Orders of the Day — Housing

Part of the debate – in the House of Commons at 12:00 am on 21st April 1977.

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Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Environment 12:00 am, 21st April 1977

I shall issue a Press notice.

The background to today's debate on housing is clear: it is the total failure of the Government's housing policy, it is the exposure of the promises which the Labour Government put before the country in the two elections of 1974, and it is now the Government's apparent bankruptcy of thought about how to cope with the housing crisis which that failure has created.

In moving to halve the salary of the Minister for Housing I can think of no more effective way of pleading the case than quoting from the first paragraph of the last Press release on the subject to come from his Department. It said: Taking three month totals to reduce the effect of month-to-month fluctuations, and discounting the normal seasonal movements, total starts in November to January were down 20 per cent. on the previous three months, August to October, and 33 per cent. lower than November to January last year. Total completions were down 9 per cent. on the previous three months and 10 per cent. lower than a year ago. In the public sector, making similar comparisons. starts were down 21 per cent. on the previous three months and 39 per cent. lower than a year ago, while completions were 11 per cent. down both on the previous three months and a year earlier. Private sector starts were 20 per cent. down on the previous three months and 26 per cent. lower than a year earlier, while completions were 7 per cent. down and 9 per cent. down respectively. The House will appreciate that not even in the best year under this Labour Government has the level of either starts or completions equalled the total in the worst year of the last Conservative Government. I am sad that that comes as such a surprise to the two Ministers responsible. I should have thought that they would at least have understood the dramatic decline in the housing programme for which they are responsible.

The Press release that was sent out by their Department—I am sure that their officials can provide a copy of it so that the figures can be checked against what I want to say—goes on to deal with house renovation grants and the slum clearance situation. Exactly the same situation is to be found there. In 1976 slum clearance figures were worse than in 1975, and both those years were worse than either the last two years of the Conservative Government. In the past two years this Government have cleared 97,000 houses. In 1972 and 1973 the Conservatives cleared a total of 129,000 slum houses.

House improvement grants reveal a consistently depressing picture. From November 1976 to January 1977 the number was 3,000 fewer than the previous year. The overall national figure shows that although the Conservatives approved 360,000 grants in 1973, that figure under this Government fell to 125,000 in 1976.

It might seem to the House that, against a calamitous record of this sort it is charitable of us that we should seek only to halve the salary of the Minister for Housing and Construction. This factual statement of the Government's record is seen in an even more reprehensible light when it is compared with the promises in the Labour manifestos of February and October 1974. In that February we were told that the serious decline in the then Conservative Government's housing programme was to be reversed. We were promised that land was to be freely and cheaply available. By October, the tone of the manifesto had assumed an even more strident pitch. The disastrous fall in house building was to be reversed. We were also told that the "lump" was to be attacked so that the Government would create a stable and permanent work force in the industry.

What the Government omitted to say was that it would be a stable and permanent unemployed work force in the construction industry. Today's figures for the construction industry, published by the National Council of Building Material Producers, forecast that in 1977 that stable and permanent work force, already containing a quarter of a million unemployed, could look forward to yet a further reduction in orders in 1977 of 7·5 per cent. There will be, moreover, a further reduction in 1978 of 2·5 per cent.

The explanation for the Government's failure is apparent. They have, as one would expect from a Socialist Government, pursued policies that placed the responsibility for the success of the housing programme on an increasingly complex, slow-moving and expensive State machine. They have consistently pursued public sector policies and destroyed the ability of the private sector to contribute to the housing programme.

The profitability of the house-building companies has deteriorated sharply over three years. Savory and Milln's building book, published last month, shows that over the three years 1974, 1975 and 1976, the 20 private estate developing companies listed have seen their profits decline from 22 per cent. to 16·9 per cent. to 12·7 per cent. At the same time the tax percentage on those reducing profits taken by the Government rose over the same period from 52·5 per cent. to 56·4 per cent.

The second and, of course, coincidental factor has been the chaotic interest rate movement consequent upon the Government's management of the national economy. Since this Government came to power, there have been some 40 changes in interest rates, including, of course, periods of unprecedentedly high interest rates. As everyone knows, the effect of that has been profound throughout the national economy, but nowhere more so than in the house building industry.

The Labour Party is now trying to divert attention away from its housing crisis by blaming the building societies for the level of interest rates. The first task of the building societies is to protect the deposits of those who save with them. Once the depositors' confidence is lost, home buyers will not receive mortgages. It is worth remembering that there are approximately four times as many depositors placing their savings in the building societies as there are borrowers using funds for home purchases.

It is interesting to watch the way in which the Government compete with the building societies and make their work unpredictable and difficult. For example, only a few weeks ago the sixteenth issue of national savings certificates offered 8·78 per cent. per annum, specifically designed for high tax payers. The calculations are that perhaps something like £150 million was thus diverted towards a Government savings scheme and away from the building societies.

We have seen a Budget introduced in the last few weeks which fails to establish an income tax rate for the coming year, with the consequence that the composite tax rate of building societies cannot yet be predicted with certainty. The Labour Party is trying to use its familiar technique of diverting attention from its own failures by turning it on to somebody else. The fact that building societies must view with increasing concern is that the rates of inflation go on moving up. Every hon. Member wants to see lower rates, but for this Government of all Governments to advise anyone, particularly building societies, on the prudent management of financial affairs flies in the face of the experience of the past three years.