning business. On 13th February The Guardian reported that the First National Finance Corporation was selling a substantial number of blocks to associate companies. Fairview Estates bought three central London blocks for £3·4 million, and First National Finance Corporation holds a 21·6 per cent. share in Fairview Estates. Regalian properties paid it £22·5 million of the total sale price of £76 million but First National has a 31 per cent. share in Regalian.
As The Guardian commented:
First National is gaining on the swings and the roundabouts.
In the City comment yesterday it was revealed that in 1972 the profits of First National Finance Corporation rose by 91 per cent. over those of 1971. Profits of property companies generally rose by 52 per cent. in the year ending July 1972. I call this offensive profiteering. All of this profiteering may be legal but it is certainly offensive to millions of ordinary people who are trying to preserve the decencies of family life in their own homes.
There is another little point which may have escaped hon. Members. Last year the Government claimed to have established a special fund of £80 million to speed up the servicing of land for development. The then Secretary of State for the Environment announced this on 27th April. He said that this was an extra £80 million of loan sanctions.
If hon. Members scrutinise the White Paper on Public Expenditure for 1976–77 they will see it suggested there that while public expenditure on the acquisition, improvement and sale of land for private housing is planned to be £82 million higher in 1972–74 than previously intended, expenditure for the following years 1974–76 has been trimmed by £51 million on the previous forecast so that only £30 million of the £80 million is a genuine increase. What a mean little trick to play on the House and on people searching for a home. It is typical of the Smart Alec who was then Secretary of State for the Environment.
There is nothing in the Budget to help the person buying his own home. Indeed, it will be much more difficult. It is virtually certain that the mortgage rate will be raised from 8½ per cent. to 9 per cent. and perhaps to 9½ per cent. On the average mortgage of £8,100 a 9 per cent. mortgage rate will mean an increase of £2·76 per month. If the rate goes up to 9½ per cent. on Friday the increase will be £5·65 per month.
The Chancellor made no proposal for helping the building societies in their difficulty. His failure to do so was, I believe, quite deliberate and is yet another example of the Government's pathetic faith in market forces, to solve the house price problem. Dearer mortgages will mean that there will be less demand for them. This will reduce the demand for houses and therefore, it is argued, prices will drop. I believe that this is quite deliberate Government policy.
There is a major problem about the fluctuations in the availability of building society funds. My right hon. Friend the Member for Grimsby (Mr. Crosland) has suggested a building society stabilisation fund. How much more sensible it would have been if the Chancellor had established a fund for this purpose with some of the money which he used to relieve lollipops and humbugs of VAT.